Europe is trying to replace Russian natural gas which funds Moscow’s war efforts. Fossil fuel companies use this moment to push for gas projects around the globe. A majority of industry lobbying is focused on sub-Saharan Africa, which includes almost a dozen countries.
New blueprint by the European Union to get the bloc off Russian gas emphasizes sub-Saharan Africa’s “untapped LNG Potential”. This refers to liquified gas that is imported by ship. The Italian foreign minister visited Angola in spring to sign new LNG agreements, while the German Chancellor visited Senegal last month for gas talks.
American and European energy officials have flown in private jets to Africa to convince governments to speed up projects that they believe would meet Europe’s urgent demand for gas.
ENI from Italy is one of these energy companies. It is currently fast-tracking plans to develop LNG in Congo and has signed new gas agreements there and in Angola following the invasion of Ukraine.
Guido Brusco is ENI’s chief operating officers natural resources. “We have ofcourse accelerated deals there in this month,” he said. “Clearly, the crisis gave priority lane.”
However, there is growing doubt about whether many of these emerging multibillion-dollar LNG investments are a good idea for African countries, according to Silas Olan’g, Africa codirector of Natural Resources Governance Institute, a group that focuses on extractive industries.
Some projects will be online within the next few years. Others will take more than a decade to complete, according to Roderick Bruce (associate director at S&P Global Commodity Insights). They are being promoted at a moment when most fossil fuel resources must be kept in the ground and unused so that the world can reduce greenhouse gas emissions and avoid the worst effects of climate change. Sub-Saharan Africa has a high vulnerability to extreme weather.
Olan’g claims that the oil industry is making huge profits now because of the Ukraine war. He is concerned that many fossil fuel companies could be offering African governments hope for future demand, given the urgent need to address climate change and the growth of renewable energy.
Olan’g states, “It’s hard to predict how long this chance will be there, especially in context of the energy transformation, the world moving away fossil fuels.”
Many countries have switched to natural gas to produce electricity. It emits less carbon dioxide and is a “bridge fuel” that can be used to eventually switch to renewables. Gas is mainly methane, which is a powerful planet-warming pollutant and large amounts of research show that it is also driving climate change.
The United Nations Intergovernmental Panel on Climate Change has stated in its most recent report that the goal to limit global warming to 1.5 degrees Celsius is not possible by extracting new fossil fuels, including gas. Numerous countries, including the US agreed to stop funding international fossil fuel projects with public money at the United Nations Climate Summit in November.
Olatunde Okeowo is a senior associate at RMI energy consultancy. However, for some African countries, the extraction of their vast gas reserves is part “just transition”. This means that hydrocarbon revenues can be used to fuel economic development, and eventually switch to renewable energy.
Okeowo states, “Currently, America is one of the largest global gas producers.” Or should it be another nation that hasn’t had as significant an impact on climate change?
Mike Anderson, senior vice-president at Dallas-based Kosmos Energy has been discussing the “just transition” a lot with African leaders. Anderson recently visited Senegal, Mauritania and the United States to meet with their presidents to discuss offshore LNG projects that could be used to supply Europe as soon as next year and continue to produce through the 2040s.
“If I were an African president, you’re not allowed use your hydrocarbon resources any way.” We have! Anderson said that the North has made a lot of money.
However, relying on new LNG development to make a profit can be dangerous, warns Daniel Kammen, senior energy advisor at the U.S. Agency for International Development. Mozambique and Tanzania are unlikely to have onshore gas projects before the 2020s. Yet, Mozambique has taken out significant debt in anticipation for future gas profits.
Although natural gas prices are currently high, this could change once these projects mature, according to Laura Page, senior LNG analyst at Kpler (a data analytics company). She believes renewables are becoming more affordable and reliable. Additionally, countries are looking at hydrogen and considering nuclear. Page states that it is unclear how the future trajectory of gas demand will play out over the next 20-30 years.
Kammen states that if gas prices drop, the new African LNG producers might not be able compete with established producers like Qatar and the US, which have lower production costs. He says, “If the demand is for gas falls the way it should be aEUR”, if our climate goals are anything aEUR,” it will be more difficult for them to recover their investment. They’ll be squeezed out of the gas reserves in the last days.
Climate change is already devastating AfricaaEUR”including countries that are seeking to develop gas fields. More than 20 million people are currently suffering from extreme hunger in the Horn of Africa, which is experiencing its worst drought in 40 years. Scientists say climate change has contributed to the massive floods in South Africa that claimed hundreds of lives this spring.
Mozambique is one the most vulnerable countries to climate change. It experiences more severe droughts, flooding and storms. In 2019, two cyclones hit Mozambique in quick succession, killing hundreds. Two more severe storms killed hundreds more people this year. The World Weather Attribution Initiative, an international network of climate scientists, discovered that global warming caused the deluge to be more severe for Tropical Storm Ana.
Mozambique is the continent’s third-largest holder of proven natural gas reserves. A massive gas discovery was made by a US oil company off the coast from Cabo Delgado, Northern Mozambique in 2010. International energy companies began to flood in, launching a race to discover new resources. TotalEnergies announced that it would construct a $20 billion LNG project in order to export Mozambican gas by 2024. ENI, ExxonMobil and China’s CNCP announced another $30 billion LNG export program.
Since 2017, Cabo Delgado has seen a violent insurgency. According to Save the Children, at least 4,000 people have been killed by local militants linked to the Islamic State. According to the International Organization for Migration, more than 780,000 people were displaced.
Mozambique, like many other gas-rich sub-Saharan African countries, has been talking a lot about “local contents” legislation. Tony Paul, an energy consultant who worked recently for the Mozambique Ministry of Mineral Resources and Energy, said that the idea that international energy companies should give contracts to local businesses and train local workers is called “local content” legislation.
NPR hears from ENI that they have trained nearly 1,000 Mozambicans. About a third are from the northern part of the country. ExxonMobil informs NPR they have created a web portal for their gas project, where thousands can access relevant supplier opportunities and submit accordingly. As of last month, ExxonMobil had awarded 19 contracts to local businesses.
Cabo Delgado residents claim they haven’t been able to find the long-term work and training they expected. FA!tima Mimbire is a Mozambican extractive industry researcher and program manager at N’weti. “The [nonlocals] are taking advantage of all the opportunities, while we are only reaping the consequences.”
She claims that insurgents have used local dissatisfaction about gas discoveries to recruit people. She says that insurgents saw potential all around the province and found a fertile spot.
Insurgents attacked the town of Palma, Cabo Delgado last March. Several people were killed and many fled the scene. TotalEnergies (the lead operator of the $20Billion project) stopped operations declaring that “force majeure” or events beyond their control had occurred.
ENI and ExxonMobil have decided to move forward with an offshore floating LNG ship despite the insurgency. ENI claims that the conflict at shore will not affect the timelines for the new gas.
Brusco states that the first cargo will be available sometime in Q3 (third quarter 2022).
Friends of the Earth, an environmental group, filed a lawsuit against the United Kingdom’s High Court to stop the U.K. from funding TotalEnergies’ $20 Billion Mozambique project. According to the CEO of the company, it plans to resume construction in 2011.
According to the suit, the U.K. government incorrectly deemed the Mozambique LNG Project compatible with the 2015 Paris Climate Agreement. Friends of the Earth appealed the decision and one of the judges agreed with them.
Olan’g states that there is increasing concern about new African LNG plants becoming stranded assets as more financial challenges are faced by fossil fuel projects. Known as stranded assets, these are oil and gas infrastructures that could become worthless as the world moves away from fossil fuels.
Anderson from Kosmos Energy explains that his company launches its projects in phases to deliver gas faster. He says, “[If] it is known that you are supplying a market need for 5, 10, or 15 years, then they won’t be stranded assets.”
ENI invests in projects that will continue to produce well into the 2040s. Brusco states that while we recognize the challenges, we are confident we can overcome them and not have stranded assets.
Olan’g said that if projects are stranded, oil companies from around the world could be held responsible for convincing African countries that this new gas can be a long-term safe investment. “I believe the government may regret investing large amounts of public money in developing these resources that might end up being lost.”
