Are African oil and gas producers prepared for the energy transition?

The document warns that African oil and gas producing countries risk committing public funds to stranded assets by basing investment decisions on current price trends rather than energy transition scenarios. It highlights the vulnerability of National Oil Companies (NOCs) and the potential for revenue overestimation, specifically citing risks in countries like Angola, Mozambique, and Senegal. The author advocates for the Extractive Industries Transparency Initiative (EITI) to mandate the disclosure of project viability data and for governments to diversify their economies.

• African oil and gas producers face significant financial vulnerability as the world moves away from fossil fuels, with some countries potentially losing 40% of their revenue in scenarios where oil demand falls rapidly and prices drop to $40 a barrel.
• National Oil Companies (NOCs) represent a major risk vector; research indicates that 22% of planned NOC capital expenditure until 2030, exceeding $400 billion, may be invested in projects that only break even if the global carbon budget is exceeded.
• Specific African NOCs are highly exposed to price drops: in a $40-per-barrel scenario, over two-thirds of Mozambique's Empresa Nacional de Hidrocarbonetos' planned investments and nearly half of Nigeria's National Petroleum Corporation's projects (risking $13 billion) would not break even.
• Emerging producers are susceptible to the 'presource' curse, where unrealistic revenue expectations lead to significant public investments before production begins. For example, Senegal's Sangomar field's internal rate of return may drop from 28% to 9% when accounting for the energy transition and operational delays.
• The report argues that governments and NOCs must shift from basing decisions on current trends to using price assumptions aligned with rapid energy transition scenarios to avoid committing public money to stranded assets.
• The Extractive Industries Transparency Initiative (EITI) is identified as a key mechanism to enforce the disclosure of project costs, contractual terms, and economic viability data, particularly through its 2022 Standard review.

APA

South African Institute of International Affairs (2021). Are African oil and gas producers prepared for the energy transition? https://saiia.org.za/research/are-african-oil-and-gas-producers-prepared-for-the-energy-transition/

Chicago

South African Institute of International Affairs. Are African oil and gas producers prepared for the energy transition? 2021. https://saiia.org.za/research/are-african-oil-and-gas-producers-prepared-for-the-energy-transition/.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=Are African oil and gas producers prepared for the energy transition? |date=12 July 2021 |url=https://saiia.org.za/research/are-african-oil-and-gas-producers-prepared-for-the-energy-transition/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2021are, author = {{South African Institute of International Affairs}}, title = {{Are African oil and gas producers prepared for the energy transition?}}, institution = {South African Institute of International Affairs}, year = {2021}, month = jul, url = {https://saiia.org.za/research/are-african-oil-and-gas-producers-prepared-for-the-energy-transition/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }