Is Energy Transition drive an Opportunity or Threat
The global “energy transition” that has gained both political and economic momentum is in itself both an opportunity and a threat. Opportunity in the sense that it is targeted at advancing comprehensive green energy projects to reduce global carbon emissions and achieve resilient economies. The threat dimension is directing a substantial amount of global capital at green projects away from fossil fuels, which remains a vital revenue source for most countries in Africa.
Oil majors are diversifying into less-carbon emission projects like renewables energy and natural gas because that is where the cash is drifting, as banks and other financial institutions grow reluctant about continuing to provide funding to oil and gas companies, in a bid to curb their exposure to the hydrocarbon sector. As a result, oil companies such as Royal Dutch Shell, BP, and France’ Total Petroleum, are moving in sync with political and economic blocks, banks and other financial institutions, a recipe for oil-heavy development being stranded.
How would the Energy Transition affect Africa Nations?
In its recent publication, Global data, a leading data and analytic company, forecast that Africa oil-producing countries, particularly Nigeria and Angola, would see declining crude oil and condensate production from 2021. According to the report, sub-Sahara Africa has so much oil production potential; however, it has a relatively small number of oil projects coming online within the next 5 years. In addition, the report notes that oil companies have been more cautious than ever over their investments, the reason for which some of the huge discoveries made over the past decade have seen significant delays with no final investment decision (FID) in sight.
What should be the Ghanaian response?
The best approach is to look within. The threat posed by the energy transition to Africa nations, including Ghana, demand an appropriate policy response, which must be internal in nature. The Ghana National Petroleum Corporation must position itself technically and financially to exploit the country’s hydrocarbons with limited support from international oil companies (IOCs).
The recent exit of ExxonMobil from Ghana to concentrate on advantaged assets in other places; makes a strong case for the GNPC to take over and produce the country’s oil to support its economic growth. Therefore, the proposed partnership between Ghana National Petroleum Corporation (GNPC) and Aker Energy for a farm-in to two oil blocks operated by Aker Energy Ghana Limited can best be described as a strategic defence.
The move is to ensure that the GNPC builds that technical and financial capacity to take over potential stranded oil blocks and stop the declining oil production we are seeing. The partnership structure must, however, ensure that GNPC plays an active role in the proposed “joint operatorship”, so the needed skills, knowledge and technology transfer into Ghanaian hands can be achieved in no time.