Over the past few years, the lack of investment in Africa's oil and gas sector has led to a sharp decline in production.
With the sanctions on Russian energy, OPEC and its allies have set a target to meet a larger global market share.
Africa is seeking solutions to increase investment in the oil sector and the energy transition.
- Despite estimated reserves of one billion barrels of oil, production in Chad has been slow, with 2022 levels estimated at 68,000 bpd. This is a significant decline from 2021 levels of 109,000 bpd.
- The majority of Chad's crude is derived from the Doba Basin, with major operators, including ExxonMobil and Shell continuing to drive progress.
- Chad was part of countries that recently signed a deal to create a regional oil and gas pipeline network and hub infrastructures which backers say will strengthen energy supply and reduce dependence on imports of refined products.
"A lot of things have been happening in the world today to make us believe that they are not serious about energy transition because when the national interest security, the energy security is threatened, they forget any transition and they come asking for more oil and gas and even coal," said Omar Ibrahim, Secretary-General of the African Petroleum Producers' Organization.
Nonetheless, it is accurate to say that an increasing number of investors are moving out of hydrocarbon development. That does not, however, mean they are turning their backs on Africa.
Chad seeks to increase the involvement of international companies in the country's exploration and production activities and attract investments to boost the entire oil and gas value chain.
Stretching from the Sahara Desert of the mountainous north bordering Libya to fertile lowlands in the south, landlocked Chad is three times bigger than California. It is home to around 16 million people, just over half Muslim. The oil sector has the potential to change the future of Chad.
The central African country joined the circle of African oil-producing and exporting countries in the early 2000s and its economy is now very dependent on it. According to the Chadian Observatory of Public Finances, it remains a modest producer, with 47 million barrels in 2021.
According to figures from the Observatory of Economic Complexity (OEC), a global data visualization tool for international trade, as of 2020, Chad exported US$1.19 billion in crude petroleum, making it the 35th largest exporter of crude petroleum in the world. In the same year, crude petroleum was Chad's first most exported product. The main destinations of crude petroleum exports from Chad are China, France, Germany, Chinese Taipei, and India.
The fastest-growing crude petroleum export markets in Chad between 2019 and 2020 were France, Chinese Taipei, and Germany.
Central African countries recently signed a deal to create a regional oil and gas pipeline network and hub infrastructures which backers say will strengthen energy supply and reduce dependence on imports of refined products. Chad was part of these countries.
The project aims to construct three multinational oil and gas pipeline systems of around 6,500 km, storage depots, liquefied natural gas terminals, at least three refineries, and gas-fired power plants linking 11 countries by 2030, according to Reuters.
The countries, including Equatorial Guinea, Cameroon, Gabon, Chad, Angola, Democratic Republic of Congo, and the Congo Republic are all oil producers or have vast untapped oil and gas reserves but are dependent on refined product imports.
In 2003 Chad began to export oil to an Atlantic terminal through a pipeline built across neighbouring Cameroon. This still exists today and provides tremendous value to investors seeking to venture into oil extraction in Chad.
Just to share a brief history of the pipeline: it was financed by the World Bank. According to an article by Ideas4development published June 17, 2021, prospecting by the French Geological Survey (BRGM) in the 1950s gave good reason to believe that Chad's subsoil contained oil, especially in the south around Doba, but also in Kanem and Tibesti. However, confirmation that the Doba reserves were worth exploiting did not come before 1975, and extraction began only in 1988.
The major petroleum groups had long been reluctant to become involved in Chadian oil fields. The fields in the central/western and northern parts of the country were located in areas of chronic insecurity.
Then, an unprecedented arrangement was made. The World Bank agreed to finance using public funds. The pipeline would later allow the private operators Exxon, Chevron, and Petronas to transport their crude oil to the Cameroonian port of Kribi. This would enable shipping to European or American refineries, where the oil could be offered on the market at prices that the cost of the transport infrastructure would not burden.
Chad faces military challenges on most of its borders which should be factored as a risk. In the west, in the region of Lake Chad, the army has been fighting the Nigerian Islamist group Boko Haram since 2015. On the border with Sudan, Eastern Chad has seen conflicts between different ethnic groups. Northern Chad is also unstable, sparsely populated, and difficult to control. Several Chadian rebel groups have set up their base in neighbouring southern Libya. Despite these problems, Chad's armed forces are considered by many analysts to be the most effective in the Sahel.
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The country is also a key member of two regional anti-jihadist coalitions and is a close ally of France, whose base at N'Djamena is also the headquarters of its Barkhane mission in the Sahel.
According to African Business, the question for energy projects in Africa must be whether they can attract this investment, given the competition from Asia and elsewhere. This avalanche of potential cash will face the same problems as those already facing the industry.
As one executive from a renewable energy firm notes: "I don't see any lack of finance at all. The problem is the other way round - the lack of well-structured projects. The question is, why aren't there more projects coming online? We're way behind in Africa, the strategy isn't working."
With the main players in Chad's oil mired in operational and financial difficulties, private providers have big opportunities to fill the country's developing oil gaps.
Now let your imagination wander on the subject of the voyages of discovery and exploratory expeditions.
