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British Ambassador commends Azuri’s next-generation energy in Africa
August 30, 2019 | 0 Comments
At the British Embassy following the last day of TICAD7, the UK’s Ambassador Paul Madden, is joined by Azuri CEO Simon Bransfield-Garth, and Yoshiaki Yokota, Chief Operating Officer, Power Business Division at Marubeni Corporation to discuss next-generation energy in Africa.

At the British Embassy following the last day of TICAD7, the UK’s Ambassador Paul Madden, is joined by Azuri CEO Simon Bransfield-Garth, and Yoshiaki Yokota, Chief Operating Officer, Power Business Division at Marubeni Corporation to discuss next-generation energy in Africa.

Yokohama, Japan, 30 August 2019: The British Ambassador to Japan today threw the spotlight on Azuri Technologies and on next-generation off-grid energy being key to economic development in Africa, during his visit to TICAD7, the long-standing Japanese summit aimed at driving trade and investment to African economies.

Azuri, the pay-as-you-go solar pioneer, last month announced a $26 million capital equity investment led by Marubeni which are among the prominent Japanese corporations at TICAD this year showcasing the latest technology and services supporting one of the fastest-growing populations and economies in the world.

Since launching in 2012, Azuri is one of the leading providers of pay-as-you-go solar power lighting and TV systems, operating in Kenya, Tanzania, Uganda, Zambia and Nigeria.

Attending the conference, Paul Madden the UK’s Ambassador to Japan commented: “Pioneering collaborations between Japanese and British companies, such as the one between Azuri and Marubeni will further accelerate the availability of digital technology across the whole of Africa and increase the speed of progress towards the UN Sustainable Development Goal of universal access to energy.”

The British Embassy recently commissioned research, “Off-grid electricity in Africa”, demonstrating the need for more action and investment in this sector and highlighted the positive work of UK companies such as Azuri.

“Azuri is delighted to represent on the global stage the depth of Britain’s talent and innovation and demonstrate how renewable energy solutions developed by the UK is helping to change the lives and livelihoods of millions currently without access to energy across Africa,” commented Simon Bransfield-Garth, CEO of Azuri Technologies.

From home lighting to satellite TV, Azuri-designed solutions deliver world-class performance and life-changing technology at an affordable price for off-grid customers who live away from mains power.

Azuri’s vision is to create a level playing field where all African consumers can access and benefit from the digital economy, wherever they live.

  • A recent survey from the global off-grid solar industry association GOGLA shows 58% of East African households with off-grid solar systems undertake more work and enterprise thanks to clean, affordable, electricity. The study also shows households with solar make an average additional $35 per month, more than 50% of monthly GDP per capita.
  • Azuri has uniquely combined cutting-edge solar innovation, mobile payment technology and machine-learning technology into a small, affordable systems that enable off-grid families, without access to mains electricity, to generate clean and reliable power for their home.
  • Customers have a stand-alone solar system in their house, with a panel, control unit including batteries and consumer devices such as LED lights, rechargeable radio and television. The system is paid for in small increments and once fully paid, the system is owned by the household and all power generated is free of charge to them.
  • The Marubeni capital injection in Azuri will help millions across Africa access clean, affordable and reliable energy.

About Azuri Technologies Ltd.

Azuri Technologies is a leading provider of affordable pay-as-you-go solar home systems to off-grid consumers across Africa. Combining the latest solar innovation and mobile payment technology, Azuri delivers reliable, renewable and distributed power to the millions who have no access to modern powered services. Azuri operates in five key territories; Kenya, Nigeria, Zambia, Tanzania and Uganda with East Africa Headquarters in Nairobi, Kenya and West Africa Headquarters in Lagos, Nigeria.

For more information, please visit: www.azuri-technologies.com

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Elumelu Challenges Japan – “Partner with us in Empowering African Entrepreneurs”
August 30, 2019 | 0 Comments
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Africa’s investment potential
August 29, 2019 | 0 Comments

With a population of over a billion people, rapid urbanisation and accelerating economic growth, the African market presents a valuable proposition for Japanese investors. Key to maximising the benefits of this investment, is being able to identify the correct opportunities. Standard Bank has been at the forefront of major developments across Africa. Among the key growth sectors that have been identified is oil and gas.

A string of successful exploration projects over the last decade has seen the number of African countries with proven oil and gas reserves rise to 28, thanks to new discoveries in Ghana, Niger, Mozambique, Uganda, Kenya, Senegal, Mauritania and South Africa. The investment required to bring these countries onstream will add further impetus to Africa’s oil consumption, which at 4 million barrels a day already significantly exceeds the continent’s 2.1 million barrels of daily refinery output. Africa’s oil and gas sector is once again attracting investment from exploration companies and refiners following a prolonged break sparked by a slump in oil prices.

Standard Bank is one of the largest oil and gas lenders in Sub-Saharan Africa. In the last three years we have been engaged in several million-dollar deals in Ghana, Nigeria and Mozambique. We have acted as mandated lead arranger, bookrunner, facility and security agent, and onshore bank for several international players in the industry.

We been involved in Mozambique’s gas sector since the early 2000s. The game-changing nature of Mozambique’s offshore gas opportunities offers major opportunities for investors. Mozambique’s resources are huge, with a 150 Trillion Cubic Feet of Liquified Natural Gas (LNG) reserves, equivalent to 24 billion barrels of oil. The process of transforming those resources into individual LNG and Domgas requires an immense amount of investment. Our general assumption is that around USD128 billion needs to be spent between 2017-2025.

The Coral Floating LNG project is currently under construction and is envisaged to produce its first gas in July 2022. Standard Bank was the only African bank at Financial Close. The FID for Area 1 was approved on 18 June and has kickstarted development in Mozambique. With over 5 000 workers on site, Area 1 is responsible for constructing support facilities to be shared with Area 4, such as the Materials Offloading Facility and LNG Marine Terminal, as well a resettlement camp, airstrip and highway amongst other developments.

An independent macroeconomic study of Area 4’s Rovuma liquified natural gas project indicated that it is expected to attract between USD 27 and 32 billion in investment. This will drive Mozambique to become the world’s fourth largest producer of LNG, and add between USD 15 to 18 billion to the country’s GDP. The Final Investment Decision for Area 4 is expected in October this year. Expressed another way, once this is approved, the Afungi Site in Northern Mozambique will become the world’s most expensive piece of real estate, attracting USD 55 billion in investment.

The process of developing LNG plants will automatically provide opportunities for multiple industrial, tertiary as well as service-based companies, some of which may need to establish a local presence to serve these plants.

“Beyond the hard infrastructure, entire new urban centres and the populations that they will house, feed, clothe, educate, entertain and provide with services represent a huge opportunity for a highly diversified industrial and services sector,” says Rob Cleasby, Global Head, Financial Institutions Group, Standard Bank Corporate and Investment Banking.

Another opportunity is developing in East Africa, whose highly diversified economies are growing northwards of 6% in a highly integrated regional market, that is attracting significant levels of Foreign Direct Investment (“FDI”). The development of the Uganda-Tanzania pipeline has further spurred FDI, with an expected capex spend of US$25 billion over the next 5-7 years. Upstream, midstream and downstream projects are expected to propel the region’s economy from its current US$175 billion to US$400 billion by 2028.

Opportunities are also opening up for private infrastructure investors in public-private partnerships (PPPs). Unlike government-to-government projects which often exclude smaller and local players, PPPs generally focus on commercially viable projects with strong, cash-generative, business cases. These projects are also highly reliant on domestic and other foreign business involvement, support, supply, operation and outsourcing.

“Businesses across nearly all sectors have the opportunity to partner with well-capitalised East African firms needing increasingly advanced technical skills and knowledge to grow,” says Carl Henriksen, Head: Japanese Corporates, Client Coverage at Standard Bank Corporate and Investment Banking.

As Africa’s largest bank, Standard Bank, is ideally placed to deliver on its purpose of “Africa is our home. We drive her growth.” With a local presence in 20 markets across the continent, and a history spanning over 156 years, we are the ideal partner to assist Japanese clients negotiate the intricacies of doing business in Africa.

 About Standard Bank Group

Standard Bank Group is the largest African bank by assets with a unique footprint across 20 African countries. Headquartered in Johannesburg, South Africa, we are listed on the Johannesburg Stock Exchange, with share code SBK, and the Namibian Stock Exchange, share code SNB.

Standard Bank has a 156-year history in South Africa and started building a franchise outside southern Africa in the early 1990s.

Our strategic position, which enables us to connect Africa to other select emerging markets as well as pools of capital in developed markets, and our balanced portfolio of businesses, provide significant opportunities for growth.

The group has over 53 000 employees, approximately 1 200 branches and over 9 000 ATMs on the African continent, which enable it to deliver a complete range of services across personal and business banking, corporate and investment banking and wealth management.

Headline earnings for 2018 were R27.9 billion (about USD2.1 billion) and total assets were R2.1 trillion (about USD148 billion). Standard Bank’s market capitalisation at 31 December 2018 was R289 billion (USD20 billion).

The group’s largest shareholder is the Industrial and Commercial Bank of China (ICBC), the world’s largest bank, with a 20,1% shareholding. In addition, Standard Bank Group and ICBC share a strategic partnership that facilitates trade and deal flow between Africa, China and select emerging markets.

For further information, go to http://www.standardbank.com

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Nigeria: NNPC, Total to Grow Nigeria’s Oil Production through partnership
August 28, 2019 | 0 Comments

By Teslim Olawore

The Nigerian National Petroleum Corporation (NNPC) and Total Nigeria have expressed their readiness to work together to grow daily crude oil and gas production and reserves to meet the national target of 40 billion barrels.

Mele Kyari, the Group Managing Director of the NNPC, and Mike Sangster, the Managing Director of Total Nigeria, made the commitment during a visit by Total top management to the NNPC Towers in Abuja.

According to a statement by Ndu Ughamadu, the spokesperson for the corporation, Mr Kyari, said that Total Nigeria was one of NNPC’s most important partners with visible outcomes.

“Total Nigeria in the last five years has very visible outcomes that we have seen and I assure you that we will work together to progress all efforts to grow production and national reserves.

“Also, I want to put on record that your downstream company has been very supportive in the supply of gasoline into our country,” he said.

He assured Total Nigeria of very transparent and accountable relationship with acceptable frameworks.

Earlier, Mr Sangster expressed Total’s firm belief in the Nigerian oil and gas industry and its readiness to deploy solutions to the challenges facing the industry.

“Total Nigeria will build on recent progress in many areas such as cash-call arrears and our long-standing partnership.

“In partnership with NNPC, the company has developed the last three Floating Production Storage Offloading’s (FPSOs) in Nigeria and wants to build on this,” he said.

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Ayuk Receives Praise for His Chapter on the U.S. and Africa in ‘Billions at Play’
August 28, 2019 | 0 Comments
Ayuk has devoted Chapter 17 of Billions at Play: The Future of African Energy to the U.S. and Africa, along with America’s potential to bolster Africa’s journey to a brighter future
Daniel Hogan

Daniel Hogan

JOHANNESBURG, South Africa, August 28, 2019/ — The latest book by leading African energy attorney NJ Ayuk describes the steps he’d like Africans to take to realize the full potential of the continent’s vast petroleum resources. Part of that process, Ayuk writes, should be continued efforts to keep American oil and gas companies in Africa.

Ayuk has devoted Chapter 17 of Billions at Play: The Future of African Energy to the U.S. and Africa, along with America’s potential to bolster Africa’s journey to a brighter future.

“International oil and gas companies are sometimes associated with Africa’s so-called ‘resource curse,’ but in reality, they have a key part to play in helping Africa turn things around,” said H. Daniel Hogan, an industry executive with over 38 years of experience much of it in Cote d’Ivoire, Equatorial Guinea, Nigeria, Namibia, Egypt and Ghana.

“They can do that by hiring from the extremely talented African labor market and procuring services from the local sectors and, even more so, by sharing information and technology,” added Hogan, who currently serves as CEO and General Manager of Lukoil International Upstream West, the Russian multinational energy corporation.

“NJ Ayuk is right to call upon African governments to do their share in making Africa appealing to American exploration and production companies.”

Hogan noted that he also appreciates the book’s detailed analysis of the risks and rewards associated with exploration activities in Africa. “I hope American companies will see that Africa still has a lot to offer in terms of economic returns” he said.

NJ Ayuk is founder and CEO of Pan-African corporate law conglomerate, Centurion Law Group (https://CenturionLG.com/); Founder and Executive Chairman of the African Energy Chamber (https://EnergyChamber.org/); and co-author of Big Barrels: African Oil and Gas and the Quest for Prosperity (2017).

He is recognized as one of the foremost figures in African business today.

Billions at Play: The Future of African Energy will be published by October 2019.

For more information about the book, follow us on Twitter, Facebook and Instagram @BilliondAtPlay.

*Centurion

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Noble Energy Makes New Equatorial Guinea Petroleum Discovery
August 28, 2019 | 0 Comments
Equatorial Guinea’s Ministry of Mines and Hydrocarbons (MMH) is pleased to announce that U.S. oil and gas company Noble Energy has made a discovery in offshore Block I
Gabriel Mbaga Obiang Lima

Gabriel Mbaga Obiang Lima

MALABO, Equatorial Guinea, August 27, 2019/ — Noble Energy makes oil discovery in Block I, located in Equatorial Guinea’s offshore sector; The well was drilled to a total depth of 4,417 meters and is expected to produce first oil in October 2019; As a champion of oil and gas development in Africa, Minister of Mines and Hydrocarbons H.E. Gabriel Mbaga Obiang Lima will lead the conversation on the future of natural gas on the continent at the Africa Oil & Power event in Cape Town on October 9-11 2019.

Equatorial Guinea’s Ministry of Mines and Hydrocarbons (MMH) is pleased to announce that U.S. oil and gas company Noble Energy has made a discovery in offshore Block I.

The Aseng 6P well was drilled to a total depth of 4,417 meters. Noble is currently in the process of completing the 400-meter horizontal section of the well and, using existing Aseng field infrastructure, is expected to produce oil from October 2019.

“We are excited to announce this discovery which could not have come at a more opportune time. We have been dedicated to developing our resources to build a better economy and create opportunities for our people and, it seems we are gaining momentum,” said Minister of Mines and Hydrocarbons H.E. Gabriel Mbaga Obiang Lima.

He added that: “It’s always been our firm belief that our country is relatively underexplored. When companies drill offshore Equatorial Guinea, their likelihood for a discovery is real. Noble Energy and partners are longtime friends of Equatorial Guinea and it is only fitting that we should build on our oil and gas development efforts with them right by our side. This is great news for our economy, jobs creation and local content development.”

The Aseng field consists of five subsea wells connected to a FPSO vessel. With a 40 percent interest, Noble Energy is operator. Other partners include Atlas Petroleum (29 percent), Glencore Exploration (25 percent) and Gunvor (6 percent).

This year, Equatorial Guinea kicked off its endeavor to become Africa’s premier gas hub with the signing of definitive agreements with the Alen field partners and Punta Europa Plant owners to monetize gas from the Noble Energy-operated Alen field – a project known as the Gas Megahub.

As the country develops its gas resources, Minister Obiang Lima said earlier this year that it was also targeting a final agreement on its 2007 joint deal with Cameroon to develop gas condensate discoveries Yoyo and Yolanda on their maritime border.

Minister Obiang Lima alongside Antonio Oburu, General Director of Equatorial Guinea’s national oil company GEPetrol, will lead a delegation of companies active in Equatorial Guinea to the Africa Oil & Power Conference and Exhibition in Cape Town, South Africa on October 9-11 2019. Joining the minister will be BANGE, Centurion Law Group, Noble Energy, Marathon Oil, Golden Swan, Baker Hughes, Kosmos Energy, Trident Energy, Tullow Oil, Elite Construcciones, Schlumberger, NAHSCO, Hexagon and NALCO Champion.

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Mobile Casinos As Potential Business Opportunities In Africa
August 27, 2019 | 0 Comments

Over the years there have been a lot of stories written about the potential for different mobile industries’ growth in Africa. At one point it was merely the idea that mobile tech in general might take off around the continent; at another, we heard a great deal about the idea of wearables having similar potential. In more recent years, more specific mobile technologies and applications, such as the use of cryptocurrency and banking services, have garnered attention.

The reason that these type of rumors and stories are so persistent is because of the underlying, pure potential for vast numbers of people to join the mobile market with each passing year. Back in 2017, analyses forecasted half a billion mobile users by 2020 across the continent, and while that number will still go up from there in the future, it’s already enough to make the African mobile market an extremely significant one. That means that, certainly, a mobile trend such as cryptocurrency always has the potential to take off among African users. Here, though, we’re looking to something more established and less trendy, in the traditional sense, with the suggestion that mobile casinos could be among the next major mobile business opportunities in Africa.

One reason that this is the case is the combination of that forecasted growth in the mobile market with the fact that some of the densest population centers on the continent have fairly open gambling laws. Countries like Kenya and Nigeria are leaders on this front, allowing licensed online gambling platforms to operate, and collecting tax benefits as a result. Though there are also some countries lagging behind in this regard (South Africa most notably, despite the legality of its land-based casinos), it’s clear that a significant portion of those half-billion-and-counting mobile users will have the ability to participate in casino businesses.

One potential hitch is that most of those businesses right now are going to be operated by providers beyond African borders. That’s not to say there aren’t some Africa-based mobile casino and gambling platforms, but far and away the most visible and appealing sites and apps in this category hail from just a few major development and hosting hubs elsewhere in the world. Whether someone is playing in the UK or browsing the best reviewed sites in New Zealand, or anywhere in between, it’s the same platforms that tend to show up. And most of them are operated in Europe.

This doesn’t mean national governments can’t tax online gambling activity, but it does mean that even if casino gaming takes off in Africa, it will do so largely through foreign businesses. At the same time however, this introduces some opportunity for tech innovators around the continent. While there are thoroughly established providers dominating this space, there’s also nothing stopping an African developer from getting in on the action with a new site or app – provided the proper licensing and security measures are in place.

We might consider also that much of Africa has also shown potential in what could be one of the next driving forces in the digital casino space: virtual reality. VR has made significant gains across the continent, and though this is mostly thanks to tourism and advertising, it also positions African tech markets well to adapt to what may soon be cutting-edge changes in online gambling. That is to say, if VR casinos are the next big iteration of this whole business, an African tech industry and consumer market familiar with virtual reality in general will be positioned to pounce on the related opportunities.

Consider all of the above and it’s clear that casino gaming should be considered yet another area of interest within mobile tech with significant potential in African markets. If even some of this comes to pass, there will be a great deal of revenue and activity to show for it.

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Owendo Port leads a logistics revolution in Gabon
August 27, 2019 | 0 Comments

One of the questions that global investors and commentators often ask about Africa is what next after the continent’s vast natural resources have been exploited? Well, that question has been answered emphatically in Gabon through several initiatives that are modernizing and industrializing the Gabonese economy.

One of these initiatives is the GSEZ New Owendo Port that is revolutionizing the maritime industry in Gabon and broader Central African region. The Port is part of a unique and dynamic Public Private Partnership between the Gabonese Government, Olam International and Africa Finance Corporation that was formed with the aim of diversifying the Gabonese economy away from oil to other sectors of the economy.

While the oil industry has been good for this nation of 1.8 million people, boasting one of the highest GDP per capita in the region and one of the highest Human Development Index in Sub-Saharan Africa, overreliance on the turbulent oil markets is not sustainable for the country.

Other oil producing countries are setting up sovereign funds to capture oil profits and reinvesting them in other sectors of the economy as a way of diversifying their economies and boosting their revenues. However, Gabon is doing things differently by partnering with the private sector to organically develop the economy through investing in infrastructure and boosting the country’s industrial capacity.

Given that the oil industry accounts for more than 50 percent of Gabon’s GDP and 80 percent of the country’s export earnings, diminishing production and the oil price downturn have hurt the nation’s economy – giving rise to a need to grow other sectors of the economy.

On the back of Gabon’s vast timber resources, new productive industries are being developed, making Gabon the second biggest producer of veneer in the world. At the centre of this modernization of Gabon is a sophisticated logistics network that connects the ports, airports, rail and road networks in a seamless fashion to allow for the delivery of goods and services more efficiently and cost-effectively for local and global markets.

Théophile Ogandaga, GSEZ Deputy Director says: “The SEZ model has been groundbreaking in many respects for the country of Gabon. Our partnership with the Gabon government, has resulted in a package of attractive incentives for global investors to invest in the country. These include zero corporate tax for the first 10 years; the easy repatriation of profits out of the country, and others, has seen an increase in the number of foreign companies establishing operations in Gabon.

“We are replicating this model in other African countries to unlock their potential, create jobs and grow their economies.”

The GSEZ New Owendo Port offers a comprehensive logistics solution to customers. It is a multi-modal platform that is easily accessible by sea, road and rail. The goods can be distributed anywhere in the country and in the broader Central African region.

The words “efficiency” and “cost-effectiveness” are not only the buzzwords for Ogandaga and his colleagues at GSEZ but is a “mantra” that is gaining traction in the whole of the Gabon business world.

Conceptualized in 2012. The purpose was to offer comprehensive and cost-effective solutions for all businesses wishing to export or import their production to and from Gabon. The brand-new harbor facility has been so far a powerful key-driver for investors wanting to start production in the Gabon Special Economic Zone (GSEZ) of Nkok. From sourcing to exports, GSEZ is now offering them end-to-end solutions to make their business successful in Gabon.

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African Energy Chamber to Conduct Working Visit in Beijing and Discuss Energy Deals with Chinese Investors
August 22, 2019 | 0 Comments
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New CNPC Discovery Confirms South Sudan’s Immense Oil Potential
August 21, 2019 | 0 Comments

While the country sits on over 3.5bn of proven oil reserves, the third largest in sub-Saharan Africa, 70% of its territory remains under-explored

JOHANNESBURG, South Africa, August 21, 2019/ — In what has become a remarkable month for exploration in Africa, a CNPC-led consortium has made a 300 million barrels of recoverable oil discovery in South Sudan’s northeastern Upper Nile state. It is almost as much as the Oyo Discovery announced earlier this month in Congo.

The exploration well was drilled at a total depth of 1,320m near the Adar oilfield in Block 3, operated by the Dar Petroleum Operating Company (DOPC), which includes CNPC, Petronas, Nilepet, Sinopec and Tri-Ocean Energy.

“This is a remarkable achievement for the country,” declared Nj Ayuk, Executive Chairman at the Chamber and CEO of the Centurion Law Group. “Since independence, South Sudan has worked tirelessly to bring back damaged fields to production, and especially encourage exploration. Their efforts to maintain peace and stability and a safe environment for investors has paid off. We have always believed that stability goes hand in hand with economic prosperity. Such a large discovery confirms the huge potential of South Sudan in oil & gas just before the country launches a new licensing round in October.”

South Sudan has signed earlier this year an exploration and production sharing agreement (EPSA) with South Africa’s Strategic Fuel Fund for the highly prospective Block B2. The move was part of South Sudan’s strategy to diversify its basket of investors and encourage further exploration.

While the country sits on over 3.5bn of proven oil reserves, the third largest in sub-Saharan Africa, 70% of its territory remains under-explored. To boost exploration, South Sudan will be launching a new and much-awaited petroleum licensing round at the upcoming Africa Oil & Power conference in Cape Town on October 9th, 2019.

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Between extortion and the sanctity of Petroleum contracts in Nigeria, DRC and Senegal
August 21, 2019 | 0 Comments

Investors need to know that their investments are safe and that they will be protected by the law in case the other parties falter on their obligations

NJ Ayuk

NJ Ayuk

By NJ Ayuk*

Last week, a commercial court in the United Kingdom gave reason to a claim by engineering company Process and Industrial Developments Ltd (P&ID), which demands over USD$9 billion from the Nigerian government over a failed gas deal. The decision follows a 2017 arbitration award and turns it into a legal judgement, which could allow P&ID to seize Nigeria’s international commercial assets.

P&ID’s claim is based on a 2010 contract signed with the government of Nigeria for the construction and operation of a “gas processing plant to refine natural gas (“wet gas”) into lean gas that Nigeria would receive free of charge to power its national electric grid,” the company’s website states. Under the deal, the Nigerian government should have provided the necessary infrastructure and pipelines needed to supply gas to the plant. P&ID would build the plant for free and then operate it and commercialize the output for a period of 20 years.

The company claims that over this period it would have earned USD$6.6 billion in profit, an incredible figure that becomes ever more fantastic as the company claims that the yearly 7% interest it is supposedly charging on this capital has now accrued to USD$2.4 billion, at the rate of USD$1.2 million a day, which closes the full amount at a perfectly round USD$9 billion. The whole situation is in itself extremely puzzling. Afterall P&ID, a company created specifically for this project, is claiming it is entitled to the full amount of what it would have gained over a period of 20 years of work, even though that period would not be over for another decade and some. Further, it is already charging interests on capital it would, if the project went forward, it would still be a decade away from generating. On top of that, it has chosen to pursue the matter in a British court, and has a separate law suite in an American court, when the contract was signed in Nigeria, under Nigerian law, and should be pursued in a Nigerian court, as the Nigerian legal team has repeatedly stated.

Nigeria is seeking an appeal to the decision, but P&ID is not wasting any time in trying to seize Nigerian assets abroad, and it might well manage to do so, at least in part.

Further, P&ID has never even broken ground on the construction of this power plant, which it claims would have benefitted so many thousands of Nigerians. The company has reportedly spent USD$40 million on preparatory work, although it is impossible to attest what that work has been.

Even just looking to the amount spent, work done and compensation sought, the figures seem simply absurd. USD$9 billion corresponds to 20% of Nigeria’s foreign exchange reserves, it would be unthinkable that a nation state would pay that much capital to a small unknown enterprise that invested not but a small fraction of that amount in the country and done none of the contracted work. Further, it is perplexing that a British court would even consider such a decision.

However, this issue represents an important cautionary tale for African governments everywhere. Very few things matter more in the struggle to attract investment and build a favourable business environment that will push the economy forward than the absolute sanctity of the contracts signed.

Investors need to know that their investments are safe and that they will be protected by the law in case the other parties falter on their obligations, as it seems to have happened with the Nigerian government. It is by no means the first time a situation like this happens. Just in March, an international court ordered the Democratic Republic of Congo to pay South African DIG Oil Ltd USD$617 million for failing to honor two oil contracts. This is an unacceptable and unjustifiable loss of capital for the people of the DRC. Particularly taking into account that the loss is incurred because the country’s leaders failed to comply with a contract that could have brought a considerable amount of wealth for the country for many years to come, in both royalties and taxes, as well as help develop its oil industry.

Senegal’s government under President Macky Sall was very smart to avoid this kind of litigation when it was confronted with the issue of the Timis Corporation and its ownership of acreage that included the Tortue field, which is estimated to contain more than 15 tcf of discovered gas resources. If President Macky Sall would have proceeded with terminating a valid contract for the acreage, the Timis Corporation would have engaged in arbitration and would have probably gotten a favorable judgment against Senegal. In the process, the gas fields would have sat dormant and produced no returns for Senegal and its citizens. Sometimes leaders are confronted with tough choices and it takes a profile in courage to find solutions and still respect the sanctity of contracts.

Even with criticism from civil society groups, Equatorial Guinea has honored contracts with U.S. oil companies that many oil analysts believe are unfavorable to the state. This principle has kept Equatorial Guinea’s oil industry stable and US firms continue to invest in new projects like the EGLNG backfilling project with Noble, Atlas Oranto, Glencore Marathon and the state.

African leaders and African nations can not afford this sort of mistakes anymore. If on the one hand, contracts must be respected, protected and followed through, the people in charge of evaluating and signing those contracts must have the project’s feasibility as the dominant reasoning behind any decision. What is the purpose of signing contracts for fantastic projects where there is neither the capital nor the conditions to pull it through. Our economies live out of their reputation too. No investor wants to work in a system where contracts are not honored and where their investments are not protected.

While P&ID’s request for USD$9 billion in compensations seems absurd, companies that see the contracts they sign with African governments, or any governments, disrespected, must have the right to claim compensation, just in the same way that African leaders must be responsible for the contracts they sign and must make sure that situations like this do not repeat themselves. Enough money has been wasted on lawsuits that could be used to benefit the lives of Africans. This is true for the oil and gas industry and in any other industries.

*NJ Ayuk is the CEO of Centurion Law Group, Executive Chairman of the Africa Energy Chamber, author of the upcoming book, Billions at Play: The Future of African Energy and Doing Deals.

 

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With Brand New Liquefied Natural Gas (LNG) Terminal and a Gas Mega Hub, Equatorial Guinea Drives the African Game
August 21, 2019 | 0 Comments
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