As Africa’s oil industry grapples with the aftermath of the COVID-19 pandemic and global oil price wars, it becomes evident that a V-shaped recovery is unlikely. To protect their fortunes and economies from future vulnerabilities, companies and governments in the African oil industry must proactively seek solutions. One crucial step is the development of massive storage facilities in partnership with host governments. Additionally, leveraging trade protocols and inter-governmental partnerships can facilitate the establishment of refineries and storage facilities across the continent, fostering regional cooperation and resilience.

The early stages of the global pandemic caused a significant downturn in Africa’s economy, with reduced oil demand from China exacerbating the situation. The situation worsened as the price war unfolded, leading to a surplus of African crude oil and a struggle to offload consignments. The inability to shut down wells during bearish market conditions or supply disruptions results in operational difficulties, environmental damage, and potential loss of wells.

To address these challenges, the oil industry in Africa should collaborate with host governments to develop large-scale storage facilities. It is crucial to integrate storage provisions into greenfield projects, considering the cost of Floating Production, Storage, and Offloading (FPSO) or Floating Storage and Offloading (FSO) structures. Existing oil well facilities should also explore the construction of additional storage structures to ensure readiness for future pandemics or waves of COVID-19.

Africa can learn from China’s strategic and commercial storage practices, which accelerated crude imports for storage purposes. By establishing partnerships and leveraging trade agreements, Africa has the potential to rival China’s storage capacity. Successful collaborations, such as the one between the Nigerian Content Development Monitoring Board (NCDMB) and Waltersmith in Equatorial Guinea, offer hope for future co-operation and local partnerships in Africa. The completion of refinery projects, such as the Nigerian duo’s capacity refinery, will contribute to increased local supplies of various petroleum products.

Africa’s sub-regional entities, such as SADC, ECOWAS, and EAC, hold untapped potential for economic development. The effective utilization of trade instruments, including the Protocol on Free Movement of Persons and the African Continental Free Trade Agreement (AfCFTA), can promote intra-African trade and bolster the continent’s resilience. Intra-African trade currently stands at a mere 17%, significantly lower than levels in other regions.

African governments must prioritize infrastructure development to meet the continent’s energy needs. Increased investment in infrastructure, as demonstrated by Nigeria’s budget allocation, can bolster energy security and resilience. Collaborative efforts, such as the West African Gas Pipeline Company, the trans-Sahara Gas Pipeline, and the Uganda-Tanzania Crude Oil Pipeline, showcase the potential for regional cooperation and infrastructure development in the oil and gas sector.

Considering the International Energy Agency’s (IEA) requirement for member countries to maintain oil stocks equivalent to at least 90 days of net oil imports, the African Petroleum Producers Organisation (APPO) should establish a similar mandate for African producing states. A capacity to store 180 days of production could mitigate the impact of market fluctuations and supply disruptions.

Africa’s oil industry must take proactive measures to enhance its resilience in the face of global uncertainties. Developing massive storage facilities, fostering regional partnerships, maximizing trade instruments, prioritizing infrastructure development, and establishing strategic stockpiling mechanisms are essential steps. By embracing these strategies, Africa can protect its economies, maximize its resources, and promote sustainable growth in the oil and gas sector.