Oil price before June 2014 dropUSD 115
Oil price after June 2014 dropUSD 30
Stronger togetherJanuary 4, 2017
TOGY talks to Mahaman Laouan Gaya, the executive secretary of the African Petroleum Producers' Association (APPA), about the role of oil and gas in Africa's development. Formed in 1987, APPA is an intergovernmental organisation that advocates for the interests of oil-producing economies in Africa.
How can Africa capitalise on its vast pool of resources?
With a population of more than 1 billion people, the market for oil and other energy resources in Africa is there. I don’t believe that we need to export all our petroleum resources. What we need to do is properly organise our market for crude oil and refined products and take stock of all our infrastructure, such as refineries, storage capacities and pipelines, to see how we can consolidate it.
In addition to the physical aspect of the oil market, we need to move towards its financialisation. That means we need a financial market for oil: a stock exchange. What are the two biggest oil markets today? The New York Mercantile Exchange with West Texas Intermediate being traded and the Intercontinental Exchange of London with Brent crude. Yet how much oil does the UK produce? Nearly none. Africa as a continent is the largest oil producer with 12% of the global production. Saudi Arabia, Russia and the US follow in production output, yet Africa has no market of our own.
What role will natural gas play in Africa’s future?
We hope that by 2030 or 2040, Africa will be the top gas producer in the world. African countries with potential haven’t started exploiting it, such as Mozambique, Kenya, Tanzania, Madagascar, São Tome and Príncipe, Tunisia and Senegal. Those are all coastal countries, but there are also countries in the interior with natural gas reserves, such as Niger, Mali and Chad. Africa is certainly rich in shale gas as well, but we need to promote research so that we can locate those reserves. Shale gas has already been found in Algeria, Libya and South Africa, so we should be able to discover it in other countries as well.
How important is Angola in APPA?
As one of the leading oil producers in Africa, Angola is part of the engine of APPA. It also hosted the first conference on local content in the oil and gas industry, which is an important step in allowing African countries to benefit from the entire value chain of the oil industry and thus boost their economies as a whole. I highly appreciate the personal support of the minister of petroleum, HE José Maria De Vasconcelos, to APPA activities.
What role does APPA play in the wider development of Africa?
APPA promotes African unity through many pan-African integration initiatives. Being united on the oil production front and pooling the rest of our energy resources will contribute to this goal. There is no reason that we should suffer from energy scarcity moving forward. The average human consumes 1.6 tonnes [11.7 barrels] of oil equivalent per year, an American consumes 8 tonnes [58.6 barrels] and a European 4 tonnes [29.3 barrels]. African consumers use only 0.3 tonnes [2.19 barrels], which is scandalous when you consider how vast our energy natural resources are. The members of APPA together produce 12% of the world’s oil, but we only consume 4%.
APPA believes that if we work together as a continent we could remedy the situation. You can’t improve the economy of a country without first improving its energy industry to use clean, efficient sources. That is why we are working to introduce regulations and legislation to that effect. All we need is political support. We will hold the first conference of APPA member heads of state in 2017. If government leaders put their confidence in us, I am optimistic that we will be able to combat not only energy poverty, but poverty in all its forms.
What is the future of oil and gas in Africa’s energy matrix?
APPA promotes economic diversification in general, but specifically in the energy industry, through the adoption of an energy mix. I became head of this organisation on July 1, 2015, during a difficult period for oil-producing countries, namely, the drop in oil price. In June 2014, oil plummeted from USD 115 per barrel to USD 30 per barrel. Oil-producing countries in Africa depended disproportionately on oil for revenue, so when the price dropped their budgets dropped as well.
Africa is rich in resources – especially clean energy resources. If properly managed, the entire continent could be powered by hydroelectricity. The Inga Dam on the Congo River could produce 44 GW, enough to power a third of Africa, and there are several other dams on the continent. Moreover, we get a great deal of sunshine in Africa and have a solar energy capacity of 6-7 KW per hour, per square metre. If you multiply that by 12 hours of daily sunshine and even at 0.1% profitability, it is enough energy to export. There is geothermal energy in East Africa and wind energy in the Saharan and sub-Saharan countries. There is also an abundance of biomass on this continent.
Africa also has the sad distinction of having the second-highest gas-flaring emissions in the world, at 40 bcm per year. APPA is working in conjunction with the World Bank to push for countries to adopt legislation that would prohibit the use of gas flaring. We can draw value from flared gas to produce electricity, heat in oil refineries and in enhanced oil recovery applications.