Welcome to our Addleshaw Goddard Africa Newsletter summer edition covering the months of July and August.

Visit our dedicated Africa site for more information about doing business in Africa and how Addleshaw Goddard can support you.

Introduction

In this newsletter edition we discuss the impact of the energy transition on countries in Africa. 

We hope you like our article on the topic where we make the point that the energy transition may not be as straightforward in Africa as in industrialised countries. 

Almost 20% of the world's population lives in Africa but Africa is only responsible for about 3% of the historic man-made emissions. Stopping investments in the upstream Oil and Gas sector in Africa effectively disallows countries in Africa to monetise their natural resources while other countries that historically contributed to climate change are still producing oil and gas and are generating wealth from these assets. 

We hope you enjoy the articles we collated for this newsletter and the webinar we organised in July on this topic that can be accessed through this edition of the newsletter. 

Guest Editorials 

The Energy Transition is coming - And Africa is losing out (again)

Alex Sarac, Partner, and David McEwing, Partner at Addleshaw Goddard

Only two years ago, Africa seemed set to become the world's next major producer of oil and gas. International companies were scrambling to win exploration rights in frontier markets in West Africa; countries in North Africa were excited about new discoveries in the Mediterranean Sea; and natural gas was identified as a long-term transitional energy source, creating new opportunities for low-income nations such as Tanzania and Mozambique.

To read this article, click here

The Global Energy Transition Series: The Future of Energy in Africa

The global energy transition represents a pathway toward overwhelming change n the production and consumption of energy. Gargantuan in its efforts, a myriad of information technology, smart technology, policy frameworks and market instruments all have their part to play. In this webinar, our panel of experts give their views on the short, mid, and long term consequences of the Energy Transition across Africa.

To view this webinar, click here

Eskom in talks with lenders, foreign governments to fund clean energy projects

Eskom is in discussions with various lenders and foreign governments to "confirm their interest and appetite" for cleaner energy projects.

The power utility responded to questions from Fin24 following a report by Bloomberg that it was seeking to raise R33.1 billion from five Development Finance Institutions (DFI). The funding would be used to help repurpose coal-fired power plants to become sites for renewable energy, Bloomberg reported.

Eskom told Fin24 its funding plan incorporates finance from both DFIs and multilateral banks. It said its funding plans would also cover social elements of these clean energy projects, as part of its Just Energy Transition (JET) strategy.

To read this article click here

Africa Needs to Spend $15.7 Billion on Refineries to Curb Emissions

African nations need to spend about $15.7 billion on their refineries to curb emissions and meet climate-change targets as demand for oil and gas surges, according to an industry lobby group.

Governments on the continent should focus on reducing sulfur levels in petroleum products because Africa’s consumption of fossil fuels will rise quickly in the coming decades even as the supply of clean energy expands, said Anibor Kragha, executive secretary of the African Refiners and Distributors Association, or ARDA. The pan-African body, based in Ivory Coast’s commercial capital of Abidjan, promotes the interests of the downstream oil industry.

To read this article click here

NNPC lists relinquishment cost, legacy liabilities for oil majors’ divestment

As Shell Petroleum Development Company (SPDC) and other oil majors begin divestment of their investments in Nigeria following a growing appetite for cleaner and more environmentally-friendly energy, the Nigerian National Petroleum Corporation (NNPC) on Monday listed various issues that have to be exhaustively addressed before their exit to avoid fracturing the Nigerian economy in hurried exodus.

To read this article click here

Africa must prioritise cleaner fuels in net zero emissions targets

With its growing petroleum products demands and huge population growth over the next two decades, Africa must first focus on cleaner transport and cooking fuels to reduce air pollution and avert public health issues before embarking on global Net Zero Emissions (NZE) energy transition plans, according to the African Refiners and Distributors Association (ARDA).

To read this article click here

Why African oil producers need to shift their strategy in post-fossil fuels era

Energy and climate policies made in the halls of Brussels or Washington have a profound impact elsewhere. This is particularly applicable to Africa.

The continent’s oil and gas producers are facing a tough future and they need help from both the outside world and within their own countries to continue.

Nigeria and Angola dominate Sub-Saharan petroleum output. A string of moderate-sized producers are mostly seeing declining production, such as the Republic of Congo, Cameroon, South Sudan, Ghana, Gabon, Equatorial Guinea and others.

To read this article click here

African Refiners and Distributors Association Executive Secretary Drives Downstream Energy Transition Dialogue at African Energy Week 2021

The African Energy Chamber (AEC) (www.EnergyChamber.org) is excited to announce that Mr. Anibor Kragha, Executive Secretary of the African Refiners and Distributors Association (ARDA) will attend and participate at Africa’s premier energy event, African Energy Week (AEW) 2021. Representing the only pan-African organization for Africa’s downstream oil sector, Mr. Kragha is expected to drive the discussion around the need for a unique African energy transition plan, emphasizing the role that clean fuels and targeted financing play in both Africa’s downstream oil sector and overall energy future.

To read this article click here

Banning fossil fuels in sub-Saharan Africa could slow the transition to renewable energy

Worldwide, the ugly consequences of a warming planet are rearing their heads. Many countries are increasing efforts to decarbonise their energy systems in a bid to limit global warming to 1.5°C above pre-industrial levels. But the path to decarbonisation is complex, requiring a unique approach from each country.

Take sub-Saharan Africa’s energy systems, which are currently patchy and often unreliable. Many countries’ reliance on fossil fuels has led policymakers to suggest that fossil fuel systems should either be banned or indirectly discouraged through imposing a carbon tax. But, given that greener forms of energy exist in tandem with fossil fuel systems across the continent, this approach might harm rather than help efforts to fight climate change.

To read this article click here

African Energy Chamber calls for boycott of firms shunning Africa's oil sector

The African Energy Chamber has called for the region's countries to boycott companies shunning the continent's fossil fuels sector as part of net-zero ambitions, highlighting the growing concern of energy-hungry African nations over the shift to clean energy by most Western producers.

African oil and gas investment has fallen sharply in the past few years, exacerbated by the COVID-19 pandemic and the energy transition away from oil and gas. The outlook for this sector in Africa is looking bleak, as many of the big international energy companies are starting to reduce their upstream footprints and funding sources for smaller oil and gas players dries up.

To read this article click here

Access to Modern Fuel to Cost Africa $7.5bn, Say Refiners

The African Refiners and Distributors Association (ARDA) has said it will cost the continent about $7.5 billion to exit the use of outdated fuel sources like firewood and charcoal and embrace modern, cleaner energy.

ARDA, which made the disclosure at a recent virtual sustainable financing workshop, noted that there was need to harmonise fuel specifications as well as Environment, Social, Governance (ESG) considerations to reduce the looming public health and environmental impacts on Africa’s citizens.

To read this article click here

Angola's oil and gas industry continues to provide huge opportunities for investors, despite energy transition (by Verner Ayukegba, Senior Vice President at the African Energy Chamber)

Over the past three decades, Angola has proven to be a tier one destination for major oil and gas producers. It is for that reason, that the country is host to all major International Oil Companies. As the world continues to debate what energy transition means and what the implications would be, Angola, like many other major oil producers will have to reaccess their oil and gas industry and ist potential to continue being a leading destination for energy investments. Offshore exploration, especially during the boom years of 2002 to 2008, led to oil production in Angola reaching close to 2 million barrels per day, providing Angola with much-needed resources for its post-conflict reconstruction.

To read this article click here

Key Contacts

Chris Taylor

Chris Taylor

Head of UK M&A and Africa
London, UK

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Nick Ashcroft

Nick Ashcroft

Partner, Dispute Resolution
United Kingdom

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Alexander Sarac

Alexander Sarac

Partner, Infrastructure Projects & Energy
UAE

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