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Shoreline Urges Nigeria and African Countries to Take Position on Energy and Economic Diversification

If there is one thing that the current COVID-19 and oil prices crises have demonstrated, it is that African oil-producing nations are still not economically diverse. Despite repeated actions taken by governments over the past decade to diversify their economies, especially following the 2014-2016 African recessions, not enough has been done. Economic crises in African oil producing countries this year will be so severe they could reach double digit economic recessions.

As countries like Nigeria, Angola, Gabon, Congo or Equatorial Guinea deal with unprecedented lows in oil prices and struggle to keep their economies afloat, the current downturn could well be the historic turning point these economies need to seriously put diversification at the top of economic policies priorities.

To be clear, diversification does not mean the end of oil, quite the contrary. Efficient diversification goes through a better use of oil revenues to fuel other sector of the economy, build a stronger industrial base and create jobs. But it also means diversifying national hydrocarbons output and increasing production, monetization and valorization of natural gas. In fact, for many African oil producers, successful economic diversification depends on their abilities to increase hydrocarbons production and make better us of flared and associated natural gas to generate power for industries, produce fertilizers for farmers and manufacture petrochemicals for their growing domestic markets.

With 188.8 Tcf of proved natural gas (BP, 2019), Nigeria has Africa’s largest discovered gas reserves and the 10th biggest in the world. In 2019, it was the world’s sixth largest LNG exporter with a 6% global market share, ahead of Algeria (3%), Angola (1%) and Equatorial Guinea (1%). Yet, out of the 20.8 million tonnes of LNG Nigeria exported last year (IGU, 2020), 54% went to Europe, 37% to Asia, and the rest to the Americas and the Middle East. In short, none of Nigeria’s LNG goes to Africa. The only Nigerian gas that reaches African markets is the limited, and often interrupted, supply that goes through the West African Gas Pipeline (WAGP) to Benin, Togo and Ghana. Even then, the lack of stable gas supplies from the pipeline has forced these countries to rely on additional domestic or international sources of gas to fuel their power plants.

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Source: PetroleumAfrica

Lamé Verre

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