Europe demand grows for African oil and gas

Gas flame from industrial chimney against cloudy sky (gas deals)
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Europe’s thirst for oil and gas to replace sanctioned Russian supply is reviving interest in African energy projects that were shunned due to costs and climate change concerns, industry executives and African officials told Reuters.

Energy firms are considering projects worth a total of $100 billion on the continent, according to calculations based on public and private company estimates.

Related article: European Union proposes Russian oil ban

African countries that currently have little or no oil and gas output could see billions in energy investments in the coming years, including Namibia, South Africa, Uganda, Kenya, Mozambique and Tanzania.

Namibia alone could provide around half a million barrels per day in new oil production, following promising exploratory wells in recent months, according to unpublished estimates by two industry consultants.

Africa as a whole could replace as much as one-fifth of Russian gas exports to Europe by 2030, based on estimates by the International Energy Agency (IEA). The Paris-based watchdog said an additional 30 billion cubic metres of African gas a year could flow to Europe by then.

“As the world seeks to replace Russian oil and gas volumes … the industry is now focusing on the advantaged barrels Africa has to offer,” said Gil Holzman, CEO of Canadian oil explorer Eco Atlantic Oil & Gas, which holds interests in oil licences in nearly 30,000 square kilometres offshore Namibia.

“The majors have been building larger positions … competitively bidding for exploration, development and production acreage,” he told Reuters by e-mail, citing activity in the oil basins off Namibia and South Africa.

European sanctions on Russian oil supply and reduced gas flows have sent prices soaring and driven up inflation to 40-year records in some countries. Benchmark Brent crude in March reached near a 15-year high of $139 a barrel.

Related article: AEMO takes further steps to manage tight gas supplies

Investment in African energy has yet to recover from a plunge in oil and gas prices in 2014, the IEA said in a June report, highlighting Africa’s potential to ease the supply crunch. Global oil output is set to rise from the pandemic but is then forecast to ebb in the late 2020s, it said.

“We are in the middle of the first truly global energy crisis and we have to find solutions to replace the loss of Russian oil and gas,” IEA executive director Fatih Birol told Reuters in an interview in June.

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