When ENERGY Magazine reached out to interview NJ Ayuk, Executive Chairman of the African Energy Chamber, a power brownout delayed the international Zoom call. It was an unintentional but powerful statement of the need for increased investment and development of Africa’s huge energy resources.
According to a November 2019 International Energy Agency special report, Africa’s burgeoning population is set to exceed China in oil demand within the next 20 years and will be the world’s third-largest source of natural gas demand growth. Currently, however, about 70 per cent of Africans are off the grid. Addressing that energy poverty is one of the chamber’s main goals.
“When you have 850 million people with no access to electricity or any type of power, you have a big market. So natural gas is really going to change, not just Africa’s exports for foreign exchange, but also within Africa,” says Ayuk, from Johannesburg, South Africa.
The CEO of one of Africa’s largest oil and gas law firms (Centurion Law Group), Ayuk has seen the chamber grow exponentially since launching in 2017. Approximately 70 per cent of oil and gas developers joined the chamber within the first year, with the renewable sector coming on board and public utilities signing up for technical assistance.
Ayuk attributes the chamber’s appeal to its focus on good governance, common sense solutions and a pledge to do away with mismanagement and corruption within the energy sector. The association is very pro-Africa, and in particular, empowering youth and women – traditionally shut out of the industry.
Africa has long been known as a continent rich in natural resources, producing almost 10 per cent of global oil output in 2019 and claiming nearly 500 trillion cubic feet (Tcf) of proven gas reserves. Mozambique, Tanzania, Senegal and Mauritania have joined Nigeria as sites of huge natural gas discoveries, holding the potential to drive economic and social advances for 1.2-billion people on the continent.
Already, sub-Saharan Africa provided 10 per cent of the global production of LNG, equivalent to 28 million tonnes per year. The production capacity is expected to soar by 150 per cent within 25 years, to 84 MT per year, or 15 to 20 per cent of the world market, according to the African Energy Chamber’s 2020 African Energy Outlook.
The ability to condense and transport the cleaner-burning fuel across existing transportation corridors is a major determinant in the continent’s search for energy equity. While offshore energy developments have garnered billions of dollars in investment, the dearth of pipelines and challenges associated with creating new networks gives liquified natural gas (LNG) an advantage.
“It creates that opportunity for those old investors and entrepreneurs to work on small-scale LNG and small-scale gas plants, and that is where natural gas really fits within our future,” Ayuk said. In addition to the large domestic market, demand from China, India and North America offers huge opportunities for the African natural gas sector. According to the IEA’s Africa Energy Outlook 2019, the continent will emerge as a major supplier of LNG to global market within the next 30 years.
However, without the right investment, African energy resources will remain underdeveloped and uncompetitive. One of the main barriers towards attracting investment is the lack of information, Ayuk noted. Although some of the first floating LNG units in the world are in Africa, discoveries in countries like Senegal and Tanzania have been dismissed because they aren’t as well-known as Nigeria or Angola. Yet, in 2020, the chamber has seen final investment decisions on Mozambique natural gas projects of almost $50 billion dollars.
“In the era of climate change and energy transition, Africa continues to be the most untapped and underexplored continent when it comes to natural gas”, Ayuk said. In the recent past, when oil majors hit gas, they would stop drilling and did not develop the resource, and they continue to flare off associated natural gas when tapping into oil reserves.
“We have so much on tap in terms of natural resources, but you need investment to develop it, to drive development,” he said. “And we don’t just want to talk about what we have. You can have the most beautiful produce, but just displaying it does nothing,” Ayuk continued. “So, we need not only investment of funds, but of expertise. People who understand what it means to walk tough terrains, who have the skills we don’t have. People such as Canadian oil and gas producers, who have decades of expertise extracting energy in challenging environments,” he said.
Almost a decade ago, Ayuk spent time in Canada and brought back a renewed sense of the importance of consensus to bring people together. For a continent with 54 countries and associated languages and cultures, finding a common purpose – promoting energy sufficiency to drive economic and social change – is what will unite the diverse voices.
“When you have a common purpose that empowers – and what we do mostly is create a platform where people can speak up – and can look at it without a lot of stuff muddying the waters, things like women in power isn’t something we need to talk more about, it’s something we do.”
Policy security and political certainty
Security and political stability are key factors to promoting development of Africa’s energy resources, and something the chamber sees as a prime goal, not only to attract investors but to change the way things work on the continent.
“We have to move away from the mindset of entitlement and do more, to a certain extent, to move away from aid. We don’t want aid, we want investment,” Ayuk said. “We have to move away from the things that have affected us in the past – mismanagement, corruption, lack of transparency. All those issues must be dealt with if we want to make Africa competitive for tomorrow.”
One of the chamber’s biggest initiatives is to empower people traditionally discounted from participating in Africa’s energy industries – young Africans and women, in particular.
“I think for our generation of Africans, if we cannot really prepare our governments, our communities to be an enabling environment to attract investment, we are making a mistake. So, we set the bar high; first for us to prepare for investors to come in. Second, to be able to talk to investors from all countries that have good intentions to invest because we believe it is good for stability in investing in African energy sector.”
Dina O’Meara has been covering Canadian energy issues for almost 20 years.