By Ntombi Mhlongo
African nations that subscribe to the Petroleum Producers’ Organisation are moving to establish a bank that will fund oil and gas explorations and businesses on the continent.
It is expected that the nations will partner with the African Export-Import Bank to establish the bank before the end of the year. The African Petroleum Producers’ Organisation (APPO) is said to be finalising plans to set up the bank.
Club of Mozambique News reported that the bank will finance oil and gas activities on the continent without the need for external financing that comes with strings. Dr. Omar Farouk Ibrahim, the APPO general secretary was quoted saying, “This going to focus essentially on funding oil and gas projects on the African continent because the funds have dried”.
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Dr Ibrahim noted that the World Bank and other international financing institutions that used to fund oil and gas projects are closing the financing channels in addition to having stringent conditions, which doesn’t make a lot of sense” compared to 20 or 30 years ago.
It was reported that the organisation plans to attract investment from countries such as Saudi Arabia, UAE, Qatar, and Kuwait, which have a lot of stakes, and history in the development of oil and gas. The bank was mooted last year during the eighth African Petroleum Congress and Exhibition in Luanda, Angola.
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Angola’s President João Manuel Lourenço was quoted at last year’s event saying that the idea would resolve challenges faced by national oil companies. The move comes at a time when many international banks are facing pressure from climate activists to stop funding oil projects over high carbon emissions, and the shift to cleaner energy.
Several major banks such as HSBC, Standard Chartered, and Standard Bank announced how they are reviewing their lending for oil and gas projects in light of the net zero campaign.
Uganda has faced challenges in financing the 1 443-kilometre crude oil pipeline over diminishing financing for greenfield oil and gas projects, and the pressure from climate activists to halt construction of the pipeline.