Lower crude oil prices may give African nations more time to develop new supplies, speakers said at a Center for Strategic and International Studies forum. The primary question is whether countries will avoid or repeat mistakes of the past, they said.
“Our energy focus is on emerging producers with the potential to take these resources and turn them into greater energy, economic, and national security,” said Christopher A. Smith, assistant US energy secretary for fossil fuels. “There’s tremendous pressure to get this right. There’s interest in taking best practices from the world and applying them to create the best possible energy structures.”
CSIS Africa Program Director Jennifer G. Cooke said, “Resources for Ghana, Uganda, and Kenya could be significant.” Cooke co-wrote a January CSIS report, “Africa’s New Energy Producers: Making the Most of Emerging Opportunities,” with Goldwyn Global Strategies LLC Pres. David L. Goldwyn.
But they don’t want to make the same mistakes already made by African countries that have developed their oil and gas resources, she said. “Once the bread basket of Africa, Nigeria’s agriculture in the north collapsed as its oil came on,” Cooke said. “Ghana and other countries want to avoid this.”
The opportunities are huge, with potentially $1 trillion of investment in sub-Saharan Africa, said Goldwyn, who also spoke. “This time could be different if countries and governments engage in the hard work of setting up the necessary structures before development begins,” he said. “Right now, changes we’ve seen in Tanzania and Mozambique to divert more revenue toward domestic markets are moving in the wrong direction.”
Africa remains a key Obama administration foreign policy comment, with a pivot from simply dispensing aid to forming partnerships, Smith said. Helping those countries address climate change is a goal, but so is helping develop reliable power supplies, he said.
Takes cue from governments
Smith said 40 US government agencies are involved in the Beyond-the-Grid initiative, and DOE will continue to make experts from its National Energy Technology Laboratories (NETL) available for partnerships. “We’ll take our cue from governments we work with, but getting in touch with broader civil society also will be important,” he said.
The crude-oil price plunge since June 2014 has created big energy market uncertainties that may prolong the development phase, Cooke said. More certainty still will be needed to attract investment, she said. “Over the long run, these resources will be developed. But African governments will have to work extra long and extra hard to attract US and other investors,” she said.
Goldwyn said the character of US oil and gas companies working in Africa has changed from multinational majors to larger independent producers such as Anadarko Petroleum Corp. “It’s a wonderful company, but I don’t know if it has ever run [an LNG] project,” he said.
Countries will need to respond by being more committed to transparency and contract law, he said. “We’re already on the road to high levels of disclosure in Europe, and I think maybe we’ll see it in the US in another year,” Goldwyn said. “The framework for these new African energy discussions will happen in the next 5 years, and we’ll have to live with it for the next 30 years.”
A fourth speaker, J. Robinson West, a senior advisor in CSIS’s energy and national security and former president of PFC Energy, said, “Governments in Africa will need to realize they’re competing. If they create difficult terms, investors will leave, particularly in a low-price environment.”
Contact Nick Snow at firstname.lastname@example.org.