A worrying aspect of the global energy transition now gathering pace is how impoverished countries with large oil and gas discoveries react to wealthy nation rhetoric telling them that they should kiss the chance of making $billions goodbye before they’ve even started harvesting the resource.
Understandably their likely first reaction will be to tell outsiders to get lost.
As the climate crisis deepens and politicians worldwide renege on promises made publicly since the milestone Paris Agreement and, most recently at COP27, we as a species potentially now face oblivion.
But when you’re in the money for the first time in your life as a country, self-interest inevitably kicks-in.
I’m talking about new producer economies like Guyana, Mozambique, Senegal and Tanzania and others like Namibia where oil and gas exploration has been spectacularly successful of late, despite the country having previously been written off as a dead loss.
“Namibia could become the largest ever deep-offshore discovery for TotalEnergies,” said Kepler Cheuvreux analyst Bertrand Hodée in September.
He estimates that as much as 12 billion barrels of oil have been found so far by both Shell and Total on the offshore Venus block.
Already there is speculation that Namibia could become a top 15 oil producer by 2035.
You can bet Namibian politicians will allow nothing to get in their way; nor will Shell and Total, no matter how they dress up their CSR (corporate social responsibility) reports and smarm investors.
And you can bet your last cent that Western countries like the UK will be keen to provide Namibia with slush money on the quiet to facilitate development.
Britain did this with Mozambique and got away with it despite a legal challenge by NGO Friends of the Earth.
Of the other countries listed above, Guyana is furthest along the development path. Offshore oil was discovered on the Stabroek Block in 2015, since when over 10billion barrels recoverable have been logged, with production started from the Liza project in 2019.
In the driving seat is Exxon. The US mega-major is the first and largest oil producer in Guyana and operates the Stabroek, Canje and Kaieteur Blocks with over 25 significant discoveries listed. And Exxon will assiduously defend its self-interest.
Mozambique is an emerging gas producer, based on various huge offshore discoveries in the early 2010s by Anadarko (US) and Eni (Italy). The country produced 5billion cu.m of gas last year of which around 80% was exported. Production is expected to rise sharply over the next several years. Sasol (South Africa) is the current producer. Total is building an LNG export facility.
Tanzania, like Mozambique, has seen a number of major offshore gas discoveries, but has to date been less successful in developing major new projects.
Senegal currently has very little oil and gas production, but the Greater Tortue Ahmeyim LNG project (shared with Mauritania) is expected to start production soon; also the Sangomar oil and gas field.
These projects are set to move the country from being a net oil and gas importer to an exporter according to the International Energy Agency, which warns that oil and gas discoveries may open up the promise of significant future income and resource wealth but amount to a poisoned chalice.
The agency points to the well-known “resource curse” describes the ways in which development based on hydrocarbon revenues can actually be detrimental to the economic outlook. They can also lead to corruption and environmental hazards.
Take Mozambique for example. The country’s large gas discoveries were made in 2009 at a time when annual GDP growth was around 6%. By 2016, growth had fallen to 3% in large part as a consequence of several huge state-backed “hidden loans”.
A court in Mozambique has only just begun handing down verdicts in the country’s biggest ($2billion) corruption scandal, in which the government unleashed a financial earthquake by trying to conceal huge debts.
The 19 high-profile defendants, who include former state security officials and the son of an ex-president, faced charges ranging from money laundering to bribery and blackmail related to a $2bn “hidden debt” scandal that crashed the nation’s economy.
And there’s more; much, much more. But the above hopefully provides a flavour of the formidable obstacles that lie ahead as we struggle with a transition that must by its very nature involve every one of us if it is to succeed.