Page 4 - AfrOil Week 46 2019

AfrOil COMMENTARY AfrOil
Panel discussion at Africa Oil Week conference in Cape Town (Photo: AfricaNews.com)
African officials highlight
continuing importance of oil and gas
Despite climate concerns, fossil fuels are still viewed as an important driver of growth, development
WHAT:
Africa’s track record of dependence on resource extraction is running up against concerns about climate change.
WHY:
African officials continue to see oil and gas as
an important driver of development.
WHAT NEXT:
African enthusiasm for oil and gas will continue to outweigh interest in renewable energy for the time being.
AFRICA has a long track record of focusing on resource extraction – sometimes unwillingly, as may have been the case during the colonial era, and sometimes enthusiastically.
In any event, this pattern has certainly per- sisted in the oil and gas sector. Many of the Afri- can states that produce crude oil and natural gas are heavily dependent on the revenues generated by the sale of those commodities. For example, in Nigeria, the continent’s largest oil producer, the proceeds of crude sales account for virtually all of state budget revenues. In Angola, Africa’s second largest source of oil, the figure is closer to 80%.
These two countries, along with other oil and gas producers, have indicated repeatedly that they would like to diversify their economies in order to reduce their reliance on extractive industries that can cause environmental degra- dation and that are dependent on the vagaries of world commodity markets. So far, though, they have not found a way to ensure the success of economic diversification campaigns.
As a result, oil- and gas-producing states in Africa still rely on the revenue streams generated by resource extraction. In turn, resource-ex- tracting companies – both international oil companies (IOCs) investing in Africa and national oil companies (NOCs) overseeing the exploitation of the resources in question – have continued to turn to world financial markets and state-sponsored lenders in order to secure the credit they need to sustain operations.
Recently, though, greater awareness of cli- mate-related issues has led some lenders to back away from fossil fuels and promote renewable energy instead. The European Investment Bank (EIB), for example, recently announced plans to stop providing credits and other forms of sup- port for fossil fuel projects. Likewise, Norway’s sovereign wealth fund indicated earlier this year that it intended to unload some of its holdings in fossil fuel-extracting companies.
This shift has been interpreted in some quar-
ters as a harbinger of the impending collapse of
oil and gas extraction 
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w w w . N E W S B A S E . c o m Week 46 20•November•2019