Energy turbulence: consequences for Africa

Oil prices stable, gas prices rising

The price of oil has fallen slightly since our last editorial and remains close to $100 - $110 per barrel, a high level to be sure, but one that has already been reached in the past and is far from the peaks seen more than 10 years ago or just a few months ago. There are several reasons for this: economic growth will be weaker than expected due to a certain recovery of the COVI and the war in Ukraine (less than 3% compared to 6% estimated at the beginning of the year). Despite production difficulties in Kazakhstan and Libya, OPEC and OPEC+ production, but also in the United States and Brazil, is growing slowly. Overall, and despite the threat of an embargo on Russian oil, the market remains well supplied. Some OPEC countries have spare capacity and could produce more. The producing countries do not want a price that is too high, which would increase the risk of a global recession and therefore a drop in oil needs and revenues.

However, the future remains uncertain due to the war in Ukraine. There is no sign of an end to the conflict. We can only welcome the agreement on grain exports from Ukraine, which are essential to avoid famine in many countries, particularly in Africa.

The price of gas remains very high due to the sharp drop in Russian exports to Europe, a drop that makes many countries on the old continent fear a very difficult winter.

African oil-importing countries are likely to continue to suffer from oil product prices that remain very high due to insufficient refining capacity. As for gas, the price on international markets is expected to remain at a high level because the replacement of Russian gas in Europe will be very difficult. This should favor African projects.

What about renewables?

In Africa, renewables are expected to grow strongly and account for almost half of the growth in electricity generation in the sub-Saharan regions of the continent by 2040.

Hydropower will continue to play an important role in many regions (West Africa around Fouta Djallon, Central Africa, Mozambique, Nile Valley). Wind and solar (especially) continue to progress, not forgetting the role of geothermal energy in Kenya. Many solar power plants are under construction. The intermittency of wind and solar power can be compensated by gas-fired power plants, which are very flexible and can provide the necessary electricity in the absence of wind or sun.

Our activities

Our Think Tank meeting on June 22 dedicated to : The impact of the war in Ukraine on African countries was a good success with over 60 participants. Thanks to Mohamed Ndao, Fary Ndao, Mohamed Seck and Mahanta Guèye. Some of the presentations are on the website as well as the recording of the conference.

Coming up:

A new Think Tank meeting to review the situation in Africa

The SIEPA whose date will be fixed soon (finally!!)

Best regards

Jean-Pierre Favennec
Président
Association pour
le Développement
de l'Énergie en Afrique

Interview with Jean-Pierre Favennec

Russia's invasion of Ukraine is a major crisis that will have long-term consequences for the entire planet. It comes as Africa struggles to put its economy on the path to recovery, amid continued pandemic, global inflationary pressures and financial and commodity market volatility. But the war is not the trigger for the rise in oil prices, which started two years ago.

 Energy in Africa in 2050

ADEA seeks your financial support, for the publication of the study « Energy in Africa in 2050 » (publised on 24 September). Please contact Jean-Pierre Favennec or Philippe Lambert.

Read study