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

This report examines the financial risks faced by African oil and gas producers during the global energy transition, specifically the danger of 'stranded assets' and the vulnerability of National Oil Companies (NOCs). It argues that governments and NOCs often base investment decisions on unrealistic price assumptions and calls for increased transparency and the adoption of Paris Agreement-aligned scenarios to protect public finances.

• African oil and gas producers face significant financial vulnerability due to the energy transition. In a scenario where oil demand falls rapidly and prices hit $40 a barrel, Angola, Equatorial Guinea, and South Sudan could each lose 40% of their revenue compared to the previous five years.
• National Oil Companies (NOCs) represent a major point of risk exposure. Research indicates that 22% of planned NOC capital expenditure until 2030, totaling over $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 losses in a $40-per-barrel scenario: more than two-thirds of Mozambique's Empresa Nacional de Hidrocarbonetos' planned investments would not break even, nearly half of Nigeria's National Petroleum Corporation's projects would not break even (risking $13 billion), and nearly half of Republic of Congo's SNPC expenditures would fail to profit ($500 to $600 million).
• Mozambique is particularly vulnerable because the risk associated with its NOC investments is equivalent to 179% of its annual general government expenditure.
• Emerging producers risk the 'presource' curse, where governments make significant public investments based on unrealistic revenue expectations before production has even begun. For example, Senegal's Sangomar field's internal rate of return is estimated to drop from 28% (pre-COVID) to 9% when accounting for operational delays and the energy transition.
• Carbon Tracker projections suggest that Ghana and Senegal would see less than half of their projected revenues materialize in a low-carbon scenario, while nascent projects in Uganda would yield no revenues.
• The report recommends that governments and NOCs improve transparency by disclosing project costs, contractual terms, and break-even prices. It suggests the Extractive Industries Transparency Initiative (EITI) Standard should be updated to require timely disclosure of the economic viability of new and existing projects.

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} }