The global climate change campaign is likely to deal a dramatic and significant blow to the economies of Nigeria, Congo, and Angola if the United States goes ahead, as it threatens, to sanction international oil companies who continue to invest in fossil fuels across Africa.
Nigeria recently signed the Petroleum Industry Act, PIA, to spur competition in the sector and attract foreign investments, especially in frontier basins.
In the new PIA dispensation, Nigeria commits to investing 30% of the profits of the newly incorporated Nigerian National Petroleum Corporation, NNPC, Limited’s in the search for new hydrocarbons in the frontier basins.
With Brent oil rising as high as $80 a barrel, and oil prices generally near a three-year high, Russia is leading OPEC and its allies to increase production, projecting an increase of as high as 400,000 barrels per day, when OPEC meets on Monday.
Speaking from South Africa at a virtual media briefing, Jonathan Pershing, the US Deputy Special Presidential Envoy for Climate, warns that Western fossil fuel companies planning to develop new projects in Africa would need to consider the significant risk of regulatory action vis-à-vis the returns on investment in Africa.
“There’s a risk of regulatory … and financial activities, and I believe that’s getting more and more explicit. If you are a company looking to invest in oil and gas, you have to ask yourself…‘am I going to be left with a stranded asset?’ I would not bet very strongly on a fossil fuel future,” Pershing said.
Africa accounts for just 3.8 per cent of greenhouse gas emissions, according to the non-profit Carbon Disclosure Project, but Pershing noted it was the fastest-growing continent.
Africa could, Pershing said: “leapfrog” older carbon-based technologies and embrace renewables, just as it skipped wired telecoms in many places and went straight for wireless.
“Africa doesn’t need to move in the direction of the West’s high-carbon intensity. It can move directly beyond that,” he said.
This is coming from a US envoy after the United States, being a major producer and exporter of oil and gas, reaped, not long ago, huge economic growth driven by output from shale fields.
Most of Nigeria’s operating International Oil Companies, IOCs, such as Royal Dutch Shell, Mobil, and Chevron also have major investments in the United States, which they would not risk to keep ramping up production of fossil fuels in Nigeria.