This session on the OTC Around the world Series- Africa Energy Forum will address the resilience and sustainability policies of energy companies operating on the Continent in the wake of the ongoing transition. The forum will also discuss elaboratively the investment, regulatory and business environment for energy business in Africa.

Acceleration to transition from fossil fuels is creating a new era for Africa’s oil and gas sector. At this rate, major oil and gas producers are being challenged to produce fossil fuels that will be done sustainably and deliver higher returns for investors. Assets on the continent average 20% more in development cost and widely believed to be 80% more carbon intensive than other oil and gas assets globally. This trend creates several considerations for African oil and gas producing countries that are highly dependent on global capital pools to fund their hydrocarbon projects and maintain their oil and gas operations.

Some producing countries on the continent are moving to improve the cost competitiveness of their resource bases. Some national governments have optimized their fiscal regimes to improve their resources position on the resource supply curve. For example, Nigeria’s Petroleum Industry Act, which among other provisions introduced a fiscal framework designed to improve the cost competitiveness of the basin. Producing countries are also considering initiatives to reduce operating costs, by addressing regional insecurity, improve the cost environment, including ensuring that local content regulations strike an appropriate balance between building local-industry capacity and reducing costs. Some experts also believe oil and gas producing countries on the continent are implementing measures to improve the ease of doing business, including streamlining the permitting processes and strengthening contract enforcement, which could also help to reduce operating costs.

For refined petroleum products, McKinsey analysis suggests that African demand will grow from 4.1 million barrels per day to approximately 5.3 million barrels per day by 2040, half of which will need to be imported based on existing and planned refining capacity. To help secure energy resilience into the future, African oil and gas producing countries must also consider investing in renewable-energy projects.