An energy sector under pressure
Oil: on the way to $100?
After peaking two years ago at the start of the war in Ukraine, the price of oil fell sharply, to $70 a barrel or less. By 2023, successive efforts by OPEC and OPEC plus to raise prices had had little effect. The production cuts announced in particular by Saudi Arabia, the undisputed leader of OPEC, were not enough.
The situation changed at the start of 2024. Economic growth is strong in the United States and China's economic situation, although still fragile, has improved compared with 2023. Demand for oil, despite the announcements at COP 28 of an energy transition "away from fossil fuels", remains strong and rising. On the supply side, OPEC's decision to extend its production cuts leaves open the threat that oil production will be insufficient to meet demand at the end of the year.
All this against a worrying geopolitical backdrop: war in Ukraine, which shows no sign of abating; crisis in the Middle East.
Oil and gas projects in Africa
Africa has around 7% of the world's oil reserves and the same percentage of gas reserves. However, oil production has fallen sharply in 10 years (from 440 to 330 Mt/year), particularly in Nigeria and Angola, where combined production has fallen by around 40%, or 80 Mt/year. This fall in production is due to insufficient exploration efforts. In these two countries, international companies are playing an important role, and the context (energy transition aimed at reducing hydrocarbon production, pressure from NGOs on oil companies to reduce their activities, particularly in Africa, refusal by a growing number of banks to finance these activities) is dissuading them from investing the necessary sums, with a few exceptions.
But let's remember once again that while it is vital at global level to reduce greenhouse gas emissions, Africa, with 17% of the world's population, consumes barely 4% of energy and emits just over 3% of greenhouse gases. It is therefore vital that African countries that have hydrocarbon reserves can exploit them to meet their energy needs and benefit from the profits of exports for their development.
More renewables
Africa has considerable renewable energy potential, particularly in solar energy (Sahelian zone, southern Africa) and geothermal energy (Kenya). However, at the seminar entitled "COP 28 - Transition away from fossil fuels - What impact for African economies? organised in Paris by the African Business Club on 5 April, emphasis was placed on the urgent need to find sufficient funding for the development of renewables. Too many projects remain unfinished, due in particular to the lack of loans on reasonable terms. Interest rates are too high because of the risks faced by projects. Operations therefore need to be "de-risked".
Our next conference
The theme of our think tank's next conference will be "Refining and the supply of petroleum products in Africa".
The programme is available on the website
The conference will be held on 16 April at 4.30pm (Paris) by ZOOM
Register with Latifa Hanifi
Jean-Pierre Favennec
Président
Association pour
le Développement
de l'Énergie en Afrique
