African Mining March 2020 | Page 42

THE RISE OF OIL AND GAS IN AFRICA Africa holds around 7% of the world’s proven crude oil and natural gas reserves, yet the continent remains largely under- explored. It’s safe to say that the motherland is far from having exploited its full potential. For this potential to bear fruit and translate into economic development and jobs, several things need to happen. Good thing is, they are slowing taking shape. There are seven trends that will shape sub-Saharan Africa’s oil and gas in 2020 and beyond: 1. The rise of the African content An emergence of strong African Oil Companies (AOCs) across the value chain, from field operators to services providers, is a key emerging trend for the sector. Many companies from West Africa particularly are seeking regional expansion across the continent and driving the regionalisation of the African content. As most countries strengthen their local content regulations, the trend is likely to accelerate. 2. Regional and international cooperation is becoming key We will know in 2020 whether African nations have learned how to cooperate on transnational energy deals and infrastructure for the benefit of all participants involved. This year could see the unlocking of multi-billion-dollar opportunities through transnational energy cooperation and projects. This applies to planned and stalled pipeline projects in need of revival such as the East African Crude Oil Pipeline for instance, but also to upstream investments and developments, especially in the Gulf of Guinea. Similarly, the way AfTCA impacts intra-African trade could be a boost to Africa’s energy sector if properly utilised. On the international stage and under the leadership of Secretary General Mohammad Sanusi Barkindo, OPEC has welcomed more African producers – Equatorial Guinea (2017) and the Republic of Congo (2018) being the latest ones. As the organisation further expands the OPEC/Non-OPEC outreach across Africa to find consensual solutions to market stability while offering technical assistance to upcoming producers, 2020 might be the year a new addition of an African oil producing country as OPEC member. 3. Expansion of Africa’s midstream and downstream infrastructure New refinery and petrochemical complexes are being constructed. The continent is likely to see the emergence of regional hubs and markets with the strategic ambition of procuring petroleum products and natural gas. Examples include Equatorial Guinea’s LNG2Africa initiative and the Akinokien import and regasification terminal, the Dangote Refinery in Nigeria, Ghana’s Tema LNG terminal project. Market access is also increasing on the back of several pipeline projects such as the Lokichar-Lamu Crude Oil Pipeline in Kenya, and the intensifying talks over the 5 660km pipeline that could supply gas to as many as 15 West African countries between Nigeria and Morocco. The State of Niger also signed 40  African Mining  March 2020 For example, it is encouraging to see African oil and gas companies becoming more and more a part of the continent’s economic empowerment story. In this context, 2020 is likely to see a continuation in the rise of the African private sector’s contribution to supporting industry growth and jobs creation. NJ Ayuk is the founder and CEO of Centurion Law Group, a pan-African law firm with a focus on oil and gas. He is the current chairman of the African Energy Chamber and best-selling author of two books Big Barrels: African Oil and Gas and the Quest for Prosperity’ (2017) and Billions At play: The Future of African Energy and Doing Deals (2019). the Transport Convention on the construction and exploitation of the Niger-Benin Export Pipeline, key to Niger significantly increasing its crude oil production over the next five years to as high as 100 000 barrels per day (bpd). In East Africa finally, Ethiopia and Djibouti have reached an agreement on a gas pipeline that will offer an exit route for Ethiopia’s gas fields and help unlock tremendous value in gas export potential. 4. Africa is transitioning to gas There is a promising outlook for the African gas sector. Countries without substantial gas resources will be turning to LNG imports to power their homes and industries. Ghana, for example, is installing a new floating regasification unit in 2020. Ivory Coast, Morocco and South Africa have also looked at installing these units soon. The urgent need for rapid industrialisation will create tremendous opportunities for gas to fuel African economies in a more cost- effective and environmentally sustainable manner. The race is on. At the end of the Gas Exporting Countries Forum’s 2019 Summit, Equatorial Guinea launched the Declaration of Malabo – a document affirming the importance of retaining rights of member countries for natural gas resources – which will lead to the securing the energy transition Africa needs and to meeting sustainable development goals and attracting investment into gas infrastructure projects. 5. Expect vigorous technology adoption to drive operational efficiencies Africa’s potential for innovation and leapfrogging is slowly affecting its hydrocarbons sector – we are finally seeing the adoption of sophisticated software and tools such as AI and ML in oil and gas. 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