Apr 18 2023
Sub-Saharan Africa's energy sector remains subject to the turbulent push-pull of conflicting forces, despite renewed regional economic activity resulting from the end of COVID-19 restrictions. COVID-19-era debt is a weight on regional economic growth, and the Russia-Ukraine conflict looms large in the region. High commodity prices resulting from the conflict have been both an economic boon and a bane, depending on the country, and the conflict has also reminded investors and policymakers worldwide why energy security is important—which has supported energy investment across the region.
Although the region had a banner year for world-class frontier hydrocarbon discoveries, energy transition considerations remain a challenge to future upstream activity. The region is a leader in refined product consumption, but this also gives rise to supply concerns, including from the power sector, which increasingly has turned to liquid feedstocks to compensate for failures of grid power. Renewables, however, may increasingly fill some of these power supply gaps.
Drilling into the Upstream
– Gas shortages resulting from the Russia-Ukraine conflict made energy security a top concern among policymakers worldwide, lending sympathy to calls from African leaders to support the exploitation of the continent's national hydrocarbon reserves, especially gas.
– New licensing rounds in Sub-Saharan Africa remain focused on the offshore.
– Frontier exploration in Sub-Saharan Africa had another banner year in 2022, further burnishing the region's reputation as a global E&P hotspot.
– Civil society continues to challenge upstream activity, which may lead Sub-Saharan Africa's producers to turn to investors and financiers less constrained by climate policies
This cross-sector report represents a review of the energy sector progress that was made over the course of the past year and offers an outlook on the complexities and questions the region will face in the coming year. Insight was pulled from our macroeconomic, upstream energy, downstream, and power and renewables research divisions.