Africa urges G20 to back oil and gas development to drive industrial growth – World Oil

Report on Africa’s Oil and Gas Sector and its Alignment with Sustainable Development Goals

Executive Summary

A report by the African Energy Chamber (AEC) presented to G20 leaders underscores the critical role of Africa’s oil and gas sector in achieving key Sustainable Development Goals (SDGs). The Chamber posits that leveraging hydrocarbon resources is a pragmatic strategy to address energy poverty, stimulate economic growth, and build resilient infrastructure across the continent. This strategy, however, faces significant headwinds from restrictive international financing policies, prompting a call for a recalibrated global partnership to support Africa’s development trajectory.

The Role of Hydrocarbons in Achieving Sustainable Development Goals (SDGs)

H3: SDG 7 – Affordable and Clean Energy

The development of oil and gas is framed as a direct response to energy access deficits, a core target of SDG 7. The continent’s energy landscape is characterized by:

• Nearly 600 million people lacking access to reliable electricity.
• Persistent energy poverty constraining overall development.
• Natural gas being positioned as a crucial transitional fuel to support large-scale power generation and provide cleaner cooking fuels, thereby reducing household air pollution and improving health outcomes (related to SDG 3).

H3: SDG 8 – Decent Work and Economic Growth

Investment in the upstream oil and gas sector is identified as a primary engine for achieving SDG 8. The potential economic impacts include:

• Significant job creation through direct and indirect employment in the energy and supporting industries.
• Exponential GDP growth, as articulated by South Africa’s Minister of Mineral and Petroleum Resources, Gwede Mantashe, who noted a potential breakthrough in domestic exploration would fundamentally alter the country’s economic outlook.
• Driving industrialization and creating a more robust and diversified economy.

H3: SDG 9 – Industry, Innovation, and Infrastructure

The report links energy development directly to the goals of SDG 9, emphasizing that reliable energy is a prerequisite for industrialization and infrastructure development. Key points include:

• Current industrial growth is severely constrained by limited and unreliable power access.
• Major projects, such as LNG developments in Mozambique and offshore gas initiatives in Senegal and Mauritania, are critical for building the energy infrastructure necessary to power industries.
• Financing for gas infrastructure is essential for creating petrochemical industries and strengthening regional supply chains.

Upstream Potential and Investment Landscape

H3: Production Outlook and Key Projects

Africa’s upstream potential is substantial, with production forecasts indicating a significant increase in its contribution to global supply. Projections include:

1. Oil and gas production is projected to rise to 11.4 million barrels per day (bpd) by 2026.
2. Production could further climb toward 13.6 million bpd by 2030 as exploration accelerates.
3. Key growth areas include major LNG projects in Mozambique, offshore gas developments in Senegal, Mauritania, and Equatorial Guinea, and renewed activity in Libya.

H3: Investment Challenges and Opportunities

While African governments are actively working to attract capital through new licensing rounds and improved fiscal terms, significant challenges remain.

• Challenges: Restrictive international financing policies, including lending bans on fossil fuel projects by multilateral institutions, are limiting investment and stalling progress on electrification and industrialization.
• Opportunities: There is evidence of renewed support, such as the recent $4.5 billion U.S. financing commitment to the Mozambique LNG project, which demonstrates how large-scale investment can drive both economic and supply-chain benefits.

Recommendations and Call for Global Partnership

H3: Aligning with SDG 17 – Partnerships for the Goals

The AEC report concludes with a direct appeal to the G20, calling for a stronger global partnership (SDG 17) to facilitate Africa’s energy-driven development. The specific recommendations for G20 policymakers are:

1. Actively support and encourage upstream investment in Africa’s oil and gas sector.
2. Work to unlock and facilitate financing for critical gas infrastructure projects.
3. Formally recognize the role of fossil fuels as a foundational component of the continent’s strategy for achieving a secure, reliable, and diversified energy mix that supports long-term sustainable development.

Analysis of SDGs, Targets, and Indicators

1. Which SDGs are addressed or connected to the issues highlighted in the article?

   The article highlights issues that are directly and indirectly connected to several Sustainable Development Goals. The primary focus is on energy access and economic development, but this also involves industry, infrastructure, and international partnerships.

   • SDG 7: Affordable and Clean Energy: This is the most prominent SDG addressed. The article centers on the challenge of “energy poverty,” with “nearly 600 million Africans without reliable electricity,” and argues for using oil and gas to achieve widespread electrification and provide “cleaner cooking fuels.”
   • SDG 8: Decent Work and Economic Growth: The article explicitly links oil and gas development to economic prosperity. It quotes South Africa’s Minister stating that a breakthrough in exploration would make the country’s “GDP grow exponentially” and frames hydrocarbons as “practical engines of… job creation.”
   • SDG 9: Industry, Innovation and Infrastructure: The text emphasizes that energy is a prerequisite for industrial growth. It warns that a lack of investment is “stalling industrialization” and calls for financing for “gas infrastructure” and major projects like LNG facilities to support industrial development.
   • SDG 17: Partnerships for the Goals: The article is a direct appeal to the G20 leaders, calling for a “broader recalibration” of international policy. It urges global policymakers to support Africa’s energy sector through financing and investment, highlighting the need for international cooperation to achieve development goals. The mention of the “$4.5 billion U.S. financing commitment” is a clear example of such a partnership.

2. What specific targets under those SDGs can be identified based on the article’s content?

   Based on the issues discussed, several specific SDG targets can be identified:

   • Target 7.1: By 2030, ensure universal access to affordable, reliable and modern energy services. The article’s core argument is to address the “nearly 600 million Africans without reliable electricity” and to use oil and gas to bridge this energy access gap.
   • Target 8.1: Sustain per capita economic growth. The statement that oil and gas development will make “GDP grow exponentially” directly aligns with the goal of fostering significant economic growth.
   • Target 9.2: Promote inclusive and sustainable industrialization. The article explicitly states that energy access is crucial for industrialization and that oil and gas are “practical engines of industrial development.”
   • Target 17.3: Mobilize additional financial resources for developing countries from multiple sources. The article’s call for the G20 to “support upstream investment” and its praise for the “$4.5 billion U.S. financing commitment to the Mozambique LNG project” directly relate to mobilizing international finance.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

   The article mentions or implies several indicators that can be used to track progress:

   • Indicator 7.1.1: Proportion of population with access to electricity. The article provides a direct, though approximate, baseline for this indicator by stating that “nearly 600 million Africans” are currently without reliable electricity. Progress would be measured by the reduction of this number.
   • Indicator 7.1.2: Proportion of population with primary reliance on clean fuels and technology. The article’s mention of using gas to support “cleaner cooking fuels” implies a move towards this indicator, away from more polluting traditional biomass fuels.
   • Indicator 8.1.1: Annual growth rate of real GDP per capita. The South African Minister’s comment about exponential GDP growth directly points to this as a key metric for success.
   • Indicator 17.3.1: Foreign direct investment (FDI), official development assistance and South-South cooperation as a proportion of total domestic budget. The article provides a concrete example of this with the “$4.5 billion U.S. financing commitment,” which serves as a measurable input of foreign investment into Africa’s energy sector.

SDGs, Targets and Indicators Table

Source: worldoil.com