National Oil Companies and the Energy Transition: Perspectives from Africa and Latin America (COP30)

National oil companies (NOCs) produce over half of the world’s oil and gas and sit at the center of the global energy transition. As demand for fossil fuels peaks and assets risk becoming stranded, NOCs and the economies that depend on them face profound economic and fiscal challenges. In many countries across Africa and Latin America, these companies are key employers and revenue sources and their transformation will shape the future of entire regions.

This event, co-organized by NRGI and Observatório do Clima, will explore how NOCs can adapt to shifting global energy markets and contribute to a just and orderly transition. Bringing perspectives from Africa and Latin America, the discussion will examine pathways for NOCs to drive economic diversification, protect public finances, and support communities through the changes ahead.

Speakers:

• Ke Rafitoson, Executive Director, Resource Justice
• Suely Araújo, Public Policy Coordinator, Observatório do Clima, Brazil
• Nafi Quarshie, Africa Director, NRGI
• Baptiste Albertone, Postdoctoral Researcher, TIDE Centre, University of
  Oxford

Moderated by: Ke Rafitoson, Executive Director, Resource Justice Network

Session Highlights: Perspectives from Africa and Latin America

Uganda: Navigating expansion in a transition-constrained world

Uganda’s National Oil Company (UNOC), established in 2015, is mandated to manage the state’s commercial interests and ensure petroleum resources are developed sustainably. With an estimated 6.5 billion barrels of reserves and 1.4–1.7 billion barrels recoverable, Uganda is advancing major upstream and midstream projects — including refinery development, pipeline infrastructure, and a newly acquired exploration block.

Nafi highlighted several pressures shaping UNOC’s future:

1. Mounting financial exposure: UNOC has already taken on loans to finance its share of the East African Crude Oil Pipeline (EACOP) and will require significant additional capital for refinery development and exploration. This deepens fiscal exposure at a time when global capital for oil is tightening.

2. Transition misalignment risk: Pursuing large-scale oil expansion in a global phase-down environment exposes Uganda to stranded-asset and revenue volatility risks, potentially diverting investment away from diversification.

3. Financing ESG commitments: UNOC’s ESG strategy includes methane-reduction measures, an LPG plant to capture fugitive gas, and a plan to plant 40 million trees. Despite early partnerships — such as with the Alliance for Climate Resilience — long-term financing remains unclear.

4. Revenue governance challenges: Recent amendments allow UNOC to retain a portion of petroleum revenues. Nafi underscored the importance of safeguards to ensure these funds support long-term national development, especially given recent cases where government borrowed funds only for UNOC to reinvest them in government securities.

Nigeria: Managing decline while building resilience

Nigeria faces the dual reality of an imminent decline in global oil demand and high domestic dependence: oil still accounts for 80% of forex earnings and around half of government revenue. Under the Petroleum Industry Act (2021), NNPC Ltd is now a commercial entity — but remains fully state-owned and central to Nigeria’s transition pathway.

Nafi emphasized four strategic imperatives:

1. A planned and managed decline: NNPC must optimize short-term value while preparing for long-term structural decline — including monetizing emitted gas, implementing a national decommissioning strategy, and ensuring divestments by international oil companies do not transfer environmental liabilities to local communities.

2. Real energy diversification: With electricity generation still 77 percent gas-based, NNPC must integrate gas monetization with growing investments in solar, wind, and emerging low-carbon technologies. Diversification is essential for subnational economies at high risk of insolvency.

3. Strengthening community resilience: Implementation of Host Community Development Trusts under the PIA remains slow. Nafi stressed the need for transparent governance, environmental remediation — particularly in Ogoniland — and investments in skills and livelihoods for women, youth, and oil-dependent communities.

4. Transforming NNPC for the Future: NNPC’s “Fit for the Future” strategy signals intent, but must be matched by stronger governance, methane-abatement financing, and alignment with Nigeria’s Energy Transition Plan. Over time, NNPC must position itself as a regional energy leader able to pivot toward a low-carbon business model.

Ghana: Declining oil fortunes and the urgency of diversification

Ghana’s GNPC, established in 1983, has been central to the country’s petroleum sector. Yet after production peaked in 2019, output has fallen for five consecutive years — from 71 million barrels in 2019 to 48 million in 2024. Revenues remain volatile and highly exposed to price fluctuations.

Nafi outlined critical vulnerabilities:

1. Structural revenue decline: Despite earning US$11.2 billion since 2010, Ghana’s petroleum revenues allocated to industrialization and social investments have fallen sharply — from 1.15% (2020) to 0.11% (2023). Declining output and global prioritization of renewables deepen fiscal risks.

2. Mounting debt and governance gaps: GNPC is owed over US$1.14 billion by government entities and is increasingly engaged in non-core activities, contributing to inefficiencies and debt accumulation. Its establishing law is nearly 40 years old and does not reflect energy transition realities.

3. Delayed diversification: GNPC’s recent pivot toward gas — including a new Gas Strategy and major infrastructure plans — may help in the near term but risks locking Ghana into carbon-intensive pathways. A clear renewable-energy and sustainability strategy is still lacking.

4. Social impact risks: Volatility in oil revenues directly affects education funding, agriculture, industrialization, and infrastructure delivery — weakening human capital development and widening inequalities.

Key Accountability Messages for Ghana

• GNPC must publish clear transition-risk assessments.
• Diversification beyond gas is non-negotiable.
• Debt and revenue governance require stronger transparency and long-term sustainability planning.
• Petroleum revenues must deliver real social value, especially in education, agriculture, and infrastructure.

What NOCs must deliver in a just and orderly transition

Nafi’s comparative reflections underscored three cross-cutting imperatives:

• Acknowledge transition risk. NOCs can no longer plan on perpetual fossil-fuel demand. Transparent risk assessments are now a governance necessity.
• Prioritize Diversification and Low-Carbon Pathways. Gas may offer short-term stability, but renewable energy, storage, and new clean technologies will define long-term competitiveness.
• Protect Communities and Public Finances. NOCs must embed strong environmental standards, methane abatement, fiscal responsibility, and community resilience strategies at the core of their transition plans.