Lowering oil prices, exacerbated by the coronavirus pandemic, has left Africa’s oil and gas producers staring at the bottom of the barrel. Renewable energy can offer them a way out.
Months before Covid-19 triggered a historic oil price crash, there were signs that the market was already in ill health.
In December 2019, Nigeria’s Minister for the Environment warned that fossil fuels were numbered amid concerns about climate change, which had given investors some idea.
Then, in March, Saudi Arabia and Russia received oil prices at about $ 20 a barrel in March, forcing Africa’s largest oil producer Nigeria, and others, to selling at a loss.
When Covid-19 erupted, it hampered global demand for transport, preventing people and goods from traveling. This gave another blow to African economies that are heavily dependent on oil.
“Africa has definitely been impacted,” said Elizabeth Rogo, East Africa chair of the Africa Energy Chamber, a special network that follows the African energy industry.
“We have seen significant cuts in state budgets, as well as public funding and increased job losses,” she told RFI.
The loss of oil revenues has strained governments’ resources and complicated their fight against Covid-19.
“If you look at the big African producers like Nigeria, you see a huge loss and contracts are being put on hold across the continent,” explains Rogo, whose company released a report calls for measures to protect producers from Covid-19 and the oil price war.
The oil spill has spurred drilling and offshore projects not only in Nigeria but in places such as Senegal, Mozambique, Ghana and Angola, the continent’s second largest oil producer.
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