NJ Ayuk On Making The Most Of Africa’s Energy Potential
March 20, 2021
By Ajong Mbapndah L
As many were wailing in disbelieve at the impact of COVID-19 on African economies, NJ Ayuk was one of those who rolled up his sleeves, put on his thinking cap and took the lead in proffering solutions and charting the way forward.
From robust engagement with OPEC, to a multitude of webinars to key stakeholders, helping governments navigate complex situations and building bridges with partners in Africa and the world, NJ Ayuk, Executive Chairman of the African Energy Chamber spared no efforts in the quest for solutions to sustain and keep the African energy sector ticking.
“Africa’s voice must therefore be heard loud and strong as part of the global energy discourse. The Chamber has identified this and therefore has as one of its objectives to federate the different aspirations of Africans in the energy sector and articulate this in a constructive manner that will foster investment in the African energy sector, says NJ Ayuk in an interview with PAV magazine.
Bullish on the way forward, Ayuk believes that Africa must make the most of its energy potential and this starts with getting activity levels across the entire energy value chain in Africa back to pre-COVID-19 levels, says Ayuk. In a show of its seriousness on the way forward, the African Energy Chamber recently published its road to recovery book which provides practical guidance on how African countries can enhance compactivity globally to attract investment.
“The energy sector’s challenges, and the trials and tribulations have made the African Energy Chamber’s work more important now, more than ever. We are committed to helping Africa’s energy sector stakeholders navigate a complex and ever-changing global energy landscape. We will continue our mission to support the dynamic private sector and unlock the continent’s remarkable energy potential,” says Ayuk.
After a tough year, what do African countries need to do to get the energy sector back on the rails so it can continue playing its role in the economic development of the continent?
In order to change the tide and spur a post covid recovery in the energy sector that will also enhance overall economic growth in Africa, African countries must double their efforts to attract investment into their energy sectors. They must put in place timely and market relevant strategies to deal with external headwinds like the drive to decarbonize globally and evolving demand patterns for energy internally and hydrocarbons globally. They must end restrictive fiscal regimes, inefficient and carbon-intensive production, cut bureaucracy and other difficulties in doing business which are preventing the industry from reaching its full potential.
2020 was a year of unprecedented challenges for Africa’s energy sector. The target must be to get activity levels across the entire energy value chain in Africa back to pre Covid-19 levels and beyond. Companies in the oil and gas sub-sector for example responded by cutting costs and delaying projects, with planned capital expenditure for 2020-2021 dropping from $90 billion pre-COVID-19, to $60 billion.
As a leading actor in the Energy sector, may we get your assessment on the response from key power players in the continent like Nigeria, Equatorial Guinea, Angola, and others, what are they getting right and what are there missing or needs to be improved upon?
The response on the continent has been a mixed bag. A number of African countries were slow in responding to market realities, largely due to bureaucracy and the absence of generally agreed principles on how to deal with the COVID -19 pandemic. Others on the other hand, especially countries with a notable dependence on their oil and gas sectors responded swiftly to minimize disruptions in their countries.
For example, OPEC member Equatorial Guinea moved swiftly in the early months of the pandemic to implement best practice protocols that enabled the industry to operate uninterrupted during the pandemic. The government also suspended and deferred several fees usually borne by companies in the sector, in an attempt to support a reduction of costs in the sector. The result of these measures was that production in EG were kept at the levels projected prior to the pandemic and the sector did not witness mass retrenchment as was the case in several other oil producing countries.
Angola responded in a similar manner, after consulting with major stakeholders in the industry. Special health and safety protocols were adopted for the industry that allowed for undisrupted activity in the oil and gas sector. The government has also been able to maintain the momentum in its ongoing bid-round by facilitating access to seismic data and passing additional legislation that will facilitate exploration and drilling activity. Despite the associated economic crisis, the government has held on to its strategic power infrastructure projects like the completion of the Lauca dam and associated transition infrastructure which will boost power supply in the country significantly. The chamber believes that this project is key to enable the development of industry and the mass creation of jobs in Angola.
In Nigeria, there is a realization, across political lines, that the long-awaited Petroleum Industry Bill must be passed in order to give clarity and predictability to the industry, both key components that drive investment. The bill was therefore tabled in parliament and it is likely, that it shall be passed and enacted in law in the 3rd quarter of this year. Furthermore, the Nigerian government in response to the growing importance of Gas globally and also for power generation internally is investing significantly to enable gas to power infrastructure in-country. This is a good development for Nigeria and Africa, as we seek to reduce the number of those without access to affordable and reliable power and to promote industry that will provide jobs for Africa’s youthful population.
The energy sector’s challenges, and the trials and tribulations have made the African Energy Chamber’s work more important now, more than ever. We are committed to helping Africa’s energy sector stakeholders navigate a complex and ever-changing global energy landscape. We will continue our mission to support the dynamic private sector and unlock the continent’s remarkable energy potential.
What role has the African Energy Chamber played and/or what initiatives have been taken to help the continental wide response and recovery efforts?
The African Energy Chamber is at the forefront of Africa’s response to COVID-19, and the associated economic crisis. The Chamber is the voice of the African energy sector and is leading the industry’s response in a number of ways;
- Together with OPEC and other stakeholders, the Chamber is working on an initiative to combat energy poverty in Africa, which is increasing even faster in a post covid era.
- The Chamber together other partners like the International Association of Geophysical Contractors – IAGC championed the streamlining of permits for the obtention of seismic data in several African countries.
- The Chamber emitted several guidelines (AEC Common Sense Agenda) after consultations with industry stakeholders on how best to ensure continuity in the energy sector and increase investment post-COVID-19
- The AEC is a trusted advisor to key stakeholders in the industry. We engaged with several governments and advised them on ways to increase quality local participation in their energy sectors, in a manner that ensures global competitivity in a post COVID-19 environment.
- The Chamber launched a jobs portal to take opportunities to young Africans
As things stand now, and with everything that has taken place, how much of a factor or key player is Africa in shaping global decisions in the energy sector, how strong is the African voice in articulating and defending its interests?
According to The Africa Energy Chambers 2021 outlook, Africa consumes just over 710 terawatt-hours (TWh) presently. This is expected to triple in the next 3 decades. This represents just 6% of global consumption, and 7% of global production, despite Africa having 17% of the world’s total population. Africa also holds over 7% of total proven global oil and gas reserves. However, the continent is significantly underexplored. Recent discovery trends indicate that the continent is well placed to become a key global supplier of LNG, with major recent discoveries in Mozambique, Nigeria, Tanzania and Senegal/Mauritania.
Africa’s voice must therefore be heard loud and strong as part of the global energy discourse. The Chamber has identified this and therefore has as one of its objectives to federate the different aspirations of Africans in the energy sector and articulate this in a constructive manner that will foster investment in the African energy sector.
African stakeholders must federate around initiatives like those of the chamber in order to have the stance taken into account. `individual countries are unlikely to have an impact.
Under your leadership, the African Energy Chamber has sort to broaden its reach in Africa, with representations in Central and West Africa, how is this expansion shaping or moving the agenda of the Chamber forward?
The Chamber and our regional Presidents have done an amazing job with creating awareness about the Chamber and our work in their respective regions and beyond. Our footprints in Angola, East Africa, Mozambique, and Central Africa and their success allow us to keep abreast with the issues facing the energy industry in these regions and find solutions that work in these regions. The chamber will continue to grow regionally as we seek closer cooperation with the energy industry and stakeholders in-country. It is imperative, that the aspirations of every African and other stakeholders in each African country are reflected in what we do at the chamber. I want to take this opportunity to thank the regional teams for all what they do.
In an op-ed last year, you said now will be a good time for American independent oil and gas producers to consider opportunities in Africa, may we know what Africa stands to gain from more US presence?
I lived, studied and worked in the United States at the start of my career and one thing that has always stood out to me was this: The American sense of optimism and ingenuity that drives American entrepreneurship. In that same light, I think the ingenuity of American oil independents will lead to a win-win situation for both the companies and African countries in which they might operate. Africa’s energy sector needs that spirit of entrepreneurship which has led to the creation of tremendous wealth in America. Many of Nigeria’s major oil discoveries were made by such companies. In Senegal, AFRICA FORTESA Corporation, headed by US Upstream veteran Roger Beall is already producing and supplying gas to the domestic market. This is a trend that is expected to define the development and industrialization of Africa in the coming decades. Mr Beall founded Fortesa in 1997 and employs over 200 employees in his onshore E&P project in Senegal. Fortesa is exactly the kind of US company that we seek to attract to Africa. Not only do such companies create good paying jobs for young Africans, but they also provide training, tax revenue and most importantly demonstrate the kind of entrepreneurship that Africans must emulate in order to develop their continent.
The African Energy Chamber recently appointed a US-Africa Committee to serve in its advisory board, how would the committee help in growing and strengthening cooperation and investment between the US and Africa in the energy sector?
The African Energy Chamber appointed the US-Africa Committee to serve on its Advisory Board as a means to support the development of stronger energy cooperation and investment between the United States and Africa. Across the entire energy value chain, the committee aims to facilitate US investment into Africa’s energy sector and provide a platform for continuous dialogue between US energy stakeholders and their counterparts in Africa. America has long viewed African energy resources, especially oil and gas as key to its strategic interests. Africa has also cherished this relationship, though perspectives have changed over time due to the changing dynamics of each stakeholders’ economies and global demand patterns. The chamber sees the US as a key partner; and with the support of incredibly talented and experienced board members on that committee, commits to ensuring that frequent exchanges between US and African stakeholders lead to more investments in Africa. The committee is chaired by KearneyAfrica Legal Advisors President and former Deputy Assistant Secretary at the US Department of Commerce, Mr Jude Kearney.
To unlock future growth potential in the US-African energy cooperation, we will need to open up to SMEs and entrepreneurs and not be limited only to large and traditional corporations. The need to encourage African investments into the US was also brought to the table as a way to further support a win-win relationship that would support further capital flows going both ways.
What is your take on the issue of vaccines for COVID 19 and do you this has a role to play in the recovery that you envisaged?
I believe vaccines are the only solution for the world to return to some form of normality, similar to pre-covid -19 times. The pandemic has been devastating to the world economy overall and even more so to Africa in particular. Ending the pandemic rests on the successful delivery of COVID-19 vaccines to every country but the challenge goes beyond just having vaccines available. There is also significant convincing to be done for populations in Africa and globally to have confidence in the vaccine. Our assessment at the chamber, is that most of the developed world will have opened up their economies fully in the fourth quarter of 2021 in response to the majority of their populations having been vaccinated. Unfortunately, vaccination is likely to be slower in Africa mainly due to lack of access to vaccines. However, a rebound in economic growth in developed nations and china will spur activity in the sector in Africa.
We end with a last word from you on the way forward for Africa as the continent grapples with COVID-19, what gives you hope and what are you are your fears?
Africa’s oil and gas industry is facing extraordinary circumstances. An ongoing energy transition and new efforts to decarbonize the world are weighing on oil demand. The shale revolution exacerbated these pressures. And of course, the COVID-19 pandemic has wrought havoc on markets around the world, accelerating and intensifying existing trends. External headwinds are forcing African petroleum producers and the entire African energy sector to re-examine their strategies. Conventional petroleum resources here must be globally competitive, if the industry is to compete and survive when compared to new frontiers like Guyana and Suriname. Growth has lagged because of conditions above the ground and not below. Restrictive fiscal regimes, inefficient and carbon-intensive production, and difficulties in doing business are preventing the industry from reaching its full potential. These conditions need to improve, if Africa’s energy industry is to remain competitive and thrive.
Africa’s young generation gives me hope. Studies show that the younger generation is more likely to hold their leaders accountable, a key component to demand and drive change that will propel development.
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