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The number of cases and deaths tell us that Africa has been significantly less impacted by COVID-19 than other parts of the world. But the impact on the energy sector is felt as keenly here as anywhere else.

Plummeting global demand for oil makes African oil exporters particularly vulnerable
and sub-Saharan Africa is likely to enter recession for the first time in a quarter-century. What do we see next for our industry?

Impact on the energy transition

Among the casualties of COVID-19 could be Senegal’s offshore Sangomar project, which had reached final investment decision in January but is now under review. New oil and gas developments from the Gulf of Guinea to the Rovuma Delta are at risk, and many will be shelved.

Oil will continue to be the lifeblood of the global economy – but the current crisis is nevertheless redrawing the rules for the energy transition.

Yury Sentyurin, Secretary-General of the Gas Exporting Countries Forum, told Africa Oil & Power that the organization sees low energy and gas prices as a good opportunity to help realize national goals on the energy transition. Excess supply could allow governments to cut subsidies for highly polluting fuels and to increase the share of natural gas in the energy mix.

“Particularly in regions with severe energy poverty, such as sub-Saharan Africa, with hundreds of millions of the population without access to electricity, the affordability of energy is critical,” he said.

He warned, however, that the pandemic could arrest the development of energy infrastructure and, in cases where policymakers do not seize the moment, slow down the energy transition and hamper the economic recovery.

Investment in energy and people

Africa will have a quarter of the world’s population by 2050 and the population today has a median age of 19. With around one million Africans entering the job market every month, education and job creation are the keys to stability and growth.

The energy industry, in all its forms, provides that engine for growth – through employment, through stimulating private sector growth and in particular, through increased power provision. The COVID-19 pandemic cannot stand in the way of these priorities.

NJ Ayuk, Chairman of the African Energy Chamber, told us in an interview: “Power is
the key component. Once you have that, you create jobs. You expand the tax base of the country and that is what is really key … diversifying the tax base and creating jobs at the same time.”

The hardest hit governments are still able to mitigate the impacts of the coronavirus and support energy growth.

Angola’s structural reforms since 2017 stand the national industry in much better stead to adapt and compete, and the re-appointment of Minister of Mineral Resources, Petroleum and Gas, H.E. Diamantino Azevedo earlier this month brings welcome stability.

Senegal has attracted attention for its two mega offshore oil and gas projects Grande Tortue Ahmeyim and Sangomar, but on a broader level its policies to promote energy independence and bring power to rural areas since 2012 created a solid foundation. An investor friendly environment and commitment to renewables has resulted in projects that are commissioned fast and stimulate employment and business while meeting national goals.

In Equatorial Guinea, the Ministry of Mines and Hydrocarbons had already placed a focus on job creation through its Year of Investment 2020 campaign, which it pledges to continue. “The 2020 Year of Investment is focused on building refineries and processing capacity, which are the projects that create jobs,” said Minister Gabriel Mbaga Obiang Lima in a webinar on Thursday.

Finance Minister Cesar A. Mba Abogo said: “The pandemic is giving us the opportunity to rethink what we are doing … about diversifying the economy. Everything we do does not make sense if the people are not at the center of it.”

Long-term view

Seismic changes are ahead for the oil and gas, power, travel, events and communications industries. In areas where we can help, Africa Oil & Power will use its platform and network to assist governments and companies.

Africa has more of a voice, and more of its leaders have a seat at the table than ever before – as shown by the OPEC+ alliance and the recent production cuts. Africa Oil & Power is committed to using its platform to share these views.

Most of all, we try to take a long-term view on the impacts of COVID-19 on the industry, and on the potential and impact of the energy industry for African nations.

The initiatives we are taking now include:

  • The Afrika Umoja project, where together with our exhibition partners we are turning events expertise towards building temporary hospitals,shelters and medical facilities. The structures can be used for schools and shelters in the long term.
  • Free communications distribution services for any participant in the African energy industry.
  • Dedicated content, newsletters and an upcoming series of webinars to keep
    you informed.

New partnerships are critical for us and for the industry, and will promote job-creating, diverse, energy-based growth.

Africa Oil & Power signed partnerships with the South Africa China Economy and Trade Association and with the South African Chamber of Commerce and Industry in April, widening our network to 160 Chinese companies and to over 20,000 South African enterprises.

We are also proud to continue our work with the government of Angola, with new dates of 14 15 October 2020 just confirmed for the Angola Oil & Gas conference; with the Department of Mineral Resources and Energy of South Africa and the South African Oil & Gas Alliance, with which we have long term partnerships; and with South Sudan, where we will hold the fourth annual South Sudan Oil & Power event on 29-30 October 2020.

Pressure grows

The rupture of the pandemic makes development and adaptation of sound energy
policy more critical than ever before.

GECF Secretary-General Sentyurin added in his interview that “the lack of investments and technologies are the main stumbling blocks in the way of unlocking the natural gas potential of the African nations.”

The same can be said for all aspects of the energy industry. As the pressure for more jobs and demand for power grows, and with governments no longer able to pay lip service to economic diversification and climate change mitigation, the COVID-19 crisis forces us to view the challenges of the industry through a new lens. Attracting investors has been, and remains, key.

The coronavirus has wreaked havoc on international markets and the global oil and gas industry – but potentially more affordable electricity, more competitive energy policies and better diversified economies could be the long-term bright spots to emerge in Africa.

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Sihle Qekeleshe is a Web Editor at Energy Capital & Power. She has experience as a Copywriter and Editor in various industries.