The Role of Hydrocarbons in Africa’s Energy Mix

Abstract

Africa is rich in hydrocarbon resources, with some countries ranking among the biggest exporters in the world. Compared of North Africa and also South Africa, where this endowment translated into the creation of domestic markets, in the rest of Sub-Saharan Africa investments have largely focused on the upstream industry for export. This chapter elaborates on the possible role of hydrocarbon resources in the future of SSA countries, taking into account the new reality that renewable energy is becoming more and more competitive as well as the fact that-despite increasing climate and environmental concerns that see international financing institutions increasingly reticent to support investments in fossil fuels-the sector remains strategic for many countries. The African continent is richly endowed with hydrocarbon 1 resources, although they are distributed unevenly. With the exclusion of the North African region, oil and gas resources are generally exploited below potential and, where the sector has developed, investments have prioritized extraction for export over the development of domestic markets. In fact, Africa is a net exporter of hydrocarbons and it accounts for 8% of global gas exports and 10% of global oil exports (British Petroleum 2017a). Africa is a sort of frontier continent for oil and gas companies because it is the least explored in terms of resources and at the same time the least developed in terms of infrastructure. Notwithstanding uncertainties, today's estimates indicate that the region has enough oil, gas, and coal to supply its current and future demand on its own (International Energy Agency 2014) but, in most cases, there are obstacles of various nature that prevent countries from fully benefit from their exploitation. Hydrocarbons already play a big role in the energy mix of African countries-and so does the capacity of resource-rich countries to extract, process, transport, commercialize , trade, and ultimately value them as social assets. Among commercial energy sources, oil, gas and coal indeed constitute the largest part of the African primary energy demand: excluding bioenergy from the account (see Chap. 2) oil accounts 1 "Hydrocarbons" is a broader term than "fossil fuels": the latter refers to the use of the first in the energy sector, however these terms are often used interchangeably, including in this book.