“We continue to support the natural resources space,” assured Africa Finance Corporation (AFC) senior VP financial advisory Mohammed Abdul-Razaq, in a panel discussion at the Africa Oil Week conference at the Cape Town International Convention Centre, on Thursday.

“You need to have strong sponsors in place,” to fund African oil and gas projects, he affirmed. “Bankability is key. … We continue to look for innovative ways to finance projects.”

Greenfield and brownfield projects had different requirements for bankability, he noted. And there had to be a real balance between environmental, social and governance (ESG) and investment in African hydrocarbon projects, which had strong knock-on effects, especially regarding socioeconomic development.

As an example of innovative finance provided by the AFC, he cited a major wind power project in Djibouti. This was a 60 MW capacity wind farm, which would meet 50% of the country’s electricity requirement. The corporation equity funded the project, upfront. It also secured partners for the project, which had now achieved financial close. As a result, it was now attracting other partners, allowing the AFC to sell down its equity share in the wind farm.

The corporation was really willing to work with partners, he assured. “We definitely like to participate and risk-share.”

When it came to funding oil and gas projects in Africa, there was a tendency to look for, and concentrate, on external funding sources, pointed out Ernst & Young EMEIA energy and resources partner Jon Clark, in the same panel discussion. “I don’t think that we should lose sight of the fact that the biggest source of finance for gas projects is internal.”

Carbon credits could make African gas projects commercially viable, highlighted ICA finance senior adviser Heine Melkevik, also a participant in the discussion. (ICA stood for Immediate Climate Action.) Carbon credits could also improve the ESG ratings of hydrocarbon projects.

“We work with producers to take down their baseline emissions, eg methane leaks and gas flaring,” he explained. ICA also worked with European regulators, who were seeking to ensure that carbon credits were incentivising the right developments. Carbon credits would provide hydrocarbon projects with financial influxes from doing the right thing on their oil and gas fields, in the year following their actions.

“The carbon credit revenue stream helps both on the ESG side and the financial side,” confirmed fellow panel participant and Seplat Energy GM: commercial and corporate finance Brian Marcus. He observed that his company was working with ICA on this.