Select Page

Seven trends that will shape sub-Saharan Africa’s oil and gas in 2020 and beyond

Seven trends that will shape sub-Saharan Africa’s oil and gas in 2020 and beyond

By NJ Ayuk.

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.

1. The rise of the African content

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.

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

2020 will show if African nations have learned how to cooperate on transnational energy deals and infrastructure for the benefit of all participants involved. 2020 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 and existing ones are being in the near and medium term. 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 etc.

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 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 100,000bpd. 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, will 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. New ways to drill wells and handle equipment are being adopted, new seismic data collection techniques and petroleum data management tools are being designed. The trend is also helping the industrial and manufacturing sectors to save cost and address the logistical and power challenges of operating on the continent. We see international technology providers investing and collaborating with African companies to drive efficiency and environmentally friendly production methods in 2020 and beyond.

6. Security concerns over the safety of Africa’s energy assets and infrastructure will continue rising

We are likely to see an increase in African governments and oil companies doing more to protect the security of energy infrastructure and assets on the continent. Oil and gas resources and commodities are prone to security risks – leaving countries victims to energy theft, vandalism, piracy. Such acts cost Africa’s oil & gas sector several billion dollars a year in losses and reparations. With insecurity now spreading to East Africa, the industry has taken as a responsibility to seriously address the issue.

7. Regulatory reforms will be pursued to remain competitive

With hundreds of blocks and acreages up for grab in 2020 and a widening energy infrastructure gap, sub-Saharan African countries are increasingly competing for investments and technology. Countries like Senegal, Benin, Gabon, Algeria and Cameroon have already implemented structural and regulatory reforms in 2018/19 to attract new investment. Several others are still restructuring their energy policies to provide more incentives to develop domestic oil & gas reserves (associated and non-associated), fuel for thermal generation and both expand and diversify their energy infrastructure.


Caption: NJ Ayuk is an-African energy lawyer, executive chair of the African Energy Chamber (AEC) and founder and CEO of Centurion Law Group.


About The Author

Guest Contributor

A Guest Contributor is any of a number of experts who contribute articles and columns under their own respective names. They are regarded as authorities in their disciplines, and their work is usually published with limited editing only. They may also contribute to other publications. - Ed.

Following reverse listing, public can now acquire shareholding in Paratus Namibia

Promotion

20 February 2020, Windhoek, Namibia: Paratus Namibia Holdings (PNH) was founded as Nimbus Infrastructure Limited (“Nimbus”), Namibia’s first Capital Pool Company listed on the Namibian Stock Exchange (“NSX”).

Although targeting an initial capital raising of N$300 million, Nimbus nonetheless managed to secure funding to the value of N$98 million through its CPC listing. With a mandate to invest in ICT infrastructure in sub-Sahara Africa, it concluded management agreements with financial partner Cirrus and technology partner, Paratus Telecommunications (Pty) Ltd (“Paratus Namibia”).

Paratus Namibia Managing Director, Andrew Hall

Its first investment was placed in Paratus Namibia, a fully licensed communications operator in Namibia under regulation of the Communications Regulatory Authority of Namibia (CRAN). Nimbus has since been able to increase its capital asset base to close to N$500 million over the past two years.

In order to streamline further investment and to avoid duplicating potential ICT projects in the market between Nimbus and Paratus Namibia, it was decided to consolidate the operations.

Publishing various circulars to shareholders, Nimbus took up a 100% shareholding stake in Paratus Namibia in 2019 and proceeded to apply to have its name changed to Paratus Namibia Holdings with a consolidated board structure to ensure streamlined operations between the capital holdings and the operational arm of the business.

This transaction was approved by the Competitions Commission as well as CRAN, following all the relevant regulatory approvals as well as the necessary requirements in terms of corporate governance structures.

Paratus Namibia has evolved as a fully comprehensive communications operator in Namibia and operates as the head office of the Paratus Group in Africa. Paratus has established a pan-African footprint with operations in six African countries, being: Angola, Botswana, Mozambique, Namibia, South Africa and Zambia.

The group has achieved many successes over the years of which more recently includes the building of the Trans-Kalahari Fibre (TKF) project, which connects from the West Africa Cable System (WACS) eastward through Namibia to Botswana and onward to Johannesburg. The TKF also extends northward through Zambia to connect to Dar es Salaam in Tanzania, which made Paratus the first operator to connect the west and east coast of Africa under one Autonomous System Number (ASN).

This means that Paratus is now “exporting” internet capacity to landlocked countries such as Zambia, Botswana, the DRC with more countries to be targeted, and through its extensive African network, Paratus is well-positioned to expand the network even further into emerging ICT territories.

PNH as a fully-listed entity on the NSX, is therefore now the 100% shareholder of Paratus Namibia thereby becoming a public company. PNH is ready to invest in the future of the ICT environment in Namibia. The public is therefore invited and welcome to acquire shares in Paratus Namibia Holdings by speaking to a local stockbroker registered with the NSX. The future is bright, and the opportunities are endless.