African Oil Producers and the Emerging Energy Investment Wave

The global energy transition is reshaping investment landscapes, and Africa's energy markets are emerging as a focal point for strategic entry. While fossil fuels still dominate the continent's power capacity-accounting for 69% in 2025-the surge in renewable energy investments and the rise of green hydrogen projects are creating a dual narrative of opportunity and complexity. For investors, the challenge lies in navigating a market where traditional hydrocarbon assets coexist with high-growth clean energy ventures, driven by both necessity and innovation.

The Shifting Energy Mix: Fossil Fuels and Renewables in Tandem

Africa's energy landscape remains heavily reliant on fossil fuels, but the pace of renewable energy adoption is accelerating. According to the International Energy Agency's World Energy Investment 2025 analysis, clean energy investments in Africa tripled between 2021 and 2024, reaching nearly $40 billion, with solar photovoltaic (PV) projects becoming the least-cost power source in many countries. This growth is underpinned by falling technology costs and the continent's vast solar and wind potential. However, public and development finance funding for energy projects has declined by one-third over the past decade, creating a gap that private sector and venture capital firms are increasingly filling.

Despite these gains, regional disparities persist. South Africa and North Africa dominate energy investment and electrical capacity, while Sub-Saharan Africa-home to most of the continent's population-remains underinvested. A 2025 Semafor report notes that fossil fuels accounted for 82% of foreign direct investment (FDI) in sub-Saharan Africa's energy sector between 2022 and 2025, with renewables capturing only 18% of the total Semafor report. This highlights the tension between immediate energy needs and long-term decarbonization goals.

Strategic Adaptation: African Oil Producers and the Energy Transition

African oil producers are recalibrating their strategies to align with global sustainability trends. While oil and gas exploration remains critical-particularly in countries like Namibia and Ivory Coast, where 2024 discoveries added to reserves-many producers are diversifying into renewables and green hydrogen. For example, South Africa's state-owned energy firm has prioritized green hydrogen projects to reduce its coal dependency, while Morocco has expanded its solar and wind capacity to become a regional leader (as noted in the Semafor report).

Green hydrogen, in particular, is gaining traction. A McKinsey analysis finds that Africa accounts for 29% of global feasibility-stage green hydrogen projects, with 15 major initiatives driving 75% of its current capacity. The continent's abundant renewable resources and low production costs position it as a potential global hub. The Africa Green Hydrogen Alliance, launched in 2022, aims to coordinate efforts among producers, with projections suggesting Africa could self-supply its domestic demand and export 40 megatons by 2050 (McKinsey projects).

Partnerships and Case Studies: Bridging Local and Global Expertise

International collaboration is pivotal to scaling these initiatives. The EU's REPowerEU plan, which seeks to import 10 million tons of green hydrogen by 2030, has spurred partnerships with North African producers. For instance, the bp Mauritania Hydrogen Project, a joint venture with the Mauritanian government, aims to produce 2,000 kilotons per year using solar and wind energy; the project is listed among the top 10 upcoming hydrogen projects in Africa. Similarly, Egypt's ACME Group Sokhna Hydrogen Project, set to begin operations in 2030, involves local and international stakeholders, including the Egyptian Electricity Transmission Company (also noted in the project listings).

Public-private partnerships (PPPs) are also critical. South Africa's Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) has attracted $40 billion in investments since 2011, demonstrating the viability of structured procurement models (reported in the IEA analysis). Kenya's geothermal success-now exceeding 985 MW of installed capacity-offers another blueprint, combining local expertise with international financing (as highlighted by Semafor).

Challenges and the Path Forward

Despite these strides, hurdles remain. Financing gaps, inconsistent policy frameworks, and inadequate transmission infrastructure hinder wider adoption. Over 600 million Africans still lack reliable electricity, underscoring the need for decentralized solutions (Semafor reports). Moreover, green hydrogen projects require significant upfront investment, with McKinsey estimating $2.9 trillion in cumulative capital expenditure needed between 2022 and 2050 to develop Africa's green energy infrastructure.

For investors, the key lies in balancing short-term returns with long-term impact. Strategic entry points include partnerships with local producers, participation in green hydrogen corridors (such as the SoutH2 Corridor connecting North Africa to Europe), and support for initiatives like the Africa Renewable Energy Initiative (AREI), which targets 300 GW of renewable capacity by 2030 (the Semafor report discusses these priorities).

Conclusion

Africa's energy transition is not a zero-sum game between fossil fuels and renewables but a complex interplay of adaptation and innovation. For oil producers and international investors alike, the continent offers a unique opportunity to align with global decarbonization goals while addressing energy poverty and economic development. As the IEA notes, renewables are projected to account for 45% of Africa's power capacity by 2035-a trajectory that demands both capital and collaboration (IEA analysis). The winners in this emerging market will be those who navigate the dual imperatives of energy security and sustainability with agility and foresight.