Differing approaches by American- and European-based oil and gas majors could have a variety of important flow-on effects for African nations in the coming years, say energy experts Ian Herbert and Norman Wisely of CMS, following the release of the firm’s report, Energy Transition: The evolving role of oil and gas companies in a net-zero future.
“A standout finding of our new report was the extent to which the larger European-based oil and gas companies like BP, Shell, TotalEnergies and Equinor have aggressively pushed a transition agenda, moving into renewable power in a significant way and investing many billions of euros in the space,” highlighted Herbert, a London-based partner in the CMS oil and gas team.
“Public opinion and legislation in Europe also contrasts starkly with that of the United States, where climate change policy hasn’t moved as quickly, and the big US players like ExxonMobil, Chevron and ConocoPhillips focus more on lower-carbon solutions for fossil fuel customers rather than moving as quickly in the direction of renewables as their European counterparts.”
While the CMS report focused on Europe, North America and Asia, Herbert and Wisely say the flow-on effects of the key trends uncovered are likely to have a number of impacts in and across Africa, which so far accounts for less than 1% of global investment in renewables, and where around 40% of people lack access to electricity.
“A lot of the clients we’ve examined will be interested, and continue to be interested, in renewables projects worldwide, including in Africa,” said Wisely, a UK based partner in CMS’s oil and gas team. “However, oil and gas are going to continue to be commodities that are worth something on global markets for years to come, and we do see investment into oil and gas projects in Africa increasing in future years.”
Given the continent’s numerous natural resources including extensive sunshine hours, land space for wind or solar, wave power projects that are beginning to gain momentum in some African nations, and major discoveries of fossil fuel deposits (like offshore Namibia), there are huge future prospects for both renewables and oil and gas across Africa, say Herbert and Wisely.
“In the short to medium term, it may actually be that there’s more investment in oil and gas in Africa, as Europeans and North Americans look to sort of do this away from their own doorstep,” explained Herbert. “While there can be challenges around political or monetary stability, as we’ve seen elsewhere, there are some pretty big fossil fuel prospects in Africa.”
They both believe it would be beneficial for more African governments to come out with policies relating to net zero, following the likes of Nigeria, Ethiopia and South Africa.
“There’s quite a lot I think any country can do to attract investors in terms of legislation,” commented Wisely, “to encourage renewable investments, but also to ensure that any oil and gas investments are made as clean as possible in order to support that ambition to net zero.”
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