African Development: Green Energy, Commodities, and International Finance

As if wanting to say, “Enough with just the news about coups d’état,” this autumn the countries of the African continent have prepared a flurry of economic and financial information regarding industrial projects successfully implemented with the participation of foreign partners.

In recent years, the weight of African countries, from Egypt to Niger, in the global energy system has increased significantly. Following the announcement of the agreement with the Belgian company Jan De Nul to lay an electric cable in the Mediterranean to export electricity from Egypt to Europe, a giant new natural gas field discovery has been reported in this North African country.

Multinational company Shell announced that it has discovered a new natural gas field in the northeastern region of Amriya in the Mediterranean Sea. At this time, Shell does not want to go into detail regarding the discovered gas reserves. What is known is that the new site is located at a depth of approximately 250 meters below sea level in the coastal zone of the Nile Delta. “This discovery represents a decisive step for Shell Egypt in consolidating its growth prospects and continued operation as Egypt’s largest energy partner,” told reporters Shell Egypt President Khaled Kassem.

In the current situation, characterized by stifling Western sanctions against Russia, which was forced to redirect its gas exports to China, African sources of sustainable energy are becoming vital for many European countries that are concluding agreement, one after another, with the gas producers of the Dark Continent.

On November 25, it was announced that Germany would invest $500 million in a number of renewable energy projects in Nigeria, West Africa. The investment will enable Nigeria to export significant volumes of liquefied natural gas (LNG) to Germany. As reported by the German weekly Die Zeit, a memorandum of understanding for LNG production “has been signed between the Nigerian company Riverside LNG and the German company Johannes Schuetze Energy Import.” Under this agreements, Nigeria will export 850,000 tons of LNG to Germany in 2026, increasing to 1.2 million tons per year in 2027. This amount will be able to satisfy 2% of the gas needs of Germany, the largest consumer of “blue fuel” in Europe.

It’s not talked about much, but Nigeria is one of the top 10 countries in the world with the richest gas reserves. Many other African countries – and Shell’s discovery in Egypt confirms this – are also rich in hydrocarbons. After Italian ENI, with the support of local partner Petroci, in August 2023 began gas and oil production in Côte d’Ivoire, ENI CEO Claudio Descalzi visited the capital Abidjan on November 25 to discuss prospects for the development of “the first zero-emission production project in Africa” with President Alassane Quattara. The Baleine (Whale) field, located off the country’s east coast, represents the largest hydrocarbon discovery in the Ivory Coast sedimentary basin. Crude oil production from Balein wells currently stands at 20,000 barrels per day, much higher than the 12,000 barrels initially expected. By the end of 2024, daily production should reach 50,000 barrels, and at full capacity, production will be equal to 150,000 barrels of oil per day.

While a significant portion of the oil produced will be exported, all associated gas – 200 million cubic feet per day (about 5,862,689 cubic meters) – will be brought ashore through a specially built pipeline, allowing the country to satisfy domestic market demand, increase electricity production, improve the conditions of access to energy for the population of Côte d’Ivoire, as well as strengthen the country’s role as a regional energy hub for neighboring countries.

Not only that, the meeting between President Quattara and Descalzi also provided an opportunity to discuss the initiatives that ENI is implementing to stimulate the diversification of the Ivorian economy. One of the new projects involves the production of vegetable oil from rubber waste, which will be supplied to ENI biorefineries.

In addition to energy, international interest in other African commodities is growing rapidly. Also in November, the interim military government of Mali signed an agreement with Russia on the construction of a large gold processing plant near the capital Bamako, the production capacity of which will be at least 200 tons of the precious metal per year.

As Interim Finance Minister Alousseni Sanou said after signing the agreement, the implementation of the project “will allow Mali to control all gold production in the country” and, above all, “to correctly apply all taxes and duties.” After double coups in 2020 and 2021, the military authorities of Mali, a former French colony, strengthened cooperation with Moscow, finally severing ties with Paris. Mali’s example was followed in 2023 by Niger, one of the world’s largest uranium producers, which condemned French neocolonial policies and banned the export of nuclear fuel to Europe.

The most developed African countries are paying close attention to the energy transition and the development of sustainable technologies. Once again, Egypt leads by example: Fertiglobe, the world’s largest exporter of urea and ammonia by sea, announced the successful completion of the first shipment of certified renewable ammonia produced at its facilities in Egypt. This ammonia, which will be used to produce synthetic sodium carbonate with virtually zero emissions, was produced in Egypt using renewable or so-called “green” hydrogen as part of the Egypt Green Hydrogen pilot project.

After centuries of disagreements, African countries are trying to develop domestic economic and trade cooperation aimed at providing greater infrastructure and energy stability. On November 25, the Tunisian Electricity and Gas Company (STEG) announced a “synchronous electrical connection between the transmission networks of three North African countries: Algeria, Tunisia, and Libya.” As STEG CEO Fayçal Trifa stated, “Grid interconnection is part of cooperation and energy exchange between North African countries.”

The implementation of all these African projects requires multi-billion-dollar funding from partner countries in Europe, Asia, and the whole world, as well as from global credit institutions. In late November, the World Bank (WB) announced $12 billion over the next three years to support Kenya’s economy. “The World Bank is fully committed to supporting Kenya on its path to becoming an upper-middle-income country by 2030,” the WB statement said. As emphasized by Keith Hansen, World Bank Regional Director for Kenya, Rwanda, Somalia, and Uganda, “financing will include new investments in a wide range of sectors, from energy to public health, transport, and water supply.” Kenya’s financial situation has been particularly affected in recent years by the Covid pandemic and frequent droughts caused by climate change. Recently, the International Monetary Fund (IMF) also met the African country’s needs and provided immediate access to a $682 million tranche of funding, as well as increasing its current lending program by $938 million.

Finally, the IMF reached an agreement with Zambia, releasing a tranche of $184 million. In an accompanying note, the IMF stressed that it “welcomes the memorandum of understanding signed by the Lusaka government with its institutional creditors, as well as ongoing negotiations with private creditors to reach an agreement on debt restructuring,” adding that Zambia may have to “further tighten monetary measures in order to curb inflationary pressure.”