Are African Oil and Gas Producers Prepared for the Energy Transition?

Many African oil and gas producers will have to find alternative public revenue sources as the world progressively moves away from fossil fuels. While the pace of the transition phase is still slow, price forecasts indicate a structural decline in fossil fuel prices going forward. Governments of producing countries that keep investing in oil and gas projects and betting on their revenues based on current price trends are putting public money at risk. They need to factor in the energy transition and the associated long-term price decrease to avoid committing money to future stranded assets. Governments and national oil companies should base their investment decisions on price assumptions that are aligned with rapid energy transition scenarios, and be transparent about it. Project costs and contractual terms should also be made publicly available to allow a proper understanding of each project’s economics and viability under different parameters. The Extractive Industries Transparency Initiative (EITI) could play a key role in pushing implementing countries to disclose this data in a timely manner.