Even as delegates from around the world were meeting in Egypt at the UN Conference of Parties (COP27) to deliberate on the current global climate crisis, 200 companies were at the same time exploring or developing new oil and gas projects across Africa, one of the regions experiencing the worst effects of climate change.
On the side-lines of the conference, 37 African climate-focused NGOs – including Urgewald, Stop EACOP, Oilwatch Africa and Africa Coal Network – released a report exposing the hypocrisy of the West in the climate change debate.
The report fingered Western companies and investors as the biggest financiers of new oil and gas projects on the continent.
Out of the 23 top investors in Africa’s oil and gas projects, “14 are headquartered in the US, six in Europe, one in Canada, one in India, and one in South Africa,” says the report titled “Who is Financing Fossil Fuel Expansion in Africa?”
Largest institutional investor
With holdings of over $12 billion, the report singles out American investment giant BlackRock as the largest institutional investor in fossil fuel expansion in Africa, followed by Vanguard at $8.4 billion and the Norwegian Government Pension Fund at $3.7 billion.
Between January 2019 and July 2022, commercial banks also channelled over $98 billion to new fossil project in Africa, with $44 billion channelled through and $54 billion through the underwriting of new share and bond issuances, the report says.
“The number one banker of fossil fuel developers in Africa is Citigroup ($5.6 billion), followed by JPMorgan Chase ($5.1 billion) and BNP Paribas ($4.6 billion),” the report reads.
The new report indicates that the total capital expenditures for oil and gas exploration on the continent rose to $5.1 billion in 2022, up from $3.4 billion in 2020, and the bulk of exploration is carried out and financed by foreign companies.
“Every dollar spent on new oil and gas exploration goes against the 1.5°C roadmaps laid out by the International Energy Agency in 2021. Financial institutions need to drop clients that are still searching for new oil and gas resources we can’t afford to burn,” said Heffa Schuecking, director of Urgewald and a Goldman Environmental Prize winner.
The new report says 886,000 square kilometres have been licensed for new oil and gas projects in Africa since 2017, with 55 companies currently prospecting for new oil and gas fields in Egypt alone — ironically this year’s host of the UN climate summit.
French oil giant TotalEnergies is cited as the largest developer of new fossil fuel projects in Africa. Already sourcing 25 per cent of its hydrocarbon production from the continent, the new report says TotalEnergies is now aiming to add 2.27 billion barrels of oil to its African portfolio.
At COP27, TotalEnergies’ and CNOOC’s East African Crude Oil Pipeline (Eacop), which will run from Uganda to the Tanzanian port of Tanga, is one of the projects that have been the target by green energy campaigners calling on the Ugandan and Tanzanian governments to halt it because of its potential harm to the environment. When complete, Eacop is expected to operate for 20 years.
The report also cites Algerian state-owned company Sonatrach as the second-largest developer of fossil fuel projects in Africa with 1.75 billion barrels of oil. Italian oil major Eni comes third with 1.32 billion barrels.
“All in all, oil and gas companies are preparing to add at least 15.8 billion barrels of oil equivalent to their production portfolios in Africa before 2030.
The extraction and combustion of these oil and gas resources would release eight gigatonnes of CO2eq into the atmosphere – more than twice the amount the EU emits each year,” says the report.
The oil companies are currently pursuing fossil fuel expansion projects in 48 out of the 55 African countries, and 71 per cent of their financial support is coming from financial institutions that are members of the UN-convened Net Zero Banking Alliance, which brings together a global group of banks “committed to aligning their investments and lending “with net-zero emissions by 2025.”
“Making net-zero promises for tomorrow is meaningless if you are spending billions of dollars on fossil fuel expansion today. Financial institutions that claim to be lining up for 1.5°C need to stop supporting clients who are driving us towards 2.8°C,” Ms Schuecking said.