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African Energy
Africa’s oil and gas sector
continues to show growth
By Chris Bredenhann, PwC Africa Oil & Gas Advisory leader
The challenges facing oil and gas companies operating in Africa
continue to be diverse and numerous.
Fuelled by fraud, corruption, theft, poor infrastructure,
and a lack of skilled resources, among others, regulatory
uncertainty and delays in passing laws are severely
inhibiting sector development in many countries
around the continent. Some key players have delayed
or cancelled projects until further clarity can be sought
in their respective jurisdictions, as they cannot move
forward with doubts given the long-term nature of the
needed investments.
As a result of the number of challenges in the market,
meticulous planning is required. PwC’s Africa oil & gas review
analyses what has happened in the past 12 months in the
oil and gas industry within the major African markets. The
survey draws upon the valuable experience and views of
industry players in Africa, including international oil companies
operating on the continent, national oil companies, services
companies, independent oil organisations, and industry
commentators, to provide insight into the latest developments
affecting the industry.
The Review shows that the oil and gas industry in Africa
continues to show substantial growth, with new hydrocarbon
provinces developing at a significant pace. Large gas finds in
Mozambique and Tanzania have caused the world to take note
of East Africa as an emerging player in the global industry.
Africa has proven natural gas reserves of 502 trillion cubic feet
(Tcf) with 90% of the continent’s annual natural gas production
of 6.5Tcf coming from Nigeria, Libya, Algeria, and Egypt.
Developing the business
The major challenges identified by organisations in the oil and
gas industry have remained largely unchanged, with the top
three issues of uncertain regulatory framework, corruption,
and poor physical infrastructure also identified as the biggest
challenges in 2010 and 2012.
While uncertain regulatory frameworks remain a concern
across the industry, Nigeria was one of the few countries
where respondents did not consider it to be of the top-three
challenges to developing the industry. According to the
Review, this suggests that companies have accepted the
lack of ratification of the Petroleum Industry Bill (PIB), which
has been in the process of implementation for six years.
In other countries where uncertainty exists concerning the
development or revision of energy policies, such as South
Africa, DRC and Tanzania, respondents indicated that the
uncertain regulatory framework was a significant impediment
to developing an African oil and gas business.
The inadequacy of basic infrastructure also ranked
much higher in the current Review than in prior years.
Even through all the challenges, Africa’s oil and gas sector
continues to show growth for 2017.
September 2017 Volume 23 I Number 7
www.plumbingafrica.co.za