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Reassessing Global Energy Trends: A Robust Outlook for Fossil Fuels in Africa

NJ Ayuk, the Executive Chairman of the African Energy Chamber, offers a compelling reassessment of global energy trends, particularly focusing on the role of fossil fuels in Africa's energy future.
fossil fuels

In a recent interview on Arise TV, NJ Ayuk, the Executive Chairman of the African Energy Chamber, offered a compelling reassessment of global energy trends, particularly focusing on the role of fossil fuels in Africa’s energy future. Ayuk’s insights challenge conventional narratives and shed light on the significant potential for continued reliance on oil and gas in emerging markets, particularly in Africa.

Mr Ayuk addressed the assertions made by the CEO of Saudi Aramco regarding the perceived failure of the global energy transition. Contrary to this viewpoint, Mr Ayuk factually states that the demand for fossil fuels, including oil and gas, remains robust, especially when considering the unique energy landscape of Africa and other emerging markets. He highlights the oversight in the analysis provided by organisations like the International Energy Agency (IEA), which often overlooks the energy demands of regions like Africa while focusing primarily on developed economies.

Drawing attention to Africa’s demographic projections, Mr Ayuk emphasises the continent’s rapidly growing population, which is expected to reach between 2 to 2.3 billion people by 2050. This demographic trend underscores the enduring importance of oil and gas in meeting Africa’s energy needs for the foreseeable future. Mr Ayuk’s analysis challenges the notion that the global energy transition will render fossil fuels obsolete, particularly in regions experiencing significant population growth and industrialisation.

Furthermore, Mr NJ Ayuk’s insights offer a factual perspective on the future of fossil fuels in Africa and beyond. By recognising the unique energy dynamics of emerging markets and embracing strategic partnerships, Africa can navigate the evolving global energy landscape while harnessing the transformative power of oil and gas to drive sustainable development and prosperity for its people.

Global discussions around energy transition and climate increased beyond any point in the past, with gradual upstream investment cuts and simultaneous increased focus on renewables becoming the crux of looking at the future of energy industry as a whole.

Natural gas is expected to play a significant role in Africa’s power generation. Africa’s power mix currently is dominated by fossil fuels as energy sources with coal, natural gas and liquids (oil and condensates) accounting for three-quarters of the power generated in 2022 and almost 72% in 2023.

However, as need for decarbonization takes priority as energy transition regulations and climate policies get stricter, Africa’s renewables (solar PV, onshore wind and hydro) driven power mix’s share is estimated to increase from 25% in 2023 to 32% in 2025 to 47% in 2030 to 62% in 2040 and finally to about 75% by 2050. While fossil fuels role in the power mix is estimated to decline gradually, natural gas is expected to continue to stay in the mix.

The 2023 – 2024 oil + condensates output from Middle East and North America is expected at 26.76 million barrels per day (bpd) – 27.26 million bpd and 19.56 million bpd – 20.32 million bpd respectively. Africa 2023 – 2024 output is expected to stay relatively flat at about 6.77 million bpd. The YoY increase driven by Middle East and the Americans is offset by marginal decline in output from the rest of the world – Russia, Asia, Europe and Australia.

On Africa’s short-term supply, 2024 is expected to see gradual month-to-month decline. The continent will stay relatively flat at about 6.77 million bpd average over both the years 2023 and 2024. Africa’s monthly contribution to global output over the two years is also expected to stay flat at about 8% of the total volumes. However, month-on-month production outlook for Africa over 2024 is expected to be a gradual marginal decline from about 6.9 million bpd in January 2024 to about 6.62 million bpd in December 2024.

The OPEC member nations in Africa alongside Egypt, Chad and Ghana are expected to be the key drivers of the oil + condensates output from Africa over the two years. OPEC members – Nigeria, Libya, Algeria and Angola comprise of the top four producers in Africa for both the years with outputs of 1.45 million bpd, 1.29 million bpd, 1.19 million bpd and 1.1 million bpd respectively for the year 2023 and 1.51 million bpd, 1.31 million bpd, 1.18 million bpd and 1.01 million bpd respectively for the year 2024.

The European banks are more prone to financing green energy as opposed to fossil fuels.

With the energy transition era focussed on capping global warming levels, cutting down on fossil fuel consumption and decarbonizing the energy sector has led to financial institutes tightening their fossil fuel financing norms towards being “climate friendly”.

BNP Paribas, which is Europe’s largest oil and gas lender and one of the top banks globally in terms of providing capital to the international oil majors, announced it will no longer be financing for new upstream developments as it aims to reduce its upstream exploration and production (E&P) exposure by 80% by 2030 and seeks to align its credit portfolio with net zero climate targets.

Singapore’s Oversea-Chinese Banking Corporation (OCBC) also announced that it will not finance any upstream projects that obtained approval for development after 2021. The bank is reported to be targeting a 95% and 55% reduction in absolute emissions from the oil & gas and power sectors respectively by 2030 and 100% by 2040.

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