The Role of Digitalization in Africa’s Energy Mix

Image credit: Frost & Sullivan

While Africa seeks to maximize the exploitation of its estimated 125.3 billion barrels of crude oil and 620 trillion cubic feet of gas reserves, global energy transition-related policies have made it difficult for the continent to attract the investments required to accelerate hydrocarbon production. With global oil and gas firms prioritizing decarbonization, various digitalization mechanism and technologies such as carbon capture and storage, artificial intelligence and machine learning provide an opportunity for the continent’s oil and gas sector to attract investments and maximize production while at the same time reducing emissions.

A panel discussion titled, ‘Africa’s future energy mix: The role of digitalization and technology,’ hosted during the 8th African Petroleum Congress and Exhibition (Cape VIII) held in Luanda from 16 – 19 May 2022, explored technology adoption within Africa’s hydrocarbons market and the role digital tools play in helping address industry challenges.

The discussion was moderated by Joel Costa, CEO at Hora da Bolsa, and featured Taher M.O Najah, Director at the African Petroleum Producers Organization’s Rilwanu Lukman Research and Development Center; Edson Azevedo, General Manager at Xamariz Marketing; Ibilola Amao, Principal Consultant at Lonadek; Tim Dixon, Director of the Greenhouse Gas R&D program at the International Energy Agency; and Jarad Daniels, CEO at the Global CCS Institute as speakers.

Commenting on digital transformation within Africa’s hydrocarbons sector, Azevedo highlighted that the continent is still well behind other regions, a development that is restricting the growth of the market.
“The oil and gas industry has access to various connectivity solutions but does not fully use them. Only 5% of oil equipment is connected and a very small fraction of data acquired is utilized to enhance operations. Advanced technologies can enable Africa to optimize drilling operations and can add up to $250 billion in value to the industry.”

The high costs associated with technology deployment and the overreliance by African companies on technology imports was blamed for the low penetration of digital solutions in Africa during the discussion.

Improving Technological Deployment in Africa

According to Najah, Africans need to do more in terms of developing technologies. “At the moment, international oil companies are the ones coming with their technologies,” Najah stated, emphasizing that governments need to create an environment that enables technology rollouts. For instance, regulation needs to be introduced to ease the trading of manpower, capital and technology. “Collaboration needs to be prioritized with technology providers and we cannot do much without the involvement of the private sector in terms of bringing big projects online. African countries also need to come together on business models and capacity development.”

Additionally, Amao emphasized that, “We need to pull the capital together in Africa to process our resources and develop our own solutions. We need to be strategic regarding how we can utilize technology to address oil and gas and energy challenges.”

Azevedo added that consumers need to be made aware of the developments happening across the entire oil and gas value chain and digital tools play a vital role in devising strategies and sending messages regarding sustainable energy usage.

Despite the slow progress on digitalization across Africa, significant efforts are underway to accelerate the adoption of carbon capture and utilization solutions, according to Daniels and Dixon, with South Africa and Algeria implementing pilots over the past seven years and Nigeria kickstarting feasibility studies with the help of the World Bank.

Benefits of Digitalization Across Oil and Gas Operations

With majors including TotalEnergies, ExxonMobil and Shell exiting some of Africa’s rich-basins as part of efforts to reduce operating expenses and to diversify businesses, the need for Africa to expand the use of digital tools to attract investments and reduce operational expenses was also highlighted by the panel.

Taher pointed out that, “Technology will enable African countries to tackle deep water oil and gas project challenges as well as energy transition-related issues. With Africa contributing less than 3% of all emissions globally, we need to leverage digital mechanisms to keep that status while maximizing the production of natural resources. The energy transition also provides an opportunity, not a threat, for Africa to exploit its abundant resources and minerals which are required to develop technologies such as solar panels and batteries that are in demand as the energy revolution intensifies.”

Finally, Amao added that digital solutions will enable countries such as Nigeria to achieve its goals of improving energy access using gas in line with the Decade of Gas initiative. “The dialogue in Africa should be around how we can attract funding to accelerate the use of modern technologies, increase the production of hydrocarbons and their use in a sustainable manner to industrialize and become independent. Digital twins and cloud services can be an enabler of the energy transition if we pay attention to data analytics.”

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Nicholas Nhede

Nicholas Nhede

Nicholas is an energy sector journalist with a passion on how technology and diversification of the energy mix can be used to address energy sector challenges. Nicholas holds a diploma in Journalism and Communication studies and has been covering energy-related topics including the Internet of Things, distributed energy and digitalisation since 2015.

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