Investing in Africa’s oil, gas makes sense
Elison Karuhanga
What you need to know:
“Investing in the African energy space is good business and is consistent with our climate goals.”
This week, I have had the privilege of attending an event in Dubai hosted by the African Energy Chamber, together with S&P Global. The chamber is actively seeking support and investment for Africa’s energy projects in various capitals.
During the event, Egbert Faibille Jnr, the chief executive officer of the Petroleum Commission of Ghana, was asked why investors find it difficult to invest in Africa, and in particular, why the African energy space is experiencing a serious dip in investor confidence. In response, he paraphrased Chinua Achebe’s great line: “Until the lion learns how to write, every story will glorify the hunter.”
This quote resonates with us in Uganda, where until very recently, the story of Uganda’s oil industry has been told by Western CSOs and environmental activists.
Unfortunately, much of what they have written could qualify for the Nobel Prize - if there was a category for fiction. Indeed, this fiction has been published and distributed on an industrial scale all over the world.
The misrepresentation of the African energy industry is not limited to Uganda. There has even been an argument that the African energy industry is more carbon-intensive than the oil industry elsewhere. The pressure to disinvest from the African oil and gas space has been more intense than the pressure to disinvest from apartheid-era South Africa.
We recognise the need for the energy transition and are not climate change sceptics. Climate justice means that the world must transition to cleaner energy while ensuring that the poorest people in the world are not the ones paying the price. Utilising Africa’s gas resources would increase its contribution to greenhouse gases by just 0.5 percent. This does not take into account the fact that deforestation, a large contributor to African emissions, will greatly reduce.
The International Energy Agency CEO, Fatih Birol, put it more starkly. He said, “If we make a list of the top 500 things we need to do to be in line with our climate targets, what Africa does with its gas does not make that list.”
However, poverty must not be used as a means of environmental conservation. First of all, it is an unjust method of conserving the environment. Secondly, it is an ineffective method of conserving the environment. Poor people will be forced to cut trees for fuel. Conservation of poverty will not save the environment. That is why in this column, we have made a clear distinction between environmental conservationists and poverty conservationists. Some of these anti-African groups are simply poverty conservationists masquerading as environmentalists.
It is important to note that we must undertake carbon intensive and environmentally sensitive projects responsibly. In Uganda, and indeed in much of Africa, we are working on developing our oil and gas assets sustainably. The Ugandan oil fields will be some of the lowest emitting oil fields on earth, emitting 13kg of carbon for every barrel of oil against a global average of over 33kg of carbon.
The use of technology, including cableless seismic cars, silent rigs, and fibre optic cables in the pipeline, makes many of our projects new generation energy projects. Does that mean they are less economic?
The answer is no. It will still be cheaper to find oil in Uganda where some wells are as shallow as a few hundred metres compared to drilling in the North Sea or along the United States Continental shelf where you have to drill thousands of metres into the deep blue sea.
My message at the African Energy Chamber and S&P event was clear; we provide good value in a sustainable manner. Investing in the African energy space is good business and is consistent with our climate goals.
Africa’s energy industry has been misrepresented, and it is time to change the narrative. Investing in Africa’s oil and gas makes sense both financially and environmentally. We must transition to cleaner energy while ensuring that the poorest people in the world are not the ones paying the price.
The writer is an advocate and partner at Kampala Associated Advocates
