With over 125 billion barrels of crude oil reserves and 620 trillion cubic feet of natural gas – estimates that are expected to further increase as multi-year exploration campaigns yield new discoveries – Africa is well-positioned to usher in long-term and sustainable economic growth on the back of hydrocarbon development.
For the continent’s wider economy, large-scale oil and gas projects promise new opportunities for export revenues and tangible economic gains for society.
Unlocking Socioeconomic Opportunities
Africa’s natural resource wealth lays the foundation for a number of socioeconomic advancements, if the right investment can be secured. Specifically, the development of sizable oil and gas discoveries opens up pathways for job creation and skills development, which remain a high priority for local governments. With unemployment representing a critical challenge in Africa – the continent’s most industrialized nation, South Africa, for example, saw unemployment rates exceed 20% for the first time in decades in 2022 – the oil and gas industry has a key role to play.
What’s more, by leveraging the oil and gas industry, Africa can kickstart long-awaited industrialization, revenue generation and broader GDP growth. While the continent has been gradually industrializing over decades, the pace of progress has been slow. Now, with attention turning to resource maximization, the African continent has a chance to redirect revenues generated from oil and gas exports into trade, manufacturing and industry –leveraging digitalization, technological advancements and enhanced financing to develop diversified industries continent-wide.
Meanwhile, as new projects come online, bilateral trade and development can improve, with African nations set to benefit from heightened GDP. Namibia, for example, is set to double its GDP with the development of its two hydrocarbon finds discovered in 2022; Mozambique’s GDP is expected to increase by 6.5% due to investments in gas; and Senegal hopes to sustain 8% GDP growth over the next decade from its upcoming oil and gas projects. Thus, the development of a positive growth economy in Africa is on track.
Kick-starting Multi-Sectoral Development
Investing in African energy will not only create direct jobs, but also trigger newfound opportunities for multi-sector development. By investing in African energy, stakeholders will be indirectly investing in Africa’s overall economy, whereby funds can be generated and reinjected into other high-potential economic sectors, such as agriculture, mining, telecommunications, services and commerce.
In addition to these economic sectors, improving the national fiscus will allow for heightened investment in public services and infrastructures, including education, transportation and health. The result: a ripple effect of opportunities, with investment in education scaling up capacity of the future workforce, transportation improving connectivity country-wide, and health improving local standards of living. In short, the entire economy and local populations stand to benefit from the sustainable development of Africa’s oil and gas resources.
Improving Economic Stability and Resilience
For a continent that has long-been reliant on the import of refined products to sustain its growing economies, renewed focus on developing mid- and downstream industries has opened up new opportunities for economic resilience. In 2023, following two years of global economic turmoil brought about by the COVID-19 pandemic and Russia’s invasion of Ukraine, enhanced energy security and strengthened supply chains represent top priorities for countries worldwide. In Africa, as new investment flows into emerging oil and gas markets – driven by the need for alternative energy supplies – a new era of stability is in sight, as governments improve investment frameworks and redirect capital towards hydrocarbon extraction, processing and distribution infrastructure.
On the gas front, the development of African liquefied natural gas (LNG) facilitates the monetization of vast offshore gas resources and is set to significantly improve energy production across the continent. Projects such as Mozambique’s Area 1 LNG Trains 1 & 2 (bringing 43 million tons per annum (mtpa) online) and Area 4 Trains 1 & 2 (15.2 mtpa); Nigeria’s NLNG Train 7 (30 mtpa); and Mauritania/Senegal’s 5 mtpa Greater Tortue Ahmeyim represent key drivers of energy security in Africa on the back of gas exploration and exploitation.
On the oil front, a focus on boosting refining and processing capacity will be key for reducing Africa’s reliance on imports and improving economic stability – a key objective given the highly volatile oil and gas market dynamics that have been experienced since 2020. Key refinery developments expected to lead the way towards stability include the 650,000-barrel per day (bpd) Dangote Oil Refinery in Nigeria; the 200,000-bpd Lobito Refinery and 100,000-bpd Soyo Refinery in Angola; and the 100,000-bpd Tiaret Refinery and 100,000-bpd Hassi Messaoud Refinery in Algeria. As new oil and gas projects come online, these facilities will be critical for improving Africa’s access to refined petroleum products and capacity for regional and global export.