Oil & Gas

With momentum for sustainability building, Africa’s oil and gas producing nations have a unique opportunity to embark on an inclusive energy transition and chart a course toward a sustainable future.

Africa’s oil and gas industry is entering a new era. As the world looks to accelerate its transition away from fossil fuels, the pressures on the continent’s oil and gas producing nations are mounting. Our analysis has found that most are highly exposed to the global energy transition, as their economies depend on oil and gas revenues, while their reserves both cost more to produce and are, on average, more carbon-intensive than oil and gas from other regions.

At the same time, energy demand on the continent threatens to outstrip supply. Over the next two decades, rapid population growth and industrialization are expected to drive strong energy demand growth across the continent—including for fossil fuels. McKinsey modelling estimates that African energy demand in 2040 could be around 30 percent higher than it is today, compared with a 10 percent increase in global energy demand. 

While these dynamics bring challenges that will need to be negotiated, they also create a clear opening for the continent to take stock and reconsider its energy approach. If oil and gas producing countries in Africa consider steps to create enabling environments, improve access to available capital pools, and attract the right skills and capabilities, they could both meet the energy needs of their developing populations and position themselves strongly in a new energy landscape.

The ongoing invasion of Ukraine, which has had deep human, social, and economic impacts across countries and sectors, adds another layer of consideration. European gas prices have increased by more than three times over the past 12 months, based on our data analysis. And since the start of the conflict, the European Commission has announced a plan to make Europe independent of Russian fossil fuels before 2030 through a combination of acceleration of renewable energy and diversification of natural gas supplies. 1 This could result in increased demand for oil and gas from the African countries that have the reserves and infrastructure in place to help meet that demand.

In this article, we unpack how the energy transition—and a potential restructuring of global natural gas supply sources—could shape the future of Africa’s oil and gas sector, and we share high-level options that affected countries could consider to encourage the necessary investments and build long-term resilience at this critical juncture.