It’s Time to Rethink Licensing Rounds: For Africa’s Oil- and Gas-Producing Countries, Negotiating the Current Environment May Require…Negotiation
January 19, 2021 | 0 Comments
By NJ Ayuk*
While the details vary by country, the licensing round process has, in general, become too prone to delays and uncertainty.
In late 2019, as the African oil and gas industry was looking to the future with optimism, Offshore Engineer wrote that the continent was had reason to expect a “more productive 2020.” Instead, the unforeseen happened, and the COVID-19 pandemic had a devastating impact on the oil and gas industry in Africa and around the world.
But even at the end of last year, during a fairly strong period for oil and gas, the publication mentioned that “delays and hiccups” were impacting licensing rounds — that is, the processes by which investors can seek oil and gas exploration licenses from the government – and argued that improvements would have to be made going forward.
This is correct. Licensing process improvements were already needed in late 2019, and now that the oil and gas industry is in the survival mode, it’s more urgent than ever to streamline licensing.
While the details vary by country, the licensing round process has, in general, become too prone to delays and uncertainty. All too often, exploration and production (E&P) companies have to wait one or two years before the exploration projects they propose are sanctioned. These practices, which help protect the interests of oil-producing nations, made sense when crude sold for $100 a barrel. But they don’t make sense now.
After all, conditions are still uncertain. True, crude pricing forecasts for 2021 are cautiously optimistic at the moment, and Goldman Sachs has said Brent oil prices could reach $65 per barrel by this summer, up from the $50-range we’re seeing now. But the outlook for Africa’s petroleum market remains shaky at best.
And it’s not just Africa: The global oil and gas industry continues to feel the negative impacts of the COVID-19 pandemic, which dramatically lowered demand for petroleum products. As a result, oil and gas companies have made dramatic cuts to their capital spending programs, resulting in the postponement and cancellation of numerous exploration and production (E&P) projects around the world.
Under these circumstances, it’s up to African oil and gas producers to do everything possible to encourage as much E&P activity as possible, particularly by international oil companies (IOCs). In the long term, of course, African producer states do need to lessen their reliance on oil and gas revenue. But for now, a number of them rely on it for much of their budgets. And as long as they do, they ought to ask for more. They should lobby for knowledge transfers, training, gas monetization programs, and other significant opportunities so that their strategically managed oil and gas operations can create pathways for economic growth and diversification.
I’ve made a case for the importance of strategic fiscal policies, from revised production sharing contract (PSC) requirements to reduced tax and royalty requirements. Some of my friends in government have strongly criticized me for this and called me a sellout and a whiteboy. I disagree with them and I still love them, but resource nationalism is not the way to go and it is actually dangerous. I truly believe that these changes are necessary to give IOCs an incentive to explore in Africa during the current downturn. But we can’t stop there. We need to consider other pain points that discourage foreign operations in Africa and find ways to eliminate those challenges as well.
The licensing round process is one of those challenges. So why not remove this hurdle? Not all countries use licensing rounds; some use direct negotiation to approve exploration and production rights. I believe it’s time for more African oil and gas-producing states to choose this route. Negotiating with trusted explorers would help them avoid unnecessary delays and bureaucratic red tape. Making these changes would still allow them to emphasize their own priorities – and it might also make IOCs more likely to keep exploring within their borders.
Licensing Rounds Sound Good In Theory
Generally, during licensing rounds, companies submit bids or grants to issuing governments in hopes of being awarded an exploration license – that is, the right to search for commercially feasible petroleum deposits. In the case of bids, the highest ones get a license. Grant approvals, by contrast, are based on prospective explorers’ experience and capabilities. Licenses are awarded for set periods of time, and if commercially viable amounts of oil or gas are discovered, the explorers can negotiate contracts with the government for the right to extract what they find.
The licensing round process does have benefits. For participating countries, it helps make sure interested companies have the necessary financial resources and technical capacity to explore successfully. It ensures that projects are completed in a timely manner. It also helps E&P companies, since the process lays out their rights.
But again, even with their strengths, licensing rounds can create unacceptable hardships for oil companies: Countries tend to take a long time to make their licensing decisions. And when capex budgets have been slashed, waiting one (or even two) years to learn if an exploration project has the green light just won’t cut it. In today’s economic environment, it just isn’t realistic to insist on putting much-needed resources aside on the chance that they’ll be needed in a year or two.
And if we’re going to be honest with ourselves, we have to admit that we’re seeing more and more examples of licensing rounds gone wrong, from extended delays in getting the bidding process started to instances of little to no company participation.
Licensing Rounds Yielding Disappointing Results
Consider Algeria, where oil and gas production rates were already declining in 2019, before the pandemic, largely because of repeated project delays caused by, among other challenges, slow government approval. During four licensing rounds, Algeria saw minimal interest from investors.
Nigeria, too, is known for the less than speedy pace at which it sanctions exploration projects. Even before COVID-19, its slow movement on this front contributed to a decline in oil production over a 10-year period.
And in 2019, as I mentioned, there were licensing round mishaps in multiple countries. “Some rounds, for example, Ghana’s First Licensing Round, have seen limited successes, while others have suffered delays or suspension,” GlobalData Upstream Oil & Gas Analyst Toya Latham told Offshore Magazine. “Gabon’s 12th Licensing Round and Somalia’s First Offshore Licensing Round have been extended in 2020 (in part due to delays in enacting pivotal legislation), whilst Madagascar’s long overdue licensing round has been suspended.”
And we saw licensing rounds go wrong before that. In early 2018, for example, only one company responded to Cameroon’s licensing round, in which eight blocks had been available. Think about it, just one and the bureaucrats still think all is right. These issues haven’t been limited to Africa, by the way. In 2017, only one bidder responded to an opportunity to explore five offshore blocks in Lebanon. Brazil had a couple of licensing rounds fizzle in late 2019: the Transfer of Rights Surplus Round, which only brought in two bids, and the Sixth Production-Sharing Bid Round, which only attracted one bid.
We Must Consider Investors’ Perspectives
Fast forward to the oil and gas industry of 2021. In today’s reality, delayed licensing round starts and long waits for decisions are more likely than ever to dim companies’ interest. These challenges aren’t trivial, since operating in Africa already represents significant risks and expenses for IOCs. Companies must, for example, factor in the possibilities of security concerns and lapses in infrastructure along with the risks that come with every exploration project, including the failure to find commercially viable petroleum stores. Then there are the additional expenses of operating overseas, complying with local content policies, supply costs, and a myriad of taxes and fees, among others.
I’ll be the first to trumpet the opportunities for IOCs in Africa, from our vast stores of oil and gas to large swaths of unexplored territory. But we have to be realistic about how businesses work. Companies need to be able to make a reasonable profit in order to justify their outlays. And when the oil and gas industry is in the midst of a downturn, as it is now, excessive risks and expenses are the last things IOCs can consider. So we have to work with IOCs and do what we can to help them profit in order to convince them to choose African sites over other options.
Direct Negotiations Could Be a Win-Win
That’s why I think a transition from licensing rounds to direct negotiations makes sense for African countries. For one thing, negotiation periods would not be tied to rigid opening and closing schedules as licensing rounds are, minimizing the risk of unreasonably long waits for a decision. Even better, direct negotiations would allow E&P companies to work with countries to discuss, and possibly adjust, the major terms of their production contracts.
With that kind of flexibility, companies with concerns about a country — whether they have questions about tax laws or local content requirements — might be willing to pursue exploration opportunities that they would have turned down, had they been required to participate in the bidding process.
We Can Make This Work
True, even with a different licensing scheme, African countries will have other unique risk factors to address – factors that could make IOCs hesitant to invest in Africa. High on that list are concerns about corruption. That’s why the African Energy Chamber pushes so strongly for meaningful transparency measures.
And again, we can’t overemphasize the importance of creating fiscal regimes more favorable to IOCs. Those measures should include, along with fairer tax and royalty requirements, the creation of natural gas-specific production-sharing contracts, rather than relying on crude oil PSCs as a one-size-fits-all template. A lot of countries have a difficult time working with companies to get to FID on natural gas discoveries. Not only will gas PSCs help make it easier for companies to conduct profitable gas projects, they also could help prevent problems and lengthy negotiations when explorers find gas, rather than crude.
IOCs are, and can continue to be, invaluable allies to African nations. Their E&P activities contribute revenue that many oil and gas-producing countries rely on now, but we also can work with them to foster economic growth and diversification for tomorrow. African countries need IOCs to create job and business opportunities today, but we also can work with them to achieve capacity building and technological know-how that will pave the way for a better future. It only makes sense to do everything possible to give explorers the certainty, predictability, and incentives they need to be competitive in Africa.
*NJ Ayuk is Executive Chairman of the African Energy Chamber, CEO of Centurion Law Group, and the author of several books about the oil and gas industry in Africa, including Billions at Play: The Future of African Energy and Doing Deals.
Senegal already produces Gas: Investors should look Onshore
January 16, 2021 | 0 Comments
|The emergence of Senegal as a regional energy power is an exciting story|
|DAKAR, Senegal, January 15, 2021/ — Senegal is the hotspot for energy investment in West Africa right now, owing to a string of huge offshore hydrocarbons discoveries since 2014 (as well as its compelling renewables potential). The emergence of Senegal as a regional energy power is an exciting story. But for almost two decades, in fact, the country has been producing its own natural gas onshore, an hour’s drive from Dakar. Further investment could unlock Senegal’s onshore potential.|
Introducing Onshore Senegal
Fortesa International, led by CEO Rogers Beall, started exploring in Senegal in 1997 and from the start, Beall aimed to create a business that was fully Senegalese. Today, the company has a staff of 125, with two expatriate mentors and some African expatriate staff, but the vast majority (around 98 percent) is Senegalese nationals. Beall has continually advocated for Senegal with U.S. companies and now serves on the U.S.-Africa Committee for the African Energy Chamber.
As AOP drove out to the Fortesa production site this week, Beall pointed to a plateau in the far distance, while we passed through a shallow valley. That, he said, is the edge of the 120-square-kilometer Thiombane Dome geological formation. It sits on the eastern side of the carbonate shelf edge that runs north to south along the coast of West Africa.
Volcanic eruptions in the sea 175 million years ago, joined up by sand blown in from the Sahara, created the Dakar peninsula. That same feature on the carbonate shelf edge extends deep into the Atlantic Ocean, and this is the basis for the massive offshore oil and gas fields generating so much excitement globally. This is where North America used to connect to Africa, and where we are driving now used to be the state of Georgia before it was the deep ocean bed. The African plate itself never moved.
“The single place between Morocco and Guinea where that shelf comes onshore is east of Dakar,” says Beall. Here, on land and a short drive from the capital, Fortesa is operating seven wells (one out of service temporarily due to an accident – the company’s first serious one – on December 20, 2020) tied back to a gas processing plant. The manifolds and tanks were built in Senegal, the whole facility was assembled by a local team, and on our visit, we met with dozens of Senegalese workers who had trained with Fortesa and were operating the facilities.
The Gadiaga field usually produces 3 million cubic feet (mcf) per day and could produce 7 mcf per day. This small field has produced just over $95 million of natural gas. But, as Beall says, “This is small potatoes compared to what Senegal needs.” The geology says that Gadiaga may sit next to a much larger gas field situated on the edge of the shelf in the Thiombane Dome. This strong potential is what Fortesa wishes to explore and develop, with fellow investors.
Natural Gas Could Do More
Fortesa’s operation may look familiar in the Niger Delta, where local companies have been producing onshore from marginal fields since 2002. But in this region, Fortesa’s gas production business is unique, and like the most effective Niger Delta marginal field companies, it enjoys the support of the local community to staff and safeguard the well sites, pipe yard and processing plant.
Energy independence is the key to Senegal’s success, says Beall. Energy poverty is a trap that ties people down to subsistence living from Senegal to Somalia. Natural gas, available in abundance onshore as well as far out to sea, can be a fuel to remove those limits.
“Right now, this country is paying $14 per mcf by using heavy fuel oil. [In doing this] they are making six times the pollution, six times the negative effect on the planet, and nearly double the cost,” says Beall. “We are able to make the investment and take the risk of drilling onshore, and [in this region] only Fortesa is doing this.”
Natural gas is cleaner and cheaper than the alternatives. It provides direct and indirect jobs for hundreds at Gadiaga, and more of it is available onshore. The company is keen to expand within its acreage to find and develop the onshore elephant that the geology points to, as well as optimizing current production. But with European and other Western financing institutions now shutting down funding for hydrocarbons, few options are available to fund expansion.
The Foundation Is Already There
Fortesa built a foundation for Senegal’s emergence as an energy player. Beall believed in the potential of Senegal before many in Europe and North America had thought to examine the country’s subsurface. His company worked with or trained many of the people now going on to run the sector or work at the national oil company Petrosen and others.
Onshore gas growth is possible and would lead to direct job creation and sustainable energy provision to households and businesses – and save on costly and high-polluting fuel oil imports.
“This is one of the most cost-effective operations in Africa. Fortesa has essentially unlocked the value of Senegal’s energy resources. The projects run by Rogers and his team are sound and are an example of projects that can generate cash and deliver the return on capital that investors are looking for,” said NJ Ayuk, Executive Chairman of the African Energy Chamber, to AOP. “I see a team that is focused on improving asset-level economics, reducing capital outlay, and stretching their dollars to do more with less.”
AOP’s mission is to bring investment to African energy of all kinds, with a view to making life better for people and businesses. Issues of climate change and sustainability must be addressed urgently. But comparatively clean natural gas and the people that produce it (and industries that can use it) should not pay the price for Western institutions’ opposition to funding hydrocarbons. “We need to give a chance to people to advance,” Beall told us. “Let’s do things that work.”
*SOURCE African Energy Chamber
OUT NOW! 2nd Edition of “Billions At Play” charts recovery path for African Oil & Gas Sector
January 14, 2021 | 0 Comments
Loyal to his upbeat approach and straightforwardness, NJ Ayuk offers pragmatic answers and solutions to the historic challenges the industry has faced throughout 2020.
Talking about oil & gas isn’t easy, especially at a time of widespread anxiety about the link between fossil fuels and climate change. But NJ Ayuk, the experienced oil and gas dealmaker who heads the Pan-African legal conglomerate Centurion Law Group and serves as Executive Chairman of the, African Energy Chamber has never been one to shy away from difficult conversations. Instead, he embraces opportunities to approach thorny questions head-on, with a spirit of optimism about the future.
Following the widely acclaimed release of his second book, Billions At Play: The Future of African Energy and Making Deals, Nj Ayuk has now released a 2nd edition of the best-seller that takes into account new market realities in a post-Covid19 era. Loyal to his upbeat approach and straightforwardness, he offers pragmatic answers and solutions to the historic challenges the industry has faced throughout 2020, detailing how a recovery can rely on better gas monetization, wider energy cooperation, stronger capacity building, an a more sustainable development of African natural resources.
This second edition opens once again on a foreword by H.E. Mohamed Sanusi Barkindo, Secretary General of the Organization of Petroleum Exporting Countries (OPEC) and features a new chapter dedicated to the impact of the Covid-19 pandemic on African oil markets. It is now available on Amazon and has for the first time been narrated by Adera Gandy and Boet Schouwinck as an audiobook also available on Audible and Barnes and Noble’s Nook .
The book is also available through leading retailers including Exclusivebooks.com , TakeAlot.com , Google Books , eBooks.com , Kindle and many more!
In Billions At Play, Ayuk places the energy sector at the center of the continent’s economic growth and argues that the oil and gas sector is well-positioned to turn the African narrative around. Billions At Play became number one on Amazon in several categories only a few days after its initial release in 2019, making it one of Africa’s energy best-seller.
The book’s critical solutions to key issues such as investment deals negotiations, electricity shortage or technology have earned it the support and praise of several leading industry executives from North America, Europe and Africa. At a time when the continent tries to position itself within the global energy transition debate, this second edition will be offering a comprehensive road map for Africa to do a better job at using its vast natural resources to fuel economic growth and improve the lives of hundreds of millions of Africans.
*SOURCE African Energy Chamber
Angolan Legal Reform Shows How Africa Can Use Oil and Gas as a Springboard Towards Job Creation
January 8, 2021 | 0 Comments
–But Only if It Looks Beyond the Obvious Options
By NJ Ayuk*
|Africa’s oil and gas resources have the potential to accomplish so much good for the continent’s people.|
For decades, many of Africa’s oil- and gas-producing states followed a predictable pattern. They treated their oil and gas primarily as raw materials that could be sold abroad for a quick profit, rather than as a means of supporting efforts to make more lasting changes in the economy of the nation as a whole.
This pattern has had unfortunate consequences. It discouraged investment in local capacity, and it fostered the development of arrangements under which most residents of the producing states could not see how the large amounts of money earned from oil and gas exports were improving their lives. In other words, it allowed most hydrocarbon revenues to flow back to the home offices of international oil companies (IOCs) or to go to national oil companies (NOCs) that transferred funds to local governments — and, in many cases, to individual government officials, along with their friends and family members.
Africans already know that focusing on oil exports doesn’t yield the best results. They already know that it ignores the need for long-term investment and fosters corruption.
But corruption isn’t the only issue. Africans also know that the old pattern of focusing on commodity exports doesn’t do enough to put their economies on track for long-term growth and keep them there.
They know, in other words, that the old habits don’t create jobs.
At least, maybe they don’t create large numbers of jobs. Or maybe they don’t create the kind of jobs that last long enough or have enough impact to lead to real change.
And why should it be that way? Africa’s oil and gas resources have the potential to accomplish so much good for the continent’s people – and that includes creating training and job opportunities across multiple sectors, which is one of the keys to sustainable economic growth. This can be accomplished by strategically harnessing oil and gas to monetize value chains and diversify economies. And to do that, we need to create an environment that enables new businesses to launch and thrive.
As the Chamber’s 2021 Africa Energy Outlook says, “Using the stimulus afforded by the natural resources to stimulate jobs in other economic sectors with higher labor intensity is where a significant amount of jobs can be created.”
So it’s time to broaden our view of Africa’s oil and gas resources. Instead of treating them only as a revenue source, we must approach them as a path towards a very important goal: empowering Africans to improve their own lives.
Local Content for Local Jobs
Africans understand the necessity of breaking free of old patterns, and they’ve tried to address the challenge with policy changes. In Angola’s case, they have sought to thwart old oil habits of the past by embarking on a fundamental reform of how the sector works. This entailed taking away regulatory powers for the sector from the national oil company Sonangol and giving those to the newly created National Oil, Gas and Biofuels Agency (ANPG). The restructuring of the sector, that resulted in the creation of the ANPG and the reorientation of Sonangol, is arguably one of the greatest achievements of H.E. Diamantino Pedro Azevedo, Angola’s Minister of Mineral Resources and Petroleum who was brought in to reform the sector. This enabled Sonangol to embark on its own restructuring, at the core of which is the sale of non-core assets and a withdrawal of what Sonangol is expected to do; be a competent partner to foreign operators, and cost efficiently run its own operations. These changes, though very recent, have already stated bearing fruits. The newly created agency, under the chairmanship of a recognized industry expert Paulino Jeronimo, has moved swiftly, to usher in the implementation of new local content guidelines. They have also refocused their efforts on making new acreage in Angola attractive for investment, in an effort to stop the expected decline in output, mid to long-term.
In more general terms, though, they’ve also introduced policy initiatives that aim to create jobs. In Angola, the government recently rolled out a new legal regime for local content requirements after two years of concertation with the various stakeholders.
President João Lourenço, who introduced the new rules last month, has made the job-creation angle clear. He has described Presidential Decree 271/20 as a way to promote Angolan commercial entities’ participation in the development of the oil and gas sector. He has said he hopes the new measure will encourage IOCs to obtain goods and services (including raw materials) from local providers and to replace foreign experts with local workers.
Presidential Decree 271/20 also stresses the Angolan government’s desire to strengthen “national entrepreneurship.” It states that foreign technical assistance and management contracts must include provisions for the establishment of detailed training and professional development programs and the transfer of expertise and technology.
Training Across Sectors
This all sounds like a good idea — and a plan for concrete action as well. Presidential Decree 271/20 doesn’t just talk about increasing local content; it also replaces all the previous local content measures approved between 2003 and 2009. It offers a more detailed description of the factors that qualify an entity as an Angolan company and outlines the procedures that will allow the government to keep an up-to-date list of the parties that are pre-qualified to bid for contracts with IOCs
But does it really go far enough?
In some ways, it does. And by that, I mean that I’m glad to see that the decree talks about the need to make sure that Angolan workers have access to detailed, effective, and sophisticated training programs— and about the need to include provisions for such training in foreign management and technical assistance contracts.
In other ways, though, I’d like President Lourenço and his government to go further. I’d like them to think about exactly what kind of training might serve Angolans best. For example, what if they decided to prioritize training in information technology (IT) and operational technology (OT) skills? Might they find that workers who learn how to operate the control systems used to maximize the efficiency of, say, gas pipelines also turn out to have the skills needed to operate similar equipment in manufacturing plants? And might such workers turn out to have something even more useful, such as the skills needed to set up and promote a new tech hub that could serve as another new source of jobs?
A More Expansive View of Oil and Gas
I also think there’s room for Angola to take a more expansive view of oil and gas. That is, I think the government ought to look further down the value chain so that its new policies don’t emphasize conventional upstream, midstream, and downstream operations (and the ways that Angolan companies can support them) while overlooking other opportunities. Oil and gas aren’t just raw materials to be exported. They can also serve as feedstock for the production of petrochemicals, fertilizers, and other value-added goods. They can be used to power energy-intensive industrial facilities such as manufacturing complexes. They can also fuel power plants that increase domestic electricity supplies to such an extent that life gets better for residential and business customers alike.
In turn, all of these new enterprises will have to hire people. They will need construction workers to build their physical plants, skilled and unskilled workers to keep their facilities running, IT and OT experts to operate and maintain the digital systems that help maximize efficiency, contractors to provide services such as food and transportation, and so on. In short, they will create jobs — and in so doing, they will show that oil and gas amount to something more than exportable raw materials.
Furthermore, if Angola can pull this feat off — if it can use its new policies to lay a foundation for job creation that both includes and transcends oil and gas — it will be in a position to show other countries in Africa how to do the same thing. It will be able to set an example capable of inspiring Africans who want to see the old patterns of hydrocarbon development broken.
Global impact and market stability
Finally, it is important to acknowledge the role that Angola and its current Minister of Mineral Resources, Petroleum and Gas, Diamantino Pedro Azevedo is playing as president of the conference of ministers of OPEC. Without market stability and a realistic price environment for crude globally, all potential benefits from the industry in Angola will be short-lived. OPEC Plus’s January 5th 2021 agreement to allow some of its members to cautiously increase production in February and March in a coordinated manner, is also due to Diamantino’s tact and experience. It is even more encouraging for the global oil markets, that Saudi Arabia is backing the current OPEC Plus deal with additional cuts of its own. This is good for Angola’s oil sector and Angolan jobs.
*SOURCE African Energy Chamber.NJ Ayuk is Executive Chairman of the African Energy Chamber, CEO of Centurion Law Group, and the author of several books about the oil and gas industry in Africa, including Billions at Play: The Future of African Energy and Doing Deals.
What happens to the African Energy Industry if Western Lenders cut off Loans for Fossil Fuel Projects?
January 6, 2021 | 0 Comments
|A little more than a year ago, in November 2019, the European Investment Bank (EIB) declared its intention to phase out funding for fossil fuels|
By NJ Ayuk*
A little more than a year ago, in November 2019, the European Investment Bank (EIB) declared its intention to phase out funding for fossil fuels. Specifically, it said that it would no longer grant loans for projects involving crude oil, natural gas, and coal as of January 1, 2022 (with a scant few exceptions for gas projects that meet rigorous environmental criteria).
In making this announcement, the EIB made history. It became the first major multi-lateral financial institution to make a public commitment to abandon fossil fuels in the name of combatting climate change.
Its pledge did not go unnoticed. In October 2020, Antonio Guterres, the secretary-general of the United Nations (UN), called on the world’s publicly funded development banks to follow suit. Less than a month later, all 450 of these institutions — including, incidentally, the African Development Bank Group (AfDB) — agreed to bring their lending policies into line with the Paris climate accord.
The agreement did not include a categorical ban on fossil fuel loans, since some of the lenders involved, such as the Asian Development Bank (ADB), were unwilling to make this commitment. However, a group of European lenders did exactly that — and they were hardly alone in doing so.
You see, public development banks aren’t the only institutions to have made climate commitments. Since the beginning of 2020, a number of major private lenders — including but not limited to giants such as Barclays, HSBC, and Morgan Stanley — have rolled out plans to reach net-zero in greenhouse gas (GHG) emissions by 2050. Others — such as Blackrock, a major asset management firm — have pledged to make more money available for renewable energy projects. And just a few weeks ago, South Africa’s Standard Bank Group joined the chorus, saying it would no longer fund fossil fuel projects unless the sponsors could demonstrate compliance with strict environmental standards.
And it’s not just the banks. Climate considerations are now driving some of the world’s largest oil and gas firms, with multi-national giants such as BP and Royal Dutch/Shell and slightly smaller operators such as Occidental Petroleum, aiming to hit the net-zero mark by 2050. They may also come to drive the U.S. government’s policies, as President Joe Biden has declared climate change one of the first priorities of his administration.
Is This a Tipping Point?
So what next? Should I follow the Bloomberg news agency’s example and talk about 2020 as a tipping point for climate activism? Should I try to extend the story I outlined above into the future and paint this year as the beginning of the end for fossil fuels?
That’s not what I want to do.
That’s not what I want to happen.
Instead, I’ll try to explain why I think the move away from financing fossil fuel projects has the potential to hurt Africa. And I’m going to do it by imagining what might happen if this move continues.
What Happens If Climate Concerns Dominate?
In this scenario, climate concerns come to dictate the lending policies of Western financial institutions. By 2025, all of the world’s publicly funded development banks have joined the EIB in declining to fund fossil fuel projects (even though a select few organizations are still managing to attract small-scale creditors after agreeing to adopt onerous and costly carbon offset arrangements). Private lenders have followed suit, making it known that they will only support renewable energy schemes (and that they prefer to do business with companies and governments that fall in line with their own net-zero pledges).
As far as the leaders of these financial institutions are concerned, they’ve done the right thing. They’ve done their part to uphold the Paris agreement and prevent the disasters caused by climate change. They’ve responded to the concerns of the public (and of their shareholders). And aren’t fossil fuels a risky investment nowadays? After all, demand never quite recovered after the COVID-19 pandemic hit, and prices have stayed rather low. Oil and gas are quite out of fashion now, really!
The View from Africa
But the view from Africa is likely to be different.
In Africa, climate considerations and ideological commitments to eliminating GHG emissions may well take a back seat to more urgent questions about how to encourage economic growth and supply basic necessities to the continent’s growing population. In countries with large natural gas reserves such as Mozambique, Tanzania, South Africa, Nigeria, Algeria, Equatorial Guinea, Ghana, Cameroon, Senegal, and many others, politicians, businessmen and everyday people should ask their western counterparts why they should decline to extract a resource that could be used to produce electricity cheaply and reliably for both households and businesses. They should ask why they should forego the opportunity to develop an industry that creates jobs, both directly and indirectly, and promotes trade with neighboring states that also need energy. They should ask why they are being discouraged from using the least polluting of the fossil fuels and pushed towards renewable energy solutions that are less reliable and more expensive per unit of power generated. They should ask why Africa should be punished for western nations GHG emissions. They should ask what happens to energy poverty. They should ask who will pay reparations to Africa if Africans have to abandon their natural resources.
They may also ask why they should make the same sacrifices as Western countries when they don’t have the same advantages as those countries — including, say, the complement of legacy, gas-fired power plants needed to ensure that electricity supplies continue all day and night, without interruption, even at times when the wind isn’t blowing, and the sun isn’t shining.
Africans should also question the need to leave crude oil in the ground – and they should! For many of them, their oil industry and service companies are a major source of income. And while they may be willing to see that source phased out gradually, they’re not likely to assent to plans for killing them off abruptly.
Also, what about independent African exploration and production companies? What about African oilfield service companies and midstream operators? Shouldn’t they have a say in their future too?
Meanwhile, what about all the time and resources that a number of African leaders have invested in creating policies that encourage international oil companies to invest in their countries, from improved fiscal regimes to transparency laws to win-win local content policies? There’s no question that these leaders were interested in oil revenue, but there is so much more to gain from these policies, from much-needed technology transfers to business and growth opportunities for local entrepreneurs. In the wake of the COVID-19 pandemic, African economies need these opportunities more than ever.
Leaving China As the Only Option
Amidst all these questions, there may be a few determined types who seek to push forward with upstream oil and gas development despite the lack of support from Western banks. Heads of state may try to subsidize gas projects (or provide other forms of support) in an attempt to build up domestic capacities and promote self-sufficiency in energy. Entrepreneurs may reach into their own pockets or work to drum up local support, in the hope of using abundant natural resources to turn out products for which there is demand.
Without access to Western capital, such initiatives are more likely to fail — or, at least, to falter. If so, their backers may very well look for support elsewhere. And they may find it in China, which has been very willing to provide financial and technical assistance for fossil fuel projects in Africa.
Personally, I find the prospect of Beijing becoming the main source of outside financing for African oil, gas, and gas-to-power projects to be concerning. I’m not saying this because I think African states ought to shy away from cooperation with China. I’m saying it because I want them to have as many options as possible. I want them to be ready to work with a wide range of partners, rather than fall into a pattern of not having to look further than satisfying China’s requirements.
And this won’t happen if Western lenders cut off funding for African oil and gas projects as a consequence of their commitment to curbing climate change.
Instead, China will come to have more influence than any other party over the African oil and gas sector. China, which has already put a number of African countries in the position of handing over important assets when they find themselves unable to keep up with loan payments. China, which has a less-than-stellar track record on environmental protection, despite being a signatory to the Paris climate accord.
Time to Make a Case for Oil and Gas
As I’ve already said, this is not the outcome I want.
Instead, I think Africa should have the chance to use its own oil and gas to strengthen itself especially with the coming into force of the Africa Continental Free Trade Agreement.
I also think Africa should have more than one option when it comes to financing petroleum projects.
Most of all, I think Africa should have the chance to make its own choices without undue pressure from Western institutions that don’t face the same challenges. Africans have to become more visible, more vocal and even more hopeful about the future and the energy sector.
As a result, I think African states ought to push back against the idea that it’s time for Western banks to stop all funding for fossil fuels. I think that African oil and gas producers ought to stand up for themselves and make a case for developing their own resources — particularly for using the least-polluting fossil fuels to deliver as much electricity as possible to as many people as possible.
And the time to make that case is now, while financing for oil and gas is still available.
*SOURCE African Energy Chamber.NJ Ayuk is Executive Chairman, African Energy Chamber.
What the U.S. Political Transition Might Mean for Africa Generally and Its Oil and Gas Sector in Particular
December 30, 2020 | 0 Comments
By Jude Kearney*
US Africa relations will likely improve by virtue of Trump’s exit.
2021 could be the beginning of a much needed reset for US relations with Africa and its various countries and regions. To date, most African governments have responded positively to the results of the recent U.S. presidential election, with many African leaders offering their congratulations to Joe Biden. That is no surprise: Donald Trump’s presidency has been, at best, a mixed bag for Africa and Africans.
President Trump’s Africa Legacy
Unfortunately for Donald Trump, his widely reported use of profane and vile language in a closed door meeting to describe African and other developing countries is now viewed by many, including most Africans, as clear evidence that he is uninterested in any meaningful or supportive relationship with Africa. While I accept it as fact that such derogation of a whole continent of peoples displays bigotry and disdain towards Africans, it is nonetheless true that, by some measures, his administration’s substantive policies and actions towards Africa are not all negative. For instance, it is a fact that Trump played a role in facilitating the April 2020? “OPEC plus” deal which helped to stabilize the oil industry and gave African oil-producing nations new opportunities to recover from COVID-19-related economic hardships. Certain of his administration’s senior officials and agencies have championed policies devoted to creating openings in Africa for US and Western investments, though primarily as a geopolitical hedge against our nation’s chief international hegemonic rivals. Indeed, the Prosper Africa program was launched by his administration pursuant to the stated intention to utilize the resources of the, including the balance sheet of a new, highly capitalized US Development Finance Corporation, to more forcefully compete for partnerships and commercial opportunities for US businesses in Africa.)
But let’s be clear: Among Africans and those in the private sector dedicated to partnering with and developing countries and regions in Africa, the net effect of Trump on US Africa matters is deeply negative. He didn’t win any friends in Africa by the above-mentioned disparagement of Africa as a monolithic “shithole”, nor through his spontaneous and otherwise unsubstantiated issuance of orders restricting travel to the United States from several African states beginning in 2017. In a move that drew criticism from many observers (including myself), his administration also withdrew from the Extractive Industries Transparency Initiative (EITI) in 2017, thereby weakening the critical war against corruption in the extractives industries (including especially the hydrocarbons sector). And the shithole reference was troubling beyond its arresting and unpresidential nature: that comment came as a flourish, of sorts, meant to punctuate his view of the unattractiveness of Africans as immigrate to the United States. As retold by an official present at the meeting, Trump would prefer instead emigres from Norway.
All, in all, where the Trump administration is concerned, US Africa relations will likely improve by virtue of Trump’s exit, even as observers seek to retain and expand on the few Trump policies and initiatives which are useful to the relationship. What remains is therefore to see what in particular the Biden Administration portends for the relationship.
How Substantially Better Will US Africa Relations Be Under Biden?
For a host of reasons, including his standing with the African American community, his reputation for stability and reason, and his renown for foreign policy expertise and diplomatic good will, Biden as president is already viewed by Africans and Africanists as an improvement over Trump. Certainly, Biden is expected to strike a different tone. In addition, throughout his presidential campaign, Biden engaged a group of dedicated Africa and foreign policy specialists to help him define and convey a positive and substantive Africa polity. Indeed, the Biden transition team has already pledged to aim for “mutually respectful engagement toward Africa with a bold strategy,” so it seems safe to assume that the new administration will take a much less confrontational approach to Africa, with an important nod to improving trade and diplomacy relationships between the US and African countries.
It is thus at least reassuring that there will be earnest and polite interaction between the US Government and its various bilateral counterparts in Africa. But will politeness good will be enough? Will the Biden administration be willing to work with Africa in ways that are productive and substantive, or will it offer mostly warm regards and rhetoric? In particular, will the new administration craft true partnerships with certain African governments and, importantly, will the Biden administration navigate a path in its Africa policies that advances US goals while acknowledging the unique juxtaposition of Africa’s continued and growing demand for power generation and poverty abatement, on the one hand, while on the other hand it must rely overwhelmingly on extractive resources, including hydrocarbons, to capitalize the installation of power and abatement of poverty.
Africa’s Energy Conundrum
So, looking more granularly at future of US Africa policy on Africa’s economies, what does the impending US presidential transition mean for Africa’s oil and gas sector? By virtue of my role at the African Energy Chamber, I simply have to ask: How will the Biden administration approach African oil and gas? Is it likely to exert itself to strengthen one of the most important pillars of the continent’s economy, or will it focus on other issues? How will it deal with energy poverty issues? Will the US help to fund an energy transition for Africa and brainstorm with leaders in Africa on the balance of optimizing Africa’s extractive resources while likewise planning a sustainable future for Africa and the planet? Or instead, on these thorny issues, will African countries be left to fend for themselves seek partnerships and support on these issues elsewhere? (It is a safe bet that China and Russia and others will be happy if that latter tack is taken.) Though I certainly don’t expect it, a related question should also be asked: Will the Biden Treasury Department continue policies where its default position is to distrust and punish Africa’s governments through sanctions and punitive monetary and banking restrictions, increasing the chances that certain countries will never get the developmental traction to pull itself out of stagnation? Will there be, in particular, an abrupt anti-funding posture towards Africa’s biggest commodity, hydrocarbons? Will the new administration utilize the good will that it will enjoy with Africa upon inauguration and the administration’s agency initiatives to foster stronger private sector alliances between US and African companies? In regards to expanded trade between the African continent and the US, how might the US provide input and partnership with Africa on the development of the proposed African Free Trade Agreement and how might the US Africa Growth and Opportunity Act be improved and strengthened so as to substantially improve direct trade advantages between the US and certain African countries?
Biden administration answers to these and similar questions will have profound influence on the tenor and success of renewed engagement between Africa and the US.
Relationship Between US Africa Policy and US Domestic Priorities, Especially Including Climate Change
First of all, the incoming administration’s top priority is likely to be COVID-19 — and specifically, the domestic implications of the pandemic. For despite the recent roll-out of several types of vaccines, infection rates are rising in the United States — and may continue to do so for some time yet. At the same time, the U.S. economy has not yet regained the momentum it lost in the spring. The outbreak is still causing companies to go out of business and people to lose jobs.
Under these circumstances, it makes sense for Biden to focus on the home front. What that means, though, is that he’ll inevitably devote more attention to the question of how best to compensate for the loss of many thousands of jobs in the U.S. oil and gas sector than to the question of how best to support upstream, midstream, and downstream projects that might create many thousands of jobs in Africa.
In short, the Biden administration is probably not going to make Africa’s oil and gas sector a priority.
But that’s not just because of the pandemic. The second reason why is that Biden has identified climate change as an urgent threat that requires immediate attention. He said so explicitly at a news conference on Dec. 19, as he named his picks for three cabinet-level posts at the Department of Energy (DoE), Department of the Interior (DoI), and the Environmental Protection Agency (EPA).
“Folks, we’re in a crisis,” he declared. “Just like we need to be [a] unified nation that responds to COVID-19, we need a unified national response to climate change. We need to meet the moment with the urgency it demands, as we would during any national emergency.”
Biden also described climate change as “the existential threat of our time.”
These statements are all perfectly in line with the lofty goals outlined on the Biden campaign website. They suggest the incoming U.S. administration will come down decisively on the side of renewable, zero-emissions energy initiatives at the expense of oil and gas. They suggest the Biden team might not provide any backing, financial or otherwise, for projects that aim to help African and international companies turn the continent’s abundant hydrocarbon reserves into fuel for domestic industry. And they suggest Washington might not be overly sympathetic to African countries that are trying to reduce their carbon footprint by expanding the use of natural gas as a fuel for electricity generation.
China’s Role in Africa: Africa Requests the Favor of US Attention and US Business Practices as Alternatives
If a strictly anti-hydrocarbon policy dominates US posture towards African economies, African states are left with little choice but to push back against such cut-and-dried policies which would essentially disregard the continent’s primary source of economic survival. And it may have the clearly unintended consequence of pushing African states deeper into the arms of other geopolitical suitors who acknowledge the unavoidable role that hydrocarbon resources play in Africa’s economy.
That push back will come not just because gas-fired power stations, a creative and growing use of Africa’s abundant hydrocarbon resources, generate less carbon dioxide other petroleum products–while also supplying the electricity that Africans need to improve their own lives and build their own economies—but also because other foreign investors, while not necessarily favored in many countries, in Africa, don’t place the impossible burden on Africa of ignoring its most prevalent source of income . China is chief among the countries sending such alternative investors into Africa.
I’m hardly the first person to notice that Beijing has taken a strong interest in Africa — in its resources, in its strategic locations, in its potential as a market for Chinese goods. And I’m also not the first person to notice that this interest has led multiple African countries to accept loans from China, which does not follow Western creditors’ practices of imposing requirements for transparency and human rights protections. But I want to add my voice to those who have pointed out that Chinese loans may be a net drag on Africa, since they often do little to support local workers or local companies and are so hard to repay that they sometimes leave borrowers with no option but to forfeit control of important assets.
I also want to point out that billions of dollars’ worth of Chinese credits have flowed into Africa’s oil and gas sector — especially in cases where sanctions and other restrictions have limited opportunities for Western investors. Chinese companies have, for example, played the leading role in developing oil fields in Chad, Sudan, and South Sudan. They have also established footholds in key producer states where sanctions are not a consideration — as in Nigeria, where a Chinese company is building the cross-country Ajaokuta-Kaduna-Kano (AKK) gas pipeline.
In short, China is looking to play a significant role in Africa’s oil and gas sector. What’s more, it’s making clear that it’s ready to invest in hydrocarbons even when the United States and other Western countries won’t do so.
Certainly, African countries aren’t going to be turning their back on Chinese investments any time soon – and they shouldn’t. Even so, I’d like the continent’s oil and gas producers to have as many options as possible. As I’ve already said, I’m concerned.
And I think the United States ought to be concerned, too. Partly because China doesn’t always play fair with respect to trade and currency policy. Partly because China doesn’t necessarily share the U.S. government’s stance on transparency and accountability.
The Biden administration will be in a better position to do the watching if it looks for ways to help U.S. businesses compete in the same sectors that China has been targeting in Africa. It therefore ought to give serious consideration to projects that involve hydrocarbons. It should look for ways to provide financing, risk insurance, and other forms of support for African oil and gas initiatives, and it should pursue closer diplomatic and trade ties with African states that don’t fall in line with Beijing’s demands. It could, for example, back the Sudanese interim government’s decision not to renew PetroChina’s contract for Block 6 in the Muglad basin at the end of 2020.
U.S. DFC, Among Certain Other Agencies, Offers Great Potential for Both the U.S. and Africa
The one key initiative taken by the outgoing Administration which can be most useful to the development of an improved US Africa relationship in the coming years is the consolidation and focus of US developmental objectives through the establishment of the US Development Finance Corporation. The substantially increased balance sheet and proactive charter given to the agency can be used to greatly enhance African development initiatives and foster stronger bilateral ties between the US and many African nations. However, as is widely known in Washington, personnel is policy: the use and treatment of this agency and its resources by new Biden administration appointees will go a long way toward defining the tenor and effectiveness of Biden Africa policy. could also make better use of existing institutions — especially the International Development Finance Corporation (DFC).
The Trump administration had a point when it gave the DFC — which is described as the provider of “an economically viable form of private sector-led investment, offering a robust alternative to state-directed investment which often leaves countries saddled with debt”— the task of promoting U.S. trade and economic interests in the face of stiff competition from China.
What’s more, I don’t expect the Biden administration to set DFC aside — at least not initially, while it focuses so closely on the pandemic and climate change. Instead, I expect the incoming team to let the corporation continue along its current course for the time being.
The problem is that DFC’s course doesn’t do much for the oil and gas sector in Africa. The agency has lent its support to several gas-to-power schemes, such as the Central Termica de Temane (CTT) initiative in Mozambique, but it has shown much more interest in renewable energy projects such as solar farms.
This imbalance doesn’t seem to be the product of any institutional biases against fossil fuels. After all, DFC has awarded funding to a number of upstream and midstream projects in the Middle East and Latin America. Nevertheless, there is an imbalance, and African oil and gas producers could try to correct it by asking this U.S. government agency for help in financing oil and gas production, transportation, processing, and distribution initiatives.
If they succeed, they’ll be in a better position to seek alternatives to Chinese creditors as they work to develop some of their most valuable natural resources. And along the way, they’ll also extract more of the fuels they need to produce more electricity, support local industries, and raise their earnings.
*Mr. Kearney collaborated on this article with NJ Ayuk, Executive Chairman of the African Energy Chamber and CEO of Centurion Law Group
A Few Thoughts for this Generation of Africans in 2021: Be Bold and Cut Out Entitlement, No One Owes Us Anything
December 28, 2020 | 0 Comments
In 2021, African gas projects are going to be in the news
By NJ Ayuk*
In 2021 most opportunities in the energy sector and in business in general will go to those who show up and negotiate better deals and get involved in making African resources work for us. Forget handouts, foreign aid and government handouts.
As I wrote in the second edition of Billions at Play: The Future of African Energy and Doing Deals, in 2021, young African dealmakers, negotiators and lawyers will have to embrace a new mindset to win. They will have to mobilize their resources and advocate for important principles of personal responsibility, smaller government, lower taxes, free markets, personal liberty, and the rule of law.
In 2021, African gas projects are going to be in the news. Companies will push to get them going, from Mozambique to Nigeria and from Equatorial Guinea to Tanzania.
If some extremists have their way, none of these projects should happen and our people should be left in the dark. Question we must also ask is how Africans are going to participate when it comes to jobs and contracts. In 2021, we cannot be bystanders. We all can’t afford to.
Africa’s economic recovery from Covid-19 and our global significance in the era of energy transition and attacks on our energy sector must be driven by the talent and entrepreneurship of its people.
Our continent is still struggling when it comes to establishing democratic and trade institutions, we must push for more democracy. Democracy isn’t perfect but it is the best of all political practices and we must embrace it.
I have a few words of advice for this generation, for Africa’s young attorneys, entrepreneurs, rising stars and dealmakers:
Never lose sight of the significance of your work.
By negotiating effectively for African businesses and governments, you can play a huge role in transforming the lives of hundreds of thousands of Africans. Few things in life are more satisfying.
I am proud of the law group I have built, but I consider the work I have done to get justice for and empower African individuals, businesses, and communities among my greatest successes.
I am the first to advise many young people to avoid feeling entitled to anything. No one owes you or us anything. We have to earn it. Our approach and success in oil and gas negotiations stem from our deep preparation and mindset. More of that is needed in 2021.
I have stated many times: you succeed when you look for mentors and let them mentor you. It’s important to have someone who is promoting you when you are not in the room. Next, be stubbornly loyal. Don’t try to pull a fast one because you know more than others! Further, embrace your trials and shortcomings for they teach you to be a better person and lawyer.
I have seen too many young lawyers or rising stars who get a chance to be on a podium, and then tend to spend more time being celebrities than being around colleagues or supervisors.
Many so-called celebrities have not earned a deal and completed one, so avoid having a big head. For me if you have not closed a deal and are not making money, you need to keep your philosophies to yourself. It is crucial to have a strong focus on building your skills because clients and business partners really want you to be good at what you do. Your writing, critical thinking, commercial mindset and in-depth industry skills cannot hurt you. Most clients want to know who is working on their deals, and they do not care about your race or nationality. They want to know you are qualified and can get the job done.
When you finally get a deal done and you get your first bonus or check, do not fall in the trap of buying that fancy car or getting into fast life. You will get broke so quickly. Spend wisely even when you think you have arrived where you need to be. Always think there is more and stay hungry. Look at the Texas oil boys, they are always hungry. They wear their cowboy boots and continue searching for the next big discovery.
Hashtags do not pay the bills. Get off your phone.
Get offline, social media is nice but it isn’t everything, we have seen people who prefer to seat on their phone even during business meetings rather than engage on real business. How do want a deal when you are busy on your whatsapp group chats? Why have a meeting with someone when you will be on your phone while they are talking? Get out of the room and take the call or send a message. If you decide to work on your Instagram while talking to me, I walk you out of my office or end the meeting. When you don’t get the job or the contract, don’t be so quick on blaming the “White Man” or Racism.
I know this will get the young generation annoyed, but its real. We need to start having a post covid mindset and know we will have to engage again. I am not crazy about Zoom meetings, but we have to do it. Business is not about who had the best tweet two hours ago or who does the best hooting and hollering. Get down on the ground and make money. Do not believe those who tell you money is bad. We know it is bad being broke and we hate being broke. You should never apologise for working hard and making money. To do that, you must be focused and yes, get off your phone.
Commit to work. Pay your dues. Your time to shine will come.
Always ask yourself, “Am I adding value to the firm or the company?” Don’t think you are in the firm to be the labor union representative or the head of diversity.
Do not walk around the firm or even a negotiation with arrogance or give off a sense that you are entitled, or that your opinion matters on every subject. You are not owed anything. It is important not to cry over discrimination on every issue, whether it is sexism, racism, or xenophobia.
You beat them with excellence and success. We see it every day and you will be surprised it comes from the same liberals who claim to love all humans and want to save the world. They will love to patronize you and put you in your place. I have experienced it myself. I just work harder, and success follows.
You must understand that building a successful practice or business calls for something not taught in law school or business school or any school: the ability to hustle and deliver on deals. I have always had run-ins with young lawyers because I can be a tough, goal-oriented taskmaster. I have a fierce sense of urgency that many others don’t share.
Working for Centurion is not for the naïve or the fainthearted—we don’t tolerate young lawyers viewing Centurion as merely a job. Everyone has to give their maximum effort all the time.
The truth is, I am harder on myself. I am never satisfied, and I just believe I can win bigger and do the deal better. The most important outcome for me is to have people around me achieve more than they ever thought they could.
Lean in and take the heat for your client or causes you believe in, and for Africa
In 2021, you will have to visible, be vocal in defending the African energy sector from those that want to end it and you must capitalize on the opportunities that you see. One of the key things you must do in 2021, is take the heat for your clients. I have never had a problem being called an ambulance-chaser in the past. Today I am that ambulance that is being chased and many know i will always stand with them and I built a strategy of taking the heat for them. Don’t let them push on your client or kill your issue. Develop a thick skin and let them hit you. If I can’t take the heat, I have no business being in the kitchen.
I have been pushed, been kicked, sometimes been spat on, lied on, demonized, talked about and even derided in the media. Its does not bother me one bit, I always know I am going to outlast my distractors or competition. In 2020, we made more money than any other year with Centurion Plus, our latest on-demand service. I have also been invited to meet with Presidents, Ministers, CEO’s and even Royals. But I never lost my way.
Never take your eyes off the prize. Be patient, play chess, keep smiling, be ready to take a punch and definitely hit back and do it harder. Maybe a combination of Jabs, Uppercuts and Hooks. That’s going to be you in 2021. Its going to be a fight to stay alive, stay employed, stay in business, stay relevant and stay sane when everything and everyone around you is going crazy.
You are going to be tested. They are going to come after you. sometimes even your own friends and those who laugh with you then stab you in the back. You will be called a traitor to most of your liberal elitist friends who feel entitled, drink latte with soy or almond milk. They sometimes cannot believe that this kid who was their darling and their best boo does not buy into their tree hugging, cry me a river ideology. You and I will have to believe and fight for Africa first, against energy poverty, and for personal responsibility, free markets, limited government and yes we must not be ashamed of being people of faith.
The wisdom and advice my law school mentor and professor John Radsan, who used to serve as the CIA’s assistant general counsel and Ron Walters shared with me hold true for you today: each one of us has a mandate to use our education and skills to impact communities and to promote economic growth and empowerment.
So, yes, seek career success and prosperity in 2021. But, in the end, choose to do good: use your skills to make sure that everyday Africans receive their fair share of the benefits the continent’s natural resources can provide.
*NJ Ayuk is Executive Chairman of the African Energy Chamber, CEO of Centurion Law Group, and the author of several books about the oil and gas industry in Africa, including ‘Billions at Play: The Future of African Energy and Doing Deals.’
Pipeline enthusiasm to drive investments worth several billion USD into Niger
December 9, 2020 | 0 Comments
|The pipeline has therefore become a symbol of hope, upon which several major development projects depend.|
Niger’s Secretary General in the ministry of Energy, Balla Mahaman Rabiou announced during a working visit of the African Energy Chamber to Niger, that his country had concluded preliminary studies for the implementation of power projects worth hundreds of millions of dollars nationwide. According to Rabiou, the government has embarked on an aggressive plan, to increase access to power for its predominantly youthful population from currently over 16% to 80% by 2035. Of particular focus, are Niger’s rural areas which have power access levels of less than 5%. Many of the power projects envisaged, are expected to be solar mini-grids, taking advantage of Niger’s abundance of sunlight throughout the year. The recently created Agency for the promotion of rural electrification is at the forefront of this effort.
During its working visit to Niger, (23 – 27 November), the African Energy Chamber pledged to support the government’s initiatives to attract much needed investment into the country. “Niger has embarked on a path we passionately support, to drastically increase access to reliable and affordable electricity for its youthful population” said Verner Ayukegba, Senior VP with the African Energy Chamber. This will not only increase the living conditions of the population, but will also form the basis for increased mechanisation and industrialisation in other sectors such as mining and agriculture. The most important effect of this increase in access to energy will be a steep rise in the availability of Jobs in the country.
There has always been a drive to increase access in Electricity in Niger, supported by donor partners like Power Africa, USAID and the European Union. However, the government’s new plans rely significantly on its own revenues, expected from increased oil production in Niger. Production is scheduled to increase from currently 20,000 barrels per day currently to 120,000 in 2024. This increase shall be made possible, with the completion of the 1950Km Niger-Benin oil pipeline to be built by the China National Petroleum Corporation (CNPC). The pipeline will transport crude to the global markets via the port of Seme in Benin from Niger’s prolific Agadem basin. The pipeline has therefore become a symbol of hope, upon which several major development projects depend. Growth rates overall in Niger are expected to reach double digits, for the decade after the completion of the pipeline in 2024.
Following Petroleum Minister Foumakoye Gado’s role in securing the construction of the all-important pipeline, he was named by the African Energy Chamber as one of the top 25 leaders in the African Energy Sector to watch. Minister Gado’s success in facilitating the deal has significantly de-risked exploration in Niger in particular and the Sahel in general.
The pipeline also symbolises the likelihood of even greater exploration in Niger. British minor, Savannah Energy is leading the way with 5 discoveries from 5 exploration wells drilled and a combined estimate of 6.7 billion barrels of oil Initially in Place in its two licenses. Several other companies are currently negotiating with the government to secure exploration licenses in Niger. Niger’s success is being closely watched by oil companies who in the past have paid less attention to the search for hydrocarbons in the Sahel. This is likely to change, with the successful completion of the pipeline.
Bilateral discussions between the Chamber and several other notable institutions in Niger, revealed a flurry of activities, that will turn Niger into a destination for major investments into the mining and energy sectors especially. The National Oil Company, SONIDEP, which was initially focused solely on the distribution of petroleum products, is now concluding a reorganisation with the mandate to ramp up its activities in the upstream and midstream sectors. SONIDEP is negotiating the obtention of exploration licenses, which it intends to develop, together with experienced technical partners. Similarly, the state mining holding company SOPAMIN is also benefiting from the increased investment projections around Niger, with renewed interest from investors into Niger’s prolific mining sector. The company is currently evaluating several new mining project proposals worth hundreds of Millions of dollars.
Politically, Niger is one of Africa’s most stable democracies, giving more confidence to investors as to the safety of their investments. A further successful transfer of power in April next year, from current President, H.E Mahamadou Issoufou to an elected successor will only help to increase Niger’s attractiveness to investors.
*SOURCE African Energy Chamber
African Energy Chamber Starts a Working Visit to Mozambique to Push for Natural Gas Adoption and Jobs Creation
December 3, 2020 | 0 Comments
The Chamber will be advocating for sound local content policies and development and a broader push for gas monetisation in order to fight energy poverty and create jobs.
The African Energy Chamber is in Mozambique this week on a working visit to meet with the country’s government authorities, representatives of the oil sector and local entrepreneurs and services providers. The Chamber will be advocating for sound local content policies and development and a broader push for gas monetisation in order to fight energy poverty and create jobs.
With the revised development plan for the Temane PSA now approved, and as Eni’s 3.4 mtpa Coral South FLNG and Total’s 12.88 mtpa Mozambique LNG projects move forward, Mozambique is set to become an African gas leader. While Mozambican gas exports are expected to benefit more than just South Africa moving forward, the monetisation of its gas at home is also set to unlock tremendous local value for Mozambicans.
The Chamber continues to firmly believe that gas monetisation stands to change the economic outlook of Mozambique and its people. Natural gas remains the best hope the country has to fight energy poverty, improve security and offer opportunities to young Mozambican women and men.
“The Chamber salute H.E. Filipe Nyusi, President of Mozambique, for providing an enabling environment for gas investors to make a play in Mozambique. The country has a unique opportunity to set new standards for the way Africans develop and monetise natural gas, and the Chamber will be once again expressing its support to all stakeholders for making this ambition a reality in the near future,” declared Nj Ayuk, Executive Chairman at the African Energy Chamber.
*SOURCE African Energy Chamber
African Energy Chamber projects Africa’s Power Demand to Keep Rising Between 4-5% per year
December 2, 2020 | 0 Comments
The African Energy Chamber forecasts that 2021 generation is likely to range between 870-900 TWh if demand picks up aggressively throughout the year.
Africa’s electricity generation capacity has grown at an average of 4.8 percent per annum since 2008; The Chamber remains determined in its commitment to seek a fair and just resolution that puts forth the interests of African people, businesses, investors and economic growth; This is an excerpt taken from the Africa Energy Outlook 2021. Get your free copy today on www.EnergyChamber.org.
Total electricity generation in Africa stood at 870 terawatt-hours (TWh) in 2019, an increase of 2.9 percent from 846 TWh in 2018. Africa’s electricity generation capacity has grown at an average of 4.8 percent per annum since 2008, compared to 2.7 percent globally. Nonetheless, Africa’s share of global electricity generation has been around 3 percent since 2000.
The African Energy Chamber forecasts that 2021 generation is likely to range between 870-900 TWh if demand picks up aggressively throughout the year following the gradual removal of COVID-19 lockdown restrictions and economies opening more fully to international trade. Our base case forecast using a conservative 4.5 percent yearly growth (current stated policies) shows that electricity generation on the continent will increase by 25 percent, 55 percent and 141 percent of 2020 baseline levels to reach 1,057, 1,138 and 2,047 TWh by 2025, 2035 and 2040 respectively. This increases to 1,520 in 2030 and 2,700 TWh in 2040 in a more aggressive push to expand capacity at 6 percent per annum.
The latter assessment is premised on Africa aggressively pushing to expand electricity supply and modern energy services within the framework of the Africa Agenda 2063 on energy and infrastructure development. This will ensure that generation expansion will outpace population growth on the continent (Africa will have 1.8 and 2.45 billion people by 2040 and 2050).
Regarding the supply mix, natural gas (39 percent) constitutes the largest element in Africa’s electricity generation mix, followed by coal (29 percent), hydro (15 percent) and oil (10 percent).
While nuclear energy accounted for another 2 percent, the share of renewables (RE) in Africa’s generation mix is growing, albeit at a lower pace than in other regions (5 percent). Most of the RE growth comes from solar, wind and geothermal power plants, and this expected to continue into 2030. Africa generated 830 megawatts (MW), 5,748 MW and 7,236 MW of geothermal, wind and solar installed capacity in 2019, signifying growth rates of 17.4 percent, 26.1 percent and 60.2 percent respectively since 2010.
Nonetheless, most of these RE developments on the continent are limited primarily to Northern (Morocco, Egypt) and South-Eastern Africa (South Africa, Kenya). Given the declining costs of key RE technologies along with rising concerns over CO2 emissions, the level of renewables deployment, particularly solar and wind energy is expected to increase by 1.5 percent annually over the next decade to 2030.
Regarding sectoral electricity consumption, the industrial sector remains the continent’s largest user (41 percent) followed by residential (33 percent), commercial and public services (18 percent) and agriculture (4 percent). Transport consumes a small proportion (approximately 1 percent) while the remaining 3 percent was accounted for by other sectors.
At a sub-regional level, North Africa and South Africa account for more than 70 percent of Africa’s electricity demand.
This is an excerpt taken from the Africa Energy Outlook 2021. Get your free copy today on www.EnergyChamber.org. Engage with us on our social media using #ChamberNews #ChamberEnergy Outlook.
*SOURCE African Energy Chamber
African Businesses and Officials Demand Justice Against Disgraced Spanish Police Commissioner José Villarejo and Diario Rombe Founder Delfin Mocache Massoko
December 1, 2020 | 0 Comments
|According to a Spanish government indictment, Villarejo received money and worked with Massoko to discredit African businesses and politicians.|
Former Spanish Police Commissioner José Villarejo and Delfin Mocache Massoko, who manages Equatorial Guinea’s digital newspaper Diario Rombe, will be sued and brought to justice. According to a Spanish government indictment, Villarejo received money and worked with Massoko to discredit African businesses and politicians, using privileged information to sell and extort customers and conduct illegal spying activities.
Over the past few years, individuals tied to Diario Rombe have indeed been trying to extort companies and public officials, and threatened to inflict substantial financial and reputational harm on them if their demands were not met. These are serious offences that should no longer go unpunished. As the affairs grows, it is becoming clear that not only did José Villarejo receive USD 5 million in exchange for working with other already disgraced individuals to discredit African companies and officials, but also kept making false public statements alleging wrongdoing from them.
This is a case where a corrupt police officer teamed up with unethical Equatorial Guinea blogger to blow well past the line of aggressive advocacy, and crossing into the territory of illegal extortion and spying in an attempt to enrich himself and his companions by extracting millions of dollars from African businesses and government officials.
Consequently, a criminal and civil complaint is currently being pursued by Centurion Law Group on behalf of the victims. This criminal and civil complaint demonstrates the continuous commitment to unmasking malicious actors behind some of the most egregious attacks on black businesses and everyday Africans. The fight against corruption and mismanagement should be aggressive and we must work together to get results.
The consequences of Delfin Mocache Massoko and Villarejo’s actions are far reaching, affecting not only individuals, but also entire African economies trying to recover from Covid-19 and economic slowdowns. Engaging in abuse of power for extortion purposes is a dangerous and illegal game and African executives and officials are now ready to stand up for their rights. Those found guilty will be held accountable for their actions, and Centurion Law Group intends to continue working with the Spanish authorities and other relevant jurisdictions to vigorously seek justice.
By calling out and seeking justice against those who threaten hardworking Africans, we expose criminals who hide behind their computer and blogs and launch attacks that threaten our public safety, our businesses, our jobs and our ability to get Africans out of poverty. Our firm, with other law firms in Spain, Europe and the United States and with the assistance of Spanish and European authorities, is sending a strong message that we will work together to investigate and hold these criminals accountable.
*SOURCE Centurion Law Group
Don’t Underestimate the Power of Natural Gas to Transform Africa
December 1, 2020 | 0 Comments
By NJ Ayuk
|The continent’s gas industry is on the verge of real transformation, as the African Energy Chamber (AEC) notes in our 2021 Africa Energy Outlook.|
Africa has already made an indelible mark in the oil industry. It is home to four of the world’s top 20 crude oil producers — Nigeria, Angola, Algeria, and Libya — and these same four countries also have some of the largest oil reserves in the world.
So far, it hasn’t made quite as much of a splash in the gas industry. The only African countries on the list of the world’s top 20 gas producers are Algeria and Nigeria, and one of the states that has the largest gas reserves is Mozambique, which is still several years away from bringing its major fields on line.
But the gap between African oil and gas doesn’t have to be permanent. The continent’s gas industry is on the verge of real transformation, as the African Energy Chamber (AEC) notes in our 2021 Africa Energy Outlook, released earlier this month. I’d like to describe what forms that shift might take — and explain how the changes would benefit Africans.
New Sources of Production
Some of the change I expect is going to happen in the upstream sector — that is, in the realm of exploration and production.
First, the continent’s current leading producers are likely to produce more. North African states such as Egypt and Algeria will account for part of this increase, as they are looking to ramp up development at existing natural gas fields. But another part of it will stem from programs designed to reduce the flaring of associated gas found in oil fields. Both Nigeria and Angola, for example, have plans to expand the use of associated gas. The former aims to deliver its production to the domestic market, while the latter is looking to split its production between the local market and the export-oriented Angola LNG project.
The upshot of these trends is that the list of Africa’s top gas producers will probably remain static until the middle of the decade. As the AEC’s outlook explains: “The (continent’s) top five crude oil producers — Nigeria and Angola from the west, and Algeria, Egypt, and Libya from North Africa — complete the top five natural gas producers for 2020 and 2021. These five countries contribute about 90% of the overall natural gas output from the continent for both (2020 and 2021), and the expected forecast suggests the share of these countries will remain the same going into the mid-2020s.”
At that point, though, new producers will start to play a more prominent role. Mozambique is due to launch its first greenfield project at Area 1 in 2024, and its offshore zone may become a major source of natural gas by 2025-2026. The Mauritania-Senegal offshore zone may follow a similar timeline, as the Greater Tortue/Ahmeyim blocks may begin yielding natural gas in 2023, followed later by the Yakaar-Teranga and BirAllah projects. What’s more, all four of the projects mentioned in this paragraph will support gas liquefaction plants capable of producing and exporting LNG.
By the end of the decade, then, there will be more than five countries accounting for the bulk of Africa’s total gas production. Nigeria, Angola, Algeria, Egypt, and Libya will be joined by at least three others —Mozambique, Mauritania, and Senegal.
Domestic Consumption vs. Exports
Meanwhile, consumption patterns are going to shift along with production patterns. Once again, this shift is likely to begin once the large new fields in the Mozambique and Mauritania/Senegal provinces come online.
The change may not be obvious on a macro level, because it won’t be evident in the split between exports and domestic consumption. That is, Africa will continue to use about 70% of the gas it extracts and will export continue to the remaining 30%. As the AEC’s outlook explains, though, the geography of African gas exports will not remain static.
“The pattern has been relatively stable since 2012 with about 70% serving local markets, 20% exported to Europe and 10% exported to Asia,” the report states. “The mid-2020s LNG startups are also expected to distort this picture by increasing the market share for East Asia LNG exports. This development is, however, not (a consequence) of local markets’ (rising demand), but rather the shrinking ability of North African countries to maintain their export capacity to Europe on the back of strong domestic demand growth. By 2030, the expectation is effectively for East Asia and Europe to be inverted, while domestic market share remains constant.”
In short, Africa is on track to produce more gas by the end of the decade but will keep the same share of the total for its own use. At the same time, Asia will replace Europe as the most important market for African gas exports.
Gas Means Jobs
These trends are interesting, but you may want to ask: What do they mean for ordinary Africans, for people who are less concerned with production data and trade balances than with questions about how to support their families?
They mean a great deal.
As I’ve mentioned, the 2021 Africa Energy Outlook report projects that African gas production is going to rise, especially after new fields come on line and ramp up development in the middle of the decade. It also anticipates that African gas consumption will rise, even if domestic consumption continues to absorb a full 70% of total production.
As production goes up, upstream operators will create jobs. They will need people to help them build, operate, maintain, and repair production, transportation, and processing facilities. They will also need people to administer their local operations. Additionally, they will need to meet legal requirements or contractual commitments for local content, so they will need to hire African contractors. Those African contractors, in turn, will need employees of all kinds, and so will hire African workers.
And as consumption goes up, even more jobs will be created. Distributors will need new pipelines to deliver the gas to end-users, so they will need people who can help them build, operate, maintain, repair, and administer those pipelines, along with associated infrastructure facilities such as storage depots. And even in the absence of pipelines, they will need to acquire tankers and containers so that they can bring gas to customers by road, rail, or river. Accordingly, they will need people to procure, operate, maintain, repair, and administer these operations.
Meanwhile, there’s more. The hiring of more African workers is sure to have knock-on effects. If, for example, employees of upstream operators need a way to get to a remote worksite, local transportation companies may be able to serve them. If so, those transportation companies may have to hire more people to drive their vehicles. Likewise, if African construction firms need to procure extra building materials to uphold their contracts with upstream operators, local suppliers may be able to meet their needs. And if so, those local suppliers may have to hire more people to handle their inventory.
In other words, as Africa’s gas industry grows, it has the potential to create thousands and thousands of jobs! Of course, some of them, such as construction jobs, will be temporary. Some of them will be more permanent, though, especially if the governments of gas-producing states work with upstream operators to develop local hiring and training standards that expand the capacity of the local workforce.
All the Way Down the Value Chain
But the knock-on effect doesn’t have to stop there.
In my most recent book, Billions at Play: The Future of African Energy and Doing Deals, I urged African oil and gas producers to look as far down the value chain as they could. I advised them to pursue projects that treated hydrocarbons not just as exportable raw materials but as inputs for value-added operations such as fertilizer or petrochemical manufacturing. I also suggested that they look for ways to focus on gas-to-power projects with the intent of improving domestic electricity supplies — and not just because new power grids would benefit African businesses.
It is true, of course, that some African businesses will be able to create more jobs if they do not have to worry about blackouts. Likewise, it is true that gas-to-power projects will create jobs of their own in areas such as construction, operations, maintenance, and administration. But it is also true that African households need and deserve access to reliable energy supplies, regardless of employment levels — and that gas-to-power plans can help them!
I’m hardly the only person to reach this conclusion. When I wrote Billions at Play, several African countries had already rolled out ambitious gas-to-power schemes. Nigeria, for example, was in the process of implementing a program that promoted associated gas as fuel for new power plants. Since then, others have followed suit. For instance, as the AEC’s energy outlook notes, Senegal has unveiled plans for using its future gas production to generate electricity for the domestic market. Mozambique already has a couple of gas-to-power projects in the works, too.
But it shouldn’t stop there. I’d like to see more gas producers do this as they ramp up gas production in the second half of the decade. If they do, they will have accomplished something beyond merely increasing output levels. They will have taken concrete action to strengthen their economies and benefit their own citizens. And in so doing, they will have made their mark on the world!
*SOURCE African Energy Chamber. NJ Ayuk is Executive Chairman of the African Energy Chamber, CEO of Centurion Law Group, and the author of several books about the oil and gas industry in Africa, including Billions at Play: The Future of African Energy and Doing Deals.
African Energy Chamber Offers Guide for Reforms for Equatorial Guinea’s Oil & Gas Sector
November 26, 2020 | 0 Comments
|To support recovery and boost investment, the African Energy Chamber’s 2021 Outlook offers several pragmatic solutions.|
The African Energy Chamber organized a Power Breakfast yesterday in Malabo to mark the launch of its Africa Energy Outlook 2021. The event gathered all of the Chamber’s partners and industry stakeholders in Equatorial Guinea as the market embarks on a path to recovery in 2021.
Despite its remarkable resilience, Equatorial Guinea’s oil sector is facing the same dire situation as the rest of global energy markets: plunging oil prices, uncertain demand and dry of capital on the back of the energy transition. In such a context, the country has embarked early on an ambitious investment outreach programme with the Year of Energy 2020 and the Year of Investment 2021. Key priorities include boosting local content, expanding midstream and downstream gas infrastructure, opening up the Rio Muni to onshore oil & gas activities, and leveraging on the country’s tremendous minerals and mining potential to further diversify the economy.
In its latest 2021 Outlook however, the African Energy Chamber has called on African governments and industry stakeholders to come together and do more to support the sector’s competitiveness and attractiveness. A key concern for Equatorial Guinea’s oil & gas industry remains the lack of competitiveness of its fiscal terms and the lack of an attractive enabling environment that supports local private sector growth and jobs creation. “The time for fiscal reforms in Equatorial Guinea and the CEMAC region is now. If we do not act now, our companies risk going bankrupt, our economic parameters will worsen and our jobs will be in jeopardy,” declared Leoncio Amada NZE, CEO of APEX Industries and Head of the CEMAC Region at the African Energy Chamber.
To support recovery and boost investment, the African Energy Chamber’s 2021 Outlook offers several pragmatic solutions. The Chamber has issued a call to action to policy makers and stakeholders around the adoption of bold fiscal reforms and the modernization of regulatory frameworks to bring back investors’ confidence. Similarly, the Chamber is increasingly engaging with financial institutions and banks on making capital more easily available to local entrepreneurs.
Finally, the 2021 Outlook also calls for a much wider adoption of natural gas across the economy, and a stronger industry dialogue to boost capacity building. “It would help if governments across the region caucus with international oil companies and the petroleum industry as a whole when drafting policies that are going to affect the industry. The voices of local and international investors need to be heard in order to adopt market-driven policies,” declared Simon Smith, Vice President and Country Manager at Marathon Oil Corporation.
Equatorial Guinea is ideally positioned to lead such a recovery, because of its political will and leadership and its established gas industry. “There is tremendous pressure from NGOs and green energy lobbyists, but there is still a future for the oil and gas industry in Africa. We have the right to exploit our natural resources to build our economies, and our natural gas potential offers such an opportunity,” added Oscar García Bernico, General Director of State Entities at the Ministry of Mines and Hydrocarbons. The Chamber has indeed highlighted how Africa’s gas potential, much more important than oil, is a key advantage for the continent as it seeks to embraced the energy transition and retain foreign capital.
The high-level reunion highlighted that, once again, the future is in the industry’s hands but the ability of policy makers and industry stakeholders to work together on a more ambitious set of reforms will be a deciding factor of the upcoming recovery. In doing so, the country will be ably to rely once again on leadership of H.E. Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons. Both at home and abroad in key institutions such as OPEC, GECF or APPO, he has always been central to advocating for the interests of the local industry and the rest of Africa at large. In this context, Equatorial Guinea has strong cards to play, and is thankfully already embarked on landmark projects that can set it apart from years to come, from the development of an offshore gas megahub in the Gulf of Guinea to the expansion of its refining and gas monetization infrastructure at Punta Europa.
*African Energy Chamber
African Energy Chamber to Gather Industry Stakeholders within the CEMAC Region Ahead of 2021 Recovery
November 23, 2020 | 0 Comments
|The event will gather all of the Chamber’s partners and industry stakeholders in Equatorial Guinea as the market embarks on a path to recovery in 2021.|
To mark the launch of the latest African Energy Outlook 2021, the African Energy Chamber (www.EnergyChamber.org) will be hosting a Power Breakfast in Malabo on Wednesday November 25th. The event will gather all of the Chamber’s partners and industry stakeholders in Equatorial Guinea as the market embarks on a path to recovery in 2021.
The event will be opened by H.E. Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons of Equatorial Guinea, and will benefit from the presence of leading participants such as Antonio Oburu Ondó, Director General of national oil company GEPetrol, and Leoncio Amada NZE, CEO of APEX Industries and President for the CEMAC Region at the Chamber. Together, they will be joined by leading industry executives from Marathon Oil Corp, ExxonMobil, the National Bank of Equatorial Guinea (BANGE) and the Bank of Central African States (BEAC) along with local industry players.
Participants will notably seek ways to work together on ensuring a strong recovery in 2021 and addressing key concerns that continue to affect investments into the region, notably when it comes to regulatory frameworks. Equally important, the discussion will aim at highlighting the resilience of Equatorial Guinea’s oil sector during the Covid-19 pandemic and historic crises of 2020, and focus on the key projects and initiatives that will bring back the industry on strong feet, especially natural gas and energy infrastructure.
“Equatorial Guinea has always been an oil & gas leader in Central Africa and across the continent as a whole. While we have not been exempt of the deep shocks and crises our industry has faced in 2020, we believe that the country’s experience will support its recovery”. Stated Leoncio Amada NZE, President for the CEMAC region at the African Energy Chamber.
“The Chamber’s latest Outlook for 2021 calls for a stronger dialogue around key issues such as policy and fiscal reforms, and a stronger adoption of gas across African economies. Equatorial Guinea, its companies and entrepreneurs, are well place to lead and benefit from such developments,” Concluded Leoncio Amada NZE,
The Power Breakfast will be held at Hotel Colinas in Malabo from 8AM onwards. Interested participants may register by sending an rsvp to firstname.lastname@example.org.
*African Energy Chamber
Oil and Gas Discoveries and Activity in Southwest Africa Set to Open New Basins for Development and Trigger Big Investments in Namibia, Angola and South Africa
November 23, 2020 | 0 Comments
By NJ Ayuk*
This is a time for the oil and gas companies that are involved in these mega-opportunities to redouble their efforts to support local communities and people.
Last spring, the Maersk Voyager, an ultra-deepwater drillship under contract by French supermajor Total, drilled a wildcat well in the deepest water ever – 3,628 meters (11,903 feet) in Block 48, a massive area with potentially huge oil reserves in the Congo basin offshore Angola.
The record-setting achievement wasn’t a success just for Maersk and Total. It also represented a victory for Angola and state oil company Sonangol in their search for new oil, part of a campaign to reverse a recent trend of production declines. The high-impact concept well was long anticipated, and it didn’t take long for other global players, including Qatar Petroleum (QP), to buy in. As part of its bid to expand its exploration portfolio, QP acquired a 30% stake in Block 48 in August, its first venture into Angola’s promising deepwater acreage.
If Angola were the only southwestern African nation making oil and gas news, that would still be a pretty good story. But the fact is, Africa’s southwestern coast is home to perhaps the most globally anticipated wildcats of 2020 and 2021 – exploration that continues despite the added challenges of COVID-19, which has constrained operating and capital budgets. As the African Energy Chamber noted in our 2021 outlook, if successful, prospects in Angola, Namibia, and South Africa, could “open new basins for development and trigger big investments towards the latter half of the 2020s.”
That’s headline-making, indeed.
Combined with Block 48, the Venus-1 prospect in Namibia, and South Africa’s Brulpadda and Luiperd, the region holds world-class resource potential. The key is translating that potential into real benefits for all Africans.
Production is Building Momentum in Angola
For nearly 70 years, oil has been a mainstay of the Angolan economy, contributing about 50% of the nation’s gross domestic product and around 89% of exports. The country holds the continent’s second-largest proven oil reserves and is behind only Nigeria in terms of production. (Angola also has Africa’s fourth-largest proven natural gas reserves, although historically it hasn’t produced much commercially.)
In recent years, though, the drop in oil prices scared off foreign investment, putting pressure on Angola’s well-established oil and gas industry as well as its oil-based economy. Despite its vast resources, not only was production on the downturn, there had not been a major new discovery since 2011. Without fresh finds, consultants Rystad Energy, S.A. said, volumes could drop below 1 million barrels per day by 2025, far below capacity and less than half the 2008’s daily output.
That forecast was more than enough to spur Angolan President João Lourenço into action.
Following his election in 2017, he promised Angola an “economic miracle” and immediately began incentivizing participation in the nation’s oil and gas industry as part of his turnaround plan.
Lourenço’s lures, including better contract terms that would make foreign investment more profitable, paid off. With reforms such as tax relief and a standalone oil industry regulator in place, Total – which has been operating in Angola for six decades – moved quickly in 2018 to take over Block 48 and was awarded Block 29 in the Namibe basin earlier this year; Italy’s Eni was awarded neighboring Block 28 about the same time. Angola also awarded several offshore blocks to Norway’s Equinor and BP. (There are approximately 50 blocks in the Namibe basin, but whether they will all be put into play remains to be seen.) Eni and its partners also began production at Agogo-1, pumping a modest 10,000 barrels per day. While that may sound small, it contributes to a much larger sum: Taken together, Rystad said, production from new Angolan projects – that is, those begun just in the last five years – should yield 549,000 barrels per day by 2025.
Fiscal Regime Sets Stage for Success in Namibia
If early seismic data is to be believed, compared to Angola there is equal, if not even more, promise in new discoveries offshore Namibia. Altogether, more than 11 billion barrels in oil reserves have been found off the Namibian coast, and scientists compare Namibia’s geology favorably to the pre-salt fields offshore Brazil, which hold 16 billion barrels of crude reserves. Yet Namibia’s basins are considered underexplored, meaning there’s ample opportunity for foreign and domestic investment. The possibility of high-impact discoveries has attracted the likes of Total, ExxonMobil, QP, and Kosmos Energy, which has had significant wildcat success in Africa over the past dozen years.
Currently, all eyes are on Total’s possibly play-opening Venus 1- prospect, which may turn out to be the largest discovery in Africa in a decade. An ultra-deepwater well in the Orange Basin, which straddles the border with South Africa, Venus-1 is thought to have at least 2 billion barrels of oil in place. If Venus-1 is successful, it’s like to attract even more attention to the area. Fortunately, the Namibian government’s oil-friendly policies make it easy for foreign companies to do business there. The fiscal regime is positive, and the state-owned oil company, the National Petroleum Corporation of Namibia (NAMCOR), is a cooperative partner. It also helps that Namibia is politically stable and has some of the best-developed infrastructure on the continent, including a modern electricity distribution grid.
We’re Seeing Growing Excitement in South Africa
Like its neighbors to the west, South Africa has been the site of considerable excitement over frontier discoveries, including Total’s Brulpadda, which opened up the Outeniqua basin in 2019. Brulpadda is considered a world-class oil and gas play that holds as much as 1 billion barrels of oil equivalent of gas and condensate light oil.
Brulpadda is considered an antidote to the cascade of ailments South Africa – like many countries with petroleum resources – has experienced in recent years: a drop in oil and gas exploration following a decline in commodity prices. It is likely that PetroSA’s gas-to-liquids (GTL) plant will provide a ready domestic market for Brulpadda, as will the nearby petrochemical and industrial facilities. It is also possible the discovery will help South Africa accelerate the use of gas for electricity.
Total continues to explore other parts of the Outeniqua basin and just last month discovered gas condensate on the Luiperd prospect, where it is a joint venture partner with QP, CNR International, and an African consortium called Main Street. In an announcement, Total said that the Luiperd well was drilled to a total depth of about 3,400 meters and encountered 73 meters of net gas condensate pay, making it even larger than the main reservoir at Brulpadda. Total and its partners have decided to commercialize the Luiperd gas rather than drill another exploration well in the program.
Africans Must Realize the Benefits
There’s no question that these discoveries have made southwestern Africa an exploration hot spot.
Neither is there any doubt that the governments of Angola, Namibia, and South Africa have facilitated and even accelerated the discovery and development processes by making it easy to do business there. (In the case of South Africa, its fiscal terms for oil and gas companies are described as “very generous.”)
What remains uncertain is to what degree each country will continue working to ensure its natural resources, whether newfound or long-established, are used to lift people out of poverty. True, African involvement in joint ventures leads us to assume that the best interests of every citizen are being considered.
But this is a time for the oil and gas companies that are involved in these mega-opportunities to redouble their efforts to support local communities and people. These companies are our guests in Africa, but the price of a welcome to our resource riches can’t be merely contractual, a handshake between governments and businessmen. The more they profit, the more Africans should benefit.
This idea is at the heart of the concept of Shared Value, which has been defined as “a framework for creating economic value while simultaneously addressing societal needs and challenges,” and as the “practice of profit in a way that creates value for society.” Shared Value doesn’t suggest that businesses should act as philanthropies or charities, giving handouts to those who exhibit need. It goes beyond the idea of corporate social responsibility, which is often based on volunteerism and one-off donations. Perhaps most important, Shared Value recognizes that companies can only stay in business if they are making money. As consultants FSG described it, the value companies and the community are sharing is “worth,” that is, economic value on a financial sheet and societal value in the form of progress on social issues.
Shared Value recognizes that companies have a responsibility to take on social challenges through the business itself. It is in their economic interest to do this. In Africa, one way they can do that is by supporting capacity-building. As the Shared Value Initiative noted, despite the substantial economic output of the oil and gas industry, it has “not always translated into societal improvements in host countries and communities… companies are losing billions of dollars a year to community strife,” much of it due to underemployment.
As more companies are attracted to southwestern Africa and these exciting new developments, we can only hope that they will recognize that where opportunity exists for them it should exist for everyone. And they have the power to make it so.
That would be really big news.
*NJ Ayuk is Executive Chairman, African Energy Chamber
Niger’s Minister of Petroleum Makes Prestigious top 25 Africa Energy Chamber Movers & Shakers List
November 20, 2020 | 0 Comments
|This highlights the growing importance of Niger as an oil producer in Africa.|
Niger’s Minister of Petroleum Foumakoye Gado was named by the African Energy Chamber this week as a top 25 leader to watch for 2021. This highlights the growing importance of Niger as an oil producer in Africa. Every year, the Chamber recognises 25 individuals who are set to play a major role in the development of the African oil & gas and energy sectors in the coming year. These leaders have demonstrated effectiveness in enabling major projects to be realised, and are expected to play a key role in the transformation of the oil and gas in their countries or the region.
Niger remains one of Africa’s most attractive onshore energy frontiers, significantly de-risked by previous exploration programmes carried out by Chinese operators. Niger holds 150m barrels of proven oil reserves and this figure is likely to increase with more exploration in the coming years. The ongoing construction of the $4.5bn Niger-Benin oil export pipeline will be opening up a new route to monetize such reserves and could result in a profound transformation of Niger’s economy by as soon as 2025. The pipeline has a capacity of 90,000 barrels per day (bpd) and could catapult Niger’s overall daily production from currently over 20,000 bpd to 110,000 bpd.
Minister Gado’s nomination is also in response to his efforts in securing FID for the all-important pipeline, and overseeing London-based Savannah energy’s exploration success with five discoveries from five exploration wells drilled. The minister will therefore be in charge of building the Sahel’s most important oil sector in the coming years, in a region whose economy remains deeply affected by droughts and security concerns.
Future developments will be closely watched globally as International Oil Companies seek to understand the viability of the sector in a region that has seen little oil and gas activity in the past. The minister shall be responsible for shaping the industry in the country, in terms of local content regulation, attracting international service companies who have till date been absent in Niger’s oil and gas sector and ensuring that Nigerians benefit from the industry in terms of jobs, training and other derivatives that the sector is expected to bring.
*African Energy Chamber
African Energy Chamber (AEC)’s Latest Top 25 Movers & Shakers Watch List 2021 Shows Strong Women Leadership in Energy
November 19, 2020 | 0 Comments
The latest list released this week by the Chamber demonstrates the growing role played by women in the fight against energy poverty.
The number of women within the African Energy Chamber’s Top 25 Movers & Shakers Watch List has made a significant jump from 3 to 8 between 2020 and 2021. Released annually, the list highlights the government officials, public and private executives whose work and decisions can profoundly impact the way Africans access and consume energy.
The latest list released this week by the Chamber demonstrates the growing role played by women in the fight against energy poverty, not only from the ground but also from African and global boardrooms where their leadership and decisions are shaping up the future of African energy.
Across the continent, the Chamber expects several women to make headlines in 2021 through key projects and actions. These notably include Rebecca Miano’s leadership in increasing geothermal production capacity by the Kenya Electricity Generating Company (KenGen), Khadija Amoah’s piloting of the Pecan field development in Ghana, or Ugandan Minister Kitutu’s ability in shaping up the development of an inclusive hydrocarbons industry in Uganda. Further north in Morocco, Amina Benkhadra is spearheading Morocco’s efforts to further develop its natural gas industry in her role as Director General of the National Office of Hydrocarbons and Mines (ONHYM).
Women are also positioning themselves to be at the centre of key financial and investment decisions. Vibhuti Jain at the US International Development Finance Corporation, or Hu XiaoLian at the Export-Import Bank of China, are both overseeing key investment programmes that could significantly support capital inflow into Africa’s energy sector in 2021. The same goes for Heather Lanigan, Regional Director for sub-Saharan Africa at the U.S. Trade and Development Agency (USTDA), which currently supports several important midstream gas and gas-to-power projects in West Africa.
The Chamber continues to believe that building an inclusive and sustainable energy industry that works for every African goes through the hiring and promotion of more women across the value-chain. From engineers to executives, women must be given more opportunities to participate in the continent’s fight against energy poverty. 2021 will tell if they continue to seize such opportunities and become the energy advocates the continent needs.
President Buhari and Four Other Nigerians Make it to the African Energy Chamber’s (AEC) TOP 25 Movers & Shakers List for 2021
November 18, 2020 | 0 Comments
|The presence of so many Nigerians on the list confirms that what happens in Nigeria affects the rest of the industry across the continent.|
As many as five Nigerians have made it to the top 25 list of the African Energy Chamber’s TOP 25 Movers & Shakers Watch List for 2021, released earlier this week. Published every year, the list identifies the leading African and international figures whose work and decisions have a direct impact on the African energy industry and the way Africans access and consume energy.
H.E. Muhammadu Buhari, President of the Federal Republic of Nigeria, is the first listed for his direct involvement in the possible passing and signing of the Petroleum Industry Bill (PIB) in 2021. If the President manages to carry through this substantial wave of reform in the country next year, it could unlock billions of dollars of investments and significantly boost the country’s recovery and West Africa’s overall attractiveness for business. His ability to compromise and define the sector will be tested in the 1st quarter of 2021 when his governments expects to get the all-important and long-awaited Petroleum Bill to be adopted by the National assembly.
Similarly, Mele Kolo Kyari, Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) also made it to the list for the first time. As the NNPC embarks on several strategic programmes and projects to boost refining capacity, cut upstream operational costs, develop energy infrastructure and unlock Nigeria’s gas potential, Mele Kolo Kyari’s actions and decisions can profoundly impact the short and medium-term outlook for Africa’s biggest oil & gas producing country. A veteran of the National oil company, he has been able to make his mark quickly since nomination, strengthening corporate reporting and aggressively pushing the removal of fuel subsidies for refined products.
As LNG becomes more and more important for African markets, Tony Attah, Managing Director/Chief Executive Officer of Nigeria LNG is also listed for his piloting of the NLNGSevenPlus project. His ability to oversee the project’s execution and local content impact will be central to support Nigeria’s economic recovery and capacity building efforts. His presence is yet another indication of the rising role of gas as a driving force for the future of the Nigerian and West African’s hydrocarbons industry.
Finally, two key figures of the power and electricity industries have also made it to the prestigious list: Seun Suleiman, new Managing Director and Chief Executive Officer of Siemens Nigeria, and Damilola Ogunbiyi, CEO and Special Representative of the UN Secretary-General for Sustainable Energy for All and Co-Chair of UN-Energy. Seun Suleiman is notably expected to become an increasingly influential executive as Siemens executes the Presidential Power Initiative in Nigeria in order to upgrade the country’s transmission and distribution systems and increase the overall national system’s capacity from 5 to 7 GW first, before ramping up to 11 GW and ultimately 25 GW. This notably puts Suleiman and the German equipment giant in the fore when major decisions are being made on how to solve Nigeria’s energy sector problems.
On her side, Damilola Ogunbiyi has taken an increasing role in leading the global energy transition conversation and bringing a true African voice to the fight against energy poverty. Her work in off-grid solar or LPG access notably has the power to transform the way Africans access and consume energy.
The presence of so many Nigerians on the list confirms that what happens in Nigeria affects the rest of the industry across the continent. These five key figures of the industry will be instrumental in shaping up the recovery everyone expects in 2021, and in building a sustainable and inclusive energy sector that work for all Nigerians and Africans.
*Africa Energy Chamber
Oil Industry keeps an eye on Angola with Top 25 Movers and Shakers to Watch list
November 18, 2020 | 0 Comments
H.E. João Lourenço, President of the Republic of Angola, made it to the list for the first time after several years of reforming the industry and making it one of the most competitive on the continent.
The latest Top 25 Movers & Shakers Watch List released earlier this week by the African Energy Chamber highlights how important 2021 will be for the Angolan oil & gas industry. Sub-Saharan Africa’s second biggest oil producing nation has been surfing on a wave of ambitious reforms since 2018 which could prove very beneficial to put the country back on a path to recovery in 2021.
H.E. João Lourenço, President of the Republic of Angola, made it to the list for the first time after several years of reforming the industry and making it one of the most competitive on the continent. Via several presidential decrees signed in 2018, 2019 and 2020, the President has truly revived Angola’s hydrocarbons sector and its attractiveness for investors. As Angola recovers from the shock of the Covid-19 pandemic and yet another economic crisis, President Lourenço’s leadership is more important than ever to further support sector recovery and boost local content development.
The country’s industry will also be marked by key offshore projects expected to move forward in 2021 and notably led by international majors Total and Eni. Nicolas Terraz, President for Africa at Total Exploration & Production, is another executive who made it to the Chamber’s TOP 25 for 2021. His piloting of key projects across the continent, especially in Eastern and Southern Africa, will be closely watched next year. This notably includes several brownfield expansions in deep water acreages in Angola, and the planned drilling of the world’s deepest well in Block 48.
Guido Brusco, listed for the second year in a row, will be another key figure able to impact the future of Angola’s oil sector. Recently promoted Director of Eni’s global upstream portfolio, Guido has a long experience in Africa and strong understanding of the continent’s dynamics and opportunities. As he makes strategic decisions to rationalize Eni’s upstream spend, the future of major Angolan assets like Block 15/06 is on the line.
*SOURCE African Energy Chamber
African Countries must develop Strategic Fiscal Policies to Survive Oil and Gas Industry Changes on Horizon
November 18, 2020 | 0 Comments
By NJ Ayuk
The African Energy Chamber has said since it was founded that African countries with petroleum reserves must adopt competitive fiscal regimes to promote thriving oil and gas operations.
The future of the global oil and gas industry has been a subject of great fascination and debate for decades. Since COVID-19 surfaced, there has been even more conjecture on this topic and, in particular, the most likely timing for “peak oil,” when crude production reaches its maximum rate before going into permanent decline.
Predictions run the gamut: OPEC’s latest World Oil Outlook, for example, forecasts increasing oil demand for two more decades. But the International Energy Agency stated in its 2020 World Energy Outlook report that demand for oil probably will plateau after 2030. And the 2020 energy outlook from BP states that the world has already passed peak oil and predicts even greater drops in demand as countries comply with carbon dioxide abatement measures.
While no one can pinpoint exactly how the energy industry will evolve, or when major changes will unfold, it makes sense to assume that decreased demand will occur at some point — and to prepare for the new era that follows.
In the case of African countries with oil and gas reserves, those preparations should include a close look at their fiscal regimes: the systems they have in place to determine how extractives revenues are shared among companies and the government. These could include royalty requirements (money paid to governments for the right to extract and sell their resources), taxes, production-sharing agreements (which determine how extracted resources are split between governments and oil companies), bonuses, and similar mechanisms. The key is to develop fiscal regimes that ensure fair treatment for the state without burdening companies with unreasonable obligations on top of their project risks, local content requirements, and the expenses associated with exploration and production such as rig and labor costs. Unless we give local and international companies a fair chance to profit, production activity will decline.
As our recently released 2021 Energy Outlook notes, “African nations with petroleum resources will most likely have to adapt their fiscal regimes similar to how other nations have adapted them in light of the new era with more supply and less demand. Failing to do so can lead to stranded resources and outcompeted resources.”
The African Energy Chamber has said since it was founded that African countries with petroleum reserves must adopt competitive fiscal regimes to promote thriving oil and gas operations. In the COVID-19 era and the years that follow, a wise approach to fiscal regimes will be even more important. Without them, indigenous companies will struggle to launch new projects, and international oil companies (IOCs) will choose other, less financially onerous locations for their upstream activities. If that happens, African countries miss out on invaluable opportunities to harness oil and gas to grow and diversify their economies, to minimize energy poverty, and to create a better future for Africans. That’s why countries that haven’t fine-tuned their fiscal regimes must start now. They have plenty of strong examples to look to.
Angola Continues to Show How It’s Done
In my recent book, Billions at Play: The Future of African Energy and Doing Deals, I praised Angola President João Lourenço for implementing transformative policies, including Angola’s new Natural Gas Regulatory Framework — Angola’s first law regulating natural gas exploration, production, monetization, and commercialization — and the creation of an independent regulator, the National Agency for Petroleum, Gas, and Biofuels, to manage Angola’s oil and gas concessions. By encouraging more efficient and transparent governance, Lourenço made his country a more appealing choice for oil and gas exploration. This year, Angola continued to demonstrate wisdom in its response to pandemic-related lockdowns, oil price drops triggered by dramatically diminished demand, and OPEC+ production cut requirements implemented last spring to stabilize the market. Angola’s National Bank implemented new fiscal policy measures that included extending credit and renegotiating debt payments to help oil and gas companies boost their liquidity.
Angola, which relies heavily on oil revenue, is still feeling the negative effects of the pandemic: The government declared a state of emergency, decided to free 30% of its goods and services budget, and suspended capital expenditures (CAPEX). However, the government’s fiscal measures have appeared to ease major oil and gas project cancellations in Angola. What’s more, these efforts to give companies a fair chance to operate profitably in Angola, most likely, will contribute to a healthy oil and gas industry for years to come.
We can learn from fiscal policies implemented before the pandemic, too.
Impossible n’est pas Camerounais. Cameroon’s Tax Holiday Is a Wise Move
When the Cameroon Senate approved updates to the country’s 1999 Petroleum Code in 2019, it positioned the nation for resiliency and long-term success. The new upstream legislation included a tax holiday for oil and condensate project development and seven more years for natural gas project development. The legislation also allows production sharing contracts (PSCs) to be modified so companies can recoup exploration expenses.
The chamber commends Cameroon for these measures. In fact, the chamber recommended tax holidays in 2020, after Cameroon updated its code, to help African countries prevent oil and gas project cancellations in the COVID-19 era. Tax holidays allow oil and gas companies to control revenue reductions, improve liquidity, and prevent job losses. Tax policies like these could play an important role in keeping African petroleum-producing countries competitive when demand for oil and gas begins to decrease.
The humanitarian, political crisis and violence in the English-speaking Anglophone region with vast oil and gas reserves has increased reputational risks for oil and gas exploration in Cameroon. A fact that has made foreign oil and gas companies nervous when it comes to taking advantage of the improved fiscal frameworks.
The government’s involvement in what is being perceived internationally as one of the worst refugee crisis and its inability to end the overall political impasse creates a more bearish view of the country’s resource potential. The ongoing political uncertainty, Covid 19, regulatory uncertainty from BEAC and low oil prices have thrown a curveball on potential FID’s for many planned oil and gas production projects at a time when Cameroonian officials are seriously exploring options on how to increase oil and gas output, revenues for the state and revive an ailing economy. Massive potential, great hope and super returns, if they get it right, as they saying goes Impossible n’est pas Camerounais.
Gabon Has Positioned Itself for Success
Gabon has taken proactive measures as well to encourage ongoing oil and gas production activity. The country’s 2019 hydrocarbon code, a modification of Gabon’s 2014 law, was written with the express goal of encouraging more exploration and production activity there. There have been several tax requirement changes. For example, companies no longer are required to pay a separate corporation tax on top of the production share that goes to Gabon. And, instead of a “one-size-fits-all” hydrocarbon tax rate for petroleum products, rates will be at different, and lower, levels — and the hydrocarbon tax rates can be negotiated before PSCs are finalized.
Gabon has taken additional measures, as well, to increase investments by making it easier for companies to be profitable. They include:
- PSC requirements have been modified with companies’ needs in mind. The state’s minimum stake in an exploration company, for example, has been cut in half.
- Government royalties for shallow blocks have gone from 13% to 7%.
- Royalties for deep-water production has gone from 9% to 5%
- The state’s share of the profit has been reduced, too, from 55% to 45% for shallow blocks and from 50% to 40% for deep-water operations
The changes did not go unnoticed by oil and gas companies: By early 2020, Gabon had signed 12 PSCs with foreign countries. And while COVID-19 has stalled drilling activity, for now, Gabon has positioned itself to see activity, and even more investments, resume after the pandemic.
Remember What’s At Stake
Ideally, developing competitive fiscal regimes should be done in concert with other measures, such as fine-tuning local content laws and working to ensure greater government transparency — anything that can be done to make African countries more appealing choices for oil and gas companies.
I realize that African countries have their hands full between the pandemic, economic struggles, and the challenges that existed long before COVID-19 surfaced. But, one could argue that there never will be a perfect time to revamp oil and gas policies. This process is simply too important to put off. We must do what we can to fully capitalize on Africa’s oil and gas resources so African governments can start using revenue to encourage the creation and growth of other economic sectors. So there are more opportunities for IOCs to share knowledge with indigenous companies and play a role in African capacity building. And, vitally important, so natural gas produced in Africa can be utilized for more gas-to-power projects, which can play a huge role in bringing electricity to more African communities.
While we don’t know the specifics of what’s ahead for the world’s oil and gas industry, we are aware of steps we can take to help us benefit from it as long as possible. Now is the time to act on them.
*NJ Ayuk is Executive Chairman of the African Energy Chamber, CEO of Centurion Law Group, and the author of several books about the oil and gas industry in Africa, including Billions at Play: The Future of African Energy and Doing Deals.
The Libyan Oil Industry’s Story of Recovery – And What it Means for the Rest of Africa
November 16, 2020 | 0 Comments
By NJ Ayuk*
When the African Energy Chamber (AEC) started drawing up our 2021 Africa Energy Outlook, which was released on Nov. 10, Libya’s oil industry was still struggling in the face of persistent civil conflict.
If I called 2020 a terrible year for the oil industry, no one would take exception. Demand collapsed in the spring, during the first wave of the COVID-19 pandemic, and it has yet to recover fully. Prices then collapsed in April as OPEC and Russia walked away from production curbs and flooded the market with crude that no one wanted or needed, and once again, they have yet to regain all of the ground they have lost.
There have been a few bright spots, though. One of those is Libya, which has managed to overcome some very daunting challenges. I’d like to tell you the story of how that happened.
Starting Near Rock Bottom
When the African Energy Chamber (AEC) started drawing up our 2021 Africa Energy Outlook, which was released on Nov. 10, Libya’s oil industry was still struggling in the face of persistent civil conflict.
At that time, the country was still producing less than 100,000 barrels per day (bpd) of crude, down from more than 900,000 bpd at the start of 2020. Its refineries, pipelines, and Mediterranean export terminals were almost entirely idle because of the blockade mounted by the Libyan National Army (LNA), a militia headed by Field Marshal Khalifa Haftar, during a major offensive campaign that began in mid-January. As a result, most of its oil fields were also idle. The National Oil Corporation (NOC), which was determined to remain neutral in the conflict, made several attempts to lift force majeure declarations and recommence production over the summer, but without success.
These struggles are addressed in our 2021 forecast: “Libya struggles to maintain (its) sustainable oil production capacity (of) around 1 million bpd. In the latest ongoing struggle for power between GNA, an UN-recognized body (set up) to govern Libya, and LNA forces, (an) army of rebels led by General Khalifa Haftar (supported by Russia, Egypt, and UAE), force majeure has been imposed on oil exports in the country from January 2020. Due to this, currently, Libya’s oil production has plummeted to almost 10% of its capacity.”
Because of all these challenges, Libya has languished. It has had no way of monetizing its primary export commodity and source of cash. It has lost many billions of dollars. It hasn’t even been able to extract or refine enough crude to cover domestic demand for fuel.
And it certainly hasn’t succeeded in resolving the disputes over regional distribution of oil revenue that helped drive the LNA’s attacks on the Government of National Accord (GNA), an interim government based in Tripoli and backed by the United Nations. Nor has Libya been able to find a way to rid tank farms and other oil infrastructure of the foreign soldiers and mercenaries deployed by Turkey and the other third parties with an interest in the country.
But things began to change in mid-September, when the LNA and its allies sat down with the GNA for yet another round of UN-brokered peace talks.
A Month of Progress
Initially, there didn’t seem to be much reason for optimism. After all, the two sides had failed to come to terms so many times before!
This time, though, was different.
This time, the GNA and the LNA struck a deal.
They didn’t go so far as to sign a peace agreement. Instead, they announced a one-month cease-fire deal on Sept. 18. The parties indicated they hoped to draw up a final agreement within the next month. They also made clear that Haftar had agreed to lift the oil blockade while the temporary deal remained in force.
Immediately after the cease-fire was declared, the NOC got right to work. It started bringing coastal terminals back online so that Libya could export oil again. Its regional production units began lifting force majeure declarations on one oil field after another. It started bringing refineries back into production. It started the process of inspecting infrastructure facilities to determine whether they were “safe” — that is, not occupied by foreign troops — and therefore eligible to resume regular business operations.
And by the time the one-month cease-fire expired on Oct. 18, the NOC had already managed to bring oil production back up to 500,000 bpd.
This was a huge achievement. Think of it! In just a few short weeks, Libya managed to increase output by more than 400,000 bpd, thereby regaining about half of the ground it lost as a result of the LNA blockade. And it did so despite the extensive damage inflicted on oil infrastructure during the blockade.
There was a problem, though.
When the cease-fire ended on Oct.18, the GNA and the LNA hadn’t yet achieved their goal of signing a final agreement. Fortunately, though, they had agreed to extend talks for another six days. As a result, the LNA did not impose another blockade, and the NOC and its subsidiaries continued to put fields, pipelines, terminals, and refineries back into action.
Then on Oct. 23 — one day ahead of the new deadline — there was another breakthrough during talks in Geneva.
On that day, the UN Support Mission in Libya (UNSMIL) declared that the parties had finalized a more comprehensive cease-fire agreement. It described the deal as permanent and applicable to the entire country.
What’s more, the agreement also removed one of the biggest problems facing the Libyan oil industry — the challenge posed by the foreign soldiers and mercenaries still occupying oil fields and infrastructure facilities. According to Stephanie Williams, the UN’s Acting Special Representative for Libya, the deal made provisions for all such troops to leave Libya within three months.
As a result, the NOC has been able to push forward with its campaign to restart the oil industry.
On Oct. 26, the company said in a statement that it was in a position to “(declare) the end of the blockades at all Libyan fields and ports.”
Then on Nov. 9, it announced that it had brought production up to more than 1 million bpd. (To be exact, it reported that oil output had reached the level of 1,036,035 bpd.)
This is another huge achievement. Again, think of it! In less than two months, Libya has managed to go from producing just a fraction of its usual volume to more than 1 million bpd. It has pushed crude oil output up more than tenfold, bringing major fields such as Sharara and El Feel back into action. It has also succeeded in reactivating the export terminals on the Mediterranean coast and is working to ramp up processing operations at its refineries.
Challenges and Lessons
All of these successes make for a good story, don’t they? Even better, the story is true.
(I’d like to think it also reflects well on the AEC, which did predict in our Africa Energy Outlook that Libyan crude oil production was set to recover as civil conflict simmered down.)
But is the story really over? Probably not.
First, we have to wait and see whether the cease-fire holds. All of the parties involved seem optimistic, but they haven’t yet revealed whether they’ve managed to resolve quarrels about how to distribute oil revenues. The LNA, which controls most of southern and eastern Libya, has often claimed that the GNA, which holds the northwestern part of the country, keeps an unfairly large portion of these revenues for itself. In turn, their conflict has negatively affected NOC, despite the company’s attempts to remain neutral so that it could continue operating (and bringing in money) despite the civil conflict. Those challenges likely will continue if the question of oil revenue distribution isn’t answered to the satisfaction of all concerned parties.
Next, if Libya does manage to hold together and keep output up, it will have to come to terms with OPEC, which is still working with Russia and other countries to support oil prices with a regime of production quotas. Libya hasn’t been subject to those quotas this year because of the blockade, but it’s now extracting more than 1 million bpd. What’s more, it expects to bring production up to 1.3 million bpd within the next few months, and Mustafa Sanalla, the head of the NOC, has said that Libya won’t fall into line with the quota system until it can stabilize yields at 1.7 million bpd. OPEC may not agree with that proposition, especially since world crude prices have fallen in response to reports of renewed development activity in Libya.
Whatever the case, there are at least two lessons to be learned from Libya’s recent victories.
One is persistence. Despite the repeated failure of attempts to work out an agreement between the LNA and the GNA, the UN and other parties did not give up. This should be a lesson for other African countries that count civil conflict as one of the obstacles to the development of oil and gas resources. Certainly, this approach appears to have benefited South Sudan, which has been embroiled in civil war for most of the time since it attained independence in 2011. The country has been under the rule of a unity government since the finalization of a peace agreement between President Salva Kiir Mayardit and his long-time rival Riek Machar Teny Dhurgon earlier this year.
The other is the necessity of paying attention to regional issues. The conflict between the GNA and the LNA wasn’t just a battle for supremacy. It was also a quarrel over how best to distribute revenues between the central government and the regions that were home to most of the oil fields and other infrastructure that generated those revenues. This is definitely one of the lessons that Nigeria has had to learn. The West African country’s federal government has seen over and over again that the residents of oil-bearing regions such as Ogoniland are willing to fight if they believe they are being denied a fair share of the money that comes from the places where they make their homes.
Neither of these lessons is easy to absorb. It’s easy to give up on negotiations when you’ve already failed repeatedly, and it’s easy to ignore the periphery if you’re one of the lucky people in the center. But I’d like to see other African producers think about them as they watch Libyan production continue to ramp up.
*SOURCE African Energy Chamber.NJ Ayuk is Executive Chairman, African Energy Chamber
The African Energy Chamber releases its 2021 TOP 25 Movers and Shakers to Watch list
November 16, 2020 | 0 Comments
|The Chamber welcomes and applauds the men and women who continue to be instrumental in the growth and development of the African energy sector.|
The African Energy Chamber (Chamber) is pleased to launch its second annual Top 25 Movers and Shakers list. Forming part of its Africa Energy Outlook 2021 report, the list profiles key individuals who are expected to impact the industry in Africa significantly in 2021.
Featuring prominent figures in the African oil, gas and power sectors such as, Rebecca Miano, CEO of the Kenya Electricity Generating Company PLC; Bernard Looney, CEO of BP; Gwede Mantashe, Minister of Mineral Resources and Energy, South Africa and HRH Prince
Abdulaziz bin Salman, Saudi Arabia’s Minister of Energy, Industry and Mineral Resources who plays a key role within OPEC, to name a few. The diverse list highlights key individuals who stand to contribute significantly in shaping the continent’s energy economy in 2021. through specific projects and initiatives that they are involved in.
“We are delighted to once again bring this list to the industry. We believe it is an important to highlight people who through their amazing contribution will significantly impact the rebound of Africa’s energy sector,” said NJ Ayuk, Executive Chairman of the African Energy Chamber. “It goes without saying that 2020 has presented some unprecedented challenges to an overall emerging African energy sector and it is through people such as these mentioned on our list that we can begin to plan a way forward,” he added.
The Chamber welcomes and applauds the men and women who continue to be instrumental in the growth and development of the African energy sector. At the Chamber we pride ourselves in being up front and vocal about our mission for Africa and we believe the people on this list align with this.
“Our Top 25 Movers and Shakers list depicts the future of the oil, gas and energy future. These selected individuals have shone the light for Africa, and we feel it is our responsibility to shine a deserved light on them. We are enthusiastic to see their progress in the new year and look forward to what, appears to be an optimistic year ahead,” said Mickael Vogel, Director of Strategy at the African Energy Chamber.
As 2020 closes, we acknowledge our Top 25 panel who have set the standard and have been trailblazers through their work and demonstrated character through their accomplishments during. It is with that intension that we look forward to 2021. Most importantly, we aim to see these prominent figures succeed in their enterprises and other initiatives in 2021 and beyond.
About the African Energy Chamber:
Determined to promote growth in the African energy sector. The African Energy Chamber encourages collaboration between businesses and government and takes a leadership role in shaping policies, sharing best practices and using resources to create value.
*SOURCE African Energy Chamber
African Energy Chamber Expects LNG to Prevent Massive Jobs Destruction in the Short-Term
November 12, 2020 | 0 Comments
|Inflexible capital programs will indeed assist in sustaining the overall employment throughout 2020 and 2021.|
Despite the profound crises of 2020 which have jeopardized hundreds of thousands of jobs across Africa, the African Energy Chamber expects employment to remain strong thanks to ongoing capital projects sanctioned since 2018, especially LNG ventures.
Inflexible capital programs will indeed assist in sustaining the overall employment throughout 2020 and 2021. As a result, the Chamber does not see big immediate impact from COVID-19 in 2020 and 2021 on job numbers as the initiated capital programs in 2018 and 2019 are ongoing and ramping up activity. This is particularly the case for Total’s mega greenfield Mozambique LNG project in Mozambique requiring north of 10 000 employees to set up two liquefaction trains with a combined export capacity of 12.88 mtpa. But additional projects, such as Eni’s 3.4 mtpa Coral Sul FLNG project, also in Mozambique, or BP’s 2.45 Greater Tortue Ahmeyim (GTA) LNG project in Mauritania and Senegal will also contribute to maintaining employment rates in the short term. The same applies in Nigeria with the NLNGSevenPlus project, sanctioned by Nigeria LNG Ltd before the Covid-19 pandemic.
Towards 2025 however, the numbers of jobs are expected to decline again on the back of new projects in 2020 and 2021 not being sanctioned due to COVID-19. Major new ventures were indeed expected to be sanctioned this year and create thousands of jobs, including Ghana’s Pecan Field Development by Aker Energy or ExxonMobil’s 15.2 mtpa Rovuma LNG project in Mozambique. As a result of their delays, the impact of the current crisis on jobs creation and employment in Africa is expected to be more severe in a few years than it is currently, unless immediate measures are taken to mitigate the impact of the pandemic and restore investors confidence.
The African Energy Chamber notably notes that Jobs creation will continue to have the greatest potential if Africa can harness its natural gas and downstream industrial potential by transforming and monetizing its resources at home. Put simply, strong policies need to be put in place so that local capacities increase and are supported by strong industrialisation and local transformation of resources, including through refining, petrochemicals, fertilizers, cement or power production.
The 2021 Outlook notably calls for increased regionalisation of African energy markets, and stronger efforts from regulators to promote an enabling environment for local and international investors. Hundreds of thousands of African jobs are on the line and risk being lost unless bold measures are taken to ensure regulatory certainty, adopt better fiscal reforms and render the sector competitive for entrepreneurs and investors.
About the African Energy Chamber:
Determined to promote growth in the African energy sector. The African Energy Chamber encourages collaboration between businesses and government and takes a leadership role in shaping policies, sharing best practices and using resources to create value.
*Source African Energy Chamber
With Afina Unitisation, Ghana Gives Explorer Springfield E&P a Boost and Ensures Production Growth
November 12, 2020 | 0 Comments
|First oil was achieved from the Sankofa Gye Nyame fields within the OCTP license in 2017 and was followed by first gas in 2018.|
The recent decision by the Ministry of Energy of Ghana to unitize the Sankofa and Afina fields located within Eni’s Offshore Cape Three Points (OCTP) Block and Springfield E&P’s West Cape Three Points Block 2 (WCTP2) is a step in the right directon.
The decision paves the way not only for an Africa’s independent to participate in the development of one of Ghana’s biggest producing assets, but also to ensure continued and increased production of oil and gas.
First oil was achieved from the Sankofa Gye Nyame fields within the OCTP license in 2017 and was followed by first gas in 2018. Three years later, OCTP has become Ghana’s biggest gas producing asset and its second biggest oil production hub. Because it has been officially confirmed that the same Cenomanian Channel straddles both the OCTP Block and WCTP2 Block, a unitization of Sankofa with the Afina discovery made last year by Springfield E&P is the fairest and most logical thing to do.
The upcoming unitization will notably give Springfield E&P, Ghana’s leading local company, a boost by ensuring its participation in the development of a world-class deep water asset. Such developments are not only positive from a capacity building and technology transfer perspective, but are also the most cost-efficient way to maximize the development of reserves found within similar structures even shared by various licensees.
“The African Energy Chamber wishes to highlight the pragmatism of the Government of Ghana and the Ministry of Energy when it comes to providing an enabling environment for local players and preserving the interests of the industry at large,” stated NJ Ayuk, Executive Chairman at the African Energy Chamber. “Springfield E&P is led by a very capable leader, Kevin Okyere, who has proven to be an astute African entrepreneur. There is no doubt that Springfield will rise to the challenge in the development of such an asset along with a partner like Eni,” concluded Ayuk.
Within its Africa Energy Outlook 2021 released this week, the African Energy Chamber has notably identified subsea tie backs and brownfield expansions as the biggest drivers of future upstream developments on the continent. Because such projects are cheaper, they are the most likely to get sanctioned under current market conditions, and remain the fastest way to reserve sub-Saharan Africa’s production decline. As Ghana still works on sanctioning a new development plan for its flagship Pecan Field, the upcoming development of Afina provides a great opportunity to maintain upstream momentum in the market.
*African Energy Chamber
African Energy Chamber Forecasts Increased Gas Monetisation in Latest 2021 Outlook
November 11, 2020 | 0 Comments
The African Energy Chamber has notably found that while not insulated to COVID-19, gas markets have been less exposed than that of oil to the shocks of 2020
In its latest Africa Energy Outlook 2021 released earlier this week, the African Energy Chamber forecasts increased gas monetization across the continent on the back of decarbonisation and industrialisation drive.
The African Energy Chamber has notably found that while not insulated to COVID-19, gas markets have been less exposed than that of oil to the shocks of 2020, notably because the transportation industry has been the most affected by the COVID-19 pandemic and is more oil-demanding than gas. The global gas market was nevertheless already facing a glut of LNG before COVID-19, resulting in even more depressed prices as the pandemic’s impact on demand started to manifest in the spring of 2020. As a result, key reference prices in Europe, North America and Asia all have experienced negative pressure since the start of 2020.
Looking forward, the African Energy Chamber’s expectations for the global gas market fundamentals are to remain loose through 2021 on the back of weak COVID-19 induced demand and continued high supply of LNG before prices tighten significantly as LNG demand growth will outpace liquefaction capacity due to more delays in project sanctioning.
The forecast notably points to a tight LNG balance between 2023 and 2025, and along with it, a price spike. Following this period, there is a downside risk in prices for 2026 and 2027 driven by the potential of seeing a new wave of sanctioning activity during 2021 and 2022. Such future projects are expected to include ExxonMobil and Eni’s 15.2 mtpa Rovuma LNG terminal in Mozambique and expansions of BP and Kosmos Energy’s Greater Tortue Ahmeyim (GTA) FLNG project in Mauritania and Senegal.
Given the gas glut on global markets with corresponding depressed prices, the Chamber notes that there may now be an opportunity to stimulate to more domestic gas consumption in Africa. Expanding infrastructure to displace diesel, increased use of gas in the power mix and gas for industrial purposes are all initiatives that would benefit from the current low cost of gas. Thankfully, African officials and regulators have increasingly seized the importance of natural gas and pushing for its adoption across industries, especially in key hydrocarbons market in West, Central and Southern Africa. Nigeria for instance has declared 2020 the Year of Gas and adopted a new gas transportation network code this year, and Senegal embarked this year on a gas pipeline network project to construct a 155km national gas grid.
Monetizing gas makes even more sense in Africa given the continent’s very high flaring intensities. While Africa benefits from conventional and easy to extract hydrocarbons, the inability to prevent gas flaring nevertheless catapults the continent to the overall least carbon efficient continent at about 31 kilogram CO2 emitted per barrel of oil equivalent produced according to the Outlook.
While 2018 is currently the last year with high quality data, projections towards 2025 nevertheless points to Africa overall not improving its position with emissions remaining above 30 kilograms CO2 per barrel of oil equivalent. Only stronger monetization of gas at home could justify using Africa’s gas reserves for industrial and power generation purposes instead of burning and wasting them. In doing so, Africa would not only reduce its carbon intensity, but also become more attractive to global investors seeking to allocate capital to the least carbon intensive projects possible.
The Africa Energy Outlook 2021 gives a special focus on all such gas markets trends within the continent, providing stakeholders with unique insights into production and consumption forecasts.
*Source Africa Energy Chamber
How to keep African oil and gas industry strong? AEC 2021 outlook answers with “workable solutions”
November 11, 2020 | 0 Comments
By Jorge Joaquim
The African Energy Chamber (AEC) has officially launched the second edition of its African Energy Outlook 2021, which details all of the major challenges facing African oil and gas stakeholders, as well as workable solutions that will keep the industry on a strong and stable growth path.
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 is exacerbating these pressures. And of course, the COVID-19 pandemic has wrought havoc on markets around the world, accelerating and intensifying existing trends.
Restrictive fiscal regimes, inefficient and carbon-intensive production, and difficulties in doing business are preventing the industry from reaching its full potential.
According to the Executive Chairman of the African Energy Chamber, NJ Ayuk, to remain competitive, African producers and governments must cut red tape to make life easier for hardworking Africans, businesses and investors to work and grow the energy sector.
“We know from experience this will reduce the cost of doing business, speed up approvals and make life better for Africans,” he said. “We must never be ashamed of supporting an industry that has brought so much to Africa and will continue to bring people out of poverty and reduce reliance on foreign aid.
“We believe the short-term outlook will improve if countries apply more competitive fiscal regimes. Emissions can be reduced by curbing flaring and monetizing gas, improving and future-proofing the carbon profile of African petroleum production.”
The world still needs oil and gas, and Africa still holds enormous untapped potential.
Ayuk believes that developing gas-to-power infrastructure will increase access to affordable energy for all sectors of the economy, offering massive knock-on benefits and making it easier to do business.
“Reducing lead times to limit risk premiums put on long cycle projects will further bolster the industry’s viability and growth prospects” he said noting that “It will not be easy, but these reforms are necessary.”
The full report can be read here
As the African Energy Chamber sets for litigation, BEAC postpones implication of new Forex Regulation towards 2021.
November 10, 2020 | 0 Comments
As the African Energy Chamber sets for litigation, BEAC postpones implication of new Forex Regulation towards 2021.
- BEAC postpones the implementation of the Forex Regulation following litigation sought by the African Energy Chamber.
- The Chamber remains determined in its commitment to seek a fair and just resolution that puts forth the interests of African people, businesses, investors and economic growth.
10 November 2020, Johannesburg, South Africa — The African Energy Chamber (“the Chamber”) which represents nearly every segment of the energy sector, is pleased to announce the extension on the implementation of the BEAC Forex Regulation from January 1st to December 1st 2021. The is based on the decision made by H.E. Abbas Mahamat Tolli, Governor of BEAC, no. 119/GR/2020 to delay the implementation, signed on November 5th 2020
The energy industry and everyday people do believe this is a step in the right direction, however, it is simply not enough.
“While we thank BEAC for listening to the Chamber, businesses, workers and foreign investors, we still believe that these regulations need to be stricken down. Though extended, the regulations as they stand, without amendments, are the most dangerous and Anti -African regulations in the world and cannot be left hanging on people’s heads without being corrected,” said NJ Ayuk, Executive Chairman of the African Energy Chamber.
One of the core principles of The Economic Community of Central African States is the promotion and strengthening of cooperation in order to achieve collective self-reliance, raise the standard of living for its peoples, increase economic stability and contribute to the progress and development of the sub-region and the African continent as a whole (Art 4 ECCAS Treaty). These Regulations stifle the vision and spirit in which the treaty was signed.
These regulations violate the very ethos of government bodies, which is to serve the interests of its people and to ensure that any regulations passed do not obstruct economic growth and self-reliance of the people in the CEMAC region.
The Chamber believes that we must continue to fight for the ability of small businesses, everyday people, investors, especially oil and gas companies to hire, invest, grow, succeed and create jobs in Africa as this is required for our post-COVID-19 recovery.
Certain provisions in the BEAC Forex Regulations appear to be anti-fair trade and against the objective of the AfCFTA, an agreement which has been ratified by all CEMAC member states. One of the key objectives of the Agreement is to “create a single market for goods, services, facilitated by movement of persons in order to deepen the economic integration of the African continent,” it states.
Therefore, these regulations are counterproductive as they have diminished the attractiveness of the CEMAC for foreign direct investments and cross border trade.
“It is because of this that the Chamber asserts that it will continue with its intention to litigate against regulations that put extremely deterrent barriers for entry of investors in Gabon, Cameroon, the Republic of Congo, Equatorial Guinea, the Central African Republic and Chad. The regulation in itself is in clear contradiction with the spirit of the AfCTA. It is illegal. It should be repealed and replaced with a more pro-growth and pro-jobs regulation which the chamber is willing to provide to BEAC,” Ayuk concluded.
The Chamber believes that this regulation will contribute to the growing challenge of energy poverty, corruption and the increasing role of bureaucrats in business affairs. The question is simple, why add more burdens and barriers?
Businesses, everyday people and people on the front lines need to be protected from this and the Chamber is committed to seeing it through. Our mission here is loud and clear: we are dedicated to being resolute in this provocation.
Rosgeo Successfully Completes Geological Mapping in Equatorial Guinea and Moves Forward to Phase 2
November 10, 2020 | 0 Comments
|The landmark exploration program is executed under two services contract signed by the Ministry of Mines and Hydrocarbons in 2020.|
A month after it started a historic geological mapping project in Equatorial Guinea’s Rio Muni region, Russia’s state-owned joint stock company Rosgeo has made significant progress and is stepping up exploration efforts on the country’s mainland. The company has now successfully completed phase 1 of the project’s scouting works, and is moving to phase 2.
The landmark exploration program is executed under two services contract signed by the Ministry of Mines and Hydrocarbons in 2020 with JSC Zarubezhgeologia and JSC Yuzhmorgeologia, internationally operating subsidiaries of Rosgeo. It notably covers an initial phase of seismic acquisition in transit zone and state geological mapping in the Rio Muni area, in mainland Equatorial Guinea.
As a result, JSC Zarubezhgeologia has been performing scouting works for state geological mapping, while JSC Yuzhmorgeologia has been performing the same for complex seismic acquisition in the transit zone of Rio Muni. The area, which includes large onshore zones but also shallow water areas, is believed to be one of the most promising exploration frontiers in Equatorial Guinea. It could notably turn the country once again into a hotspot for natural resources exploration.
Increased exploration by Rosgeo is expected not only to help in sustaining and increasing domestic output of oil and gas, but also in proving additional reserves in key minerals to help Equatorial Guinea further diversify its economy.
“The geological mapping project undertaken by Rosgeo in the Rio Muni is not only a new pillar of energy cooperation between the Republic of Equatorial Guinea and the Russian Federation, but could also shape the future of our natural resources industry. Our mainland is one of the richest regions of the country for mining and minerals which we have identified as strong sectors to diversify our economy and create jobs. We have also always believed in the onshore hydrocarbons potential of the region, and understanding its geology will prove extremely beneficial to support future oil & gas activities there which could be carried out by local operators,” declared H.E. Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons.
Capital for oil and gas projects in Africa at risk, as the continent continues to operate carbon inefficient production
November 10, 2020 | 0 Comments
By Jorge Joaquim
As the world is moving towards the energy transition in order to curb greenhouse gas emissions and meet the targets in the Paris agreement, the oil and gas industry is doing its share.
Meanwhile, Africa continues to operate carbon inefficient production, which further impacts its ability to raise capital for oil and gas projects, says African Energy Chamber (AEC) in its new report African Energy Outlook 2021.
While Africa benefits from conventional and easy to extract hydrocarbons, the inability to prevent gas flaring nevertheless catapults the continent to the overall least carbon efficient continent at about 31kg CO2 emitted per barrel of oil equivalent produced.
However, AEC understands that flaring and upstream emissions are not always easy to reduce, it nevertheless does represent an enormous opportunity for Africa to reduce its carbon emission per production unit and thereby increase the resources’ competitiveness in a world with an increasingly constrained carbon emission budget.
“In this context, political will and industry compliance will be key,” says AEC adding that initiatives such as the Nigerian Gas Flare Commercialization Program are extremely positive steps in that direction and must be encouraged and supported by all stakeholders.
African petroleum producers must adapt themselves or will become uncompetitive
November 10, 2020 | 0 Comments
By Jorge Joaquim
African petroleum producers must adapt themselves or will become uncompetitive, as the global energy transition and decarbonization drive are putting pressure on oil demand while shale has unlocked abundant resources, said the African Energy Chamber (AEC) on its new report.
Called African Energy Outlook 2021 and released on Tuesday, the report says that the coronavirus pandemic has accelerated this underlying pressure by causing unprecedented havoc on global energy markets that Africa is not insulated from.
“Conventional petroleum resources such as those in Africa should be competitive in the global supply stack, but above surface conditions related to fiscal regimes, carbon emissions and general difficulty of doing business are holding projects back,” it states.
Outside COVID-19, the report continues, regulatory matters have also unnecessarily delayed major projects in Nigeria, Kenya, Uganda and Tanzania.
This situation “represents big opportunity losses for local content development, delayed job creation and further deteriorated Africa’s competitive position versus resources elsewhere.”
Fixing the situation
The African Energy Chamber believes that the short-term outlook can be remedied by applying more competitive fiscal regimes that can help unlock 4.4 billion barrels of liquids and $100 billion of additional investments by 2030; curbing flaring and monetizing gas, which will help improving the carbon emission profile of African petroleum production that currently bottom tier among the continents.
Other measures include the developing gas to power infrastructure that will increase access to affordable energy to all sectors of the economy and reducing lead time as higher risk premiums are put on long cycle projects versus short cycle projects.