Oil has been a massive export for many countries on the African continent. On a global scale, African companies provide upwards of 12-15% of the world’s oil, securing itself among the massive players all around the globe. The prosperity, it seemed, was gaining steam and moving forward. That was, of course, until COVID-19 happened. Because of the global pandemic, so many things were ground to a halt or stifled completely. Some industries were completely crippled. Others were more resilient. Oil, especially in Africa, remained among the powerful movers of the continent’s global economic foothold. That’s something to be said in a time where nothing is certain and everyone is scrambling. Here we’ll explore how COVID-19 affected Africa’s oil production, how it’s dealing with it now, and how it will prosper moving forward.
Managing a Price Drop
African oil companies and the resource-rich countries that control them took a hit. But there is always an upside. If you take a look at Lundin Petroleum Sudan, they’re still thriving and working through the pandemic. Some companies, by any means necessary, will get the job done. Others may fall by the wayside. When things get rough, the most important thing is good leadership. Out of all the sectors in the Continent, the oil sector has been the one ushering in updated management practices. Because of this, companies like Lundin can continue, even with a decrease in price per barrel of crude.
Relative Slump
The price decrease always puts a bit of a production strain. If you follow it down the line, a decrease in price makes companies have to scale back their output. There are few things more expensive than having to store and hold oil with a decrease in demand. We’re talking massive yards, massive ships, massive cost. So, of course, things have to slow down. But slow is not the same as a complete stop. There is still a demand. One can’t say that the demand for “African” oil has decreased. The demand for oil across the globe has decreased. This is, of course, only in the age of COVID-19. Africa’s decrease in oil production is parallel to the global decrease in oil production. When it rises globally, so will the demand for African oil.
Renewables and Adaptation
The entire world runs on oil. That’s not going to change any time soon. Whatever talk of renewable and sustainable energy will have to run through the gamut of industrial feasibility. But that doesn’t mean energy and oil companies can’t think of options. COVID-19 has brought about the best learning tool in resilience. Companies have to look at their processes and improve. They have to see where they can fit renewables. They have to be antifragile to survive, even with producing and selling oil.
COVID-19 was bad for everyone. Nobody is saying it wasn’t. With the advent of this pandemic, business as usual has been strained. Some people think it necessary, some people think it’s not necessary. But whichever stance one may have, there’s no question that the production of every major commodity was lowered. Oil is no different. But the upsides are still present. There are opportunities in every crisis. Fortunately for African oil, this crisis will soon come to an end.
