{"id":73186,"date":"2020-05-04T19:07:07","date_gmt":"2020-05-04T18:07:07","guid":{"rendered":"http:\/\/pointblanknews.com\/pbn\/?p=73186"},"modified":"2020-05-04T20:25:10","modified_gmt":"2020-05-04T19:25:10","slug":"the-way-forward-how-africa-can-make-a-comeback-from-the-oil-gas-downturn","status":"publish","type":"post","link":"https:\/\/pointblanknews.com\/pbn\/articles-opinions\/the-way-forward-how-africa-can-make-a-comeback-from-the-oil-gas-downturn\/","title":{"rendered":"The Way Forward: How Africa Can Make a Comeback from the Oil &#038; Gas Downturn"},"content":{"rendered":"<div id=\"m#msg-f:1665783732242350332\" class=\"mail-message expanded\">\n<div class=\"mail-message-content collapsible zoom-normal mail-show-images \">\n<div class=\"clear\">\n<p>There has been a ray of hope: a landmark production-cut agreement among<br \/>\nOPEC, OPEC+ and G20 stakeholders on April 12 put an end to the oil price<br \/>\nwar<\/p>\n<p>Stunning drops in crude oil prices\u2014the result of COVID-19-related<br \/>\ndeclines in demand and an oil price war between Saudi Arabia and<br \/>\nRussia\u2014have been taking their toll around the globe this spring. For<br \/>\nAfrica\u2019s oil-producing countries, where crude oil exports make up a<br \/>\nlarge portion of their revenue, the situation is especially dire.<\/p>\n<p>In Nigeria, for example, Finance Minister Zainab Ahmed recently warned<br \/>\nof an imminent recession and requested billions of dollars in<br \/>\ninternational emergency funding. As of the second week of April,<br \/>\nnational oil production in Angola was expected to fall from 1.8 million<br \/>\nto 1.36 million barrels per day as the government prepared to freeze 30%<br \/>\nof its goods and services budget. And Ghana, according to the Africa<br \/>\nCentre for Energy Policy, stands to see a 53% shortfall this year in<br \/>\nprojected revenue from crude oil sales. There are similar difficulties<br \/>\nacross the continent.<\/p>\n<p>There has been a ray of hope: a landmark production-cut agreement among<br \/>\nOPEC, OPEC+ and G20 stakeholders on April 12 put an end to the oil price<br \/>\nwar. Shortly after that historical agreement, the African Petroleum<br \/>\nProducers Organization (APPO) committed to significant crude production<br \/>\ncuts of its own, effective May 1. While demand remains a concern, the<br \/>\nproduction cuts will help lower oil inventories and should bring some<br \/>\nstability to the oil market.<\/p>\n<p>I am not saying we can expect smooth sailing from this point on. There\u2019s<br \/>\nno denying that the COVID-19 pandemic will continue to test African<br \/>\ncountries on multiple fronts, from the health and safety dangers it<br \/>\nposes to our people to the economic devastation and low demand for<br \/>\ncrude. The situation is painful, but it\u2019s not permanent. And when this<br \/>\nchapter is over, African countries will recover.<\/p>\n<p>This is the time to lay the framework for that recovery. When demand for<br \/>\ncrude oil increases again, and it will, Africa will need exploration and<br \/>\nproduction activities to resume. That means oil and gas ministries<br \/>\nshould be working now on regulations that foster a more enabling<br \/>\nenvironment for investors and businesses. We should be fine-tuning our<br \/>\nlocal content policies and exploring technologies that can contribute to<br \/>\na leaner, more profitable petroleum sector. Last October, I released a<br \/>\nbook that explains how we can accomplish these things, along with other<br \/>\nmeasures that will help Africa better capitalize on its oil and gas<br \/>\nresources. The ideas and examples it provides remain on point. We can<br \/>\nstill do this.<\/p>\n<p>Exploring Solutions<\/p>\n<p>With demand for oil at a historic low, it may seem odd to talk about E&amp;P<br \/>\nactivity. But, as I have said, the situation we find ourselves in now is<br \/>\ntemporary. After we get through the current crisis, production will play<br \/>\na critical role in our economic recovery. We need indigenous companies<br \/>\ninvolved so employees, business partners, and suppliers can benefit from<br \/>\nthese activities. We also need foreign companies that are willing to<br \/>\nshare knowledge and technology\u2014and to create economic opportunities in<br \/>\nthe communities where they operate. That\u2019s why it\u2019s vital that<br \/>\ngovernment leaders take steps now to remove obstacles to launching<br \/>\nproduction, from red tape and lengthy delays to excessive taxes.<br \/>\nGovernments also need to support smaller independent companies by<br \/>\nbreaking exploration maps into smaller sections. And we need better<br \/>\nfiscal terms for companies like breaks on import duties.<\/p>\n<p>This isn\u2019t my first time to call for these things, I cover them in-depth<br \/>\nin my book, Billions at Play: The Future of African Energy and Doing<br \/>\nDeals. But in the COVID-19 era, they\u2019ve become more important than ever.<\/p>\n<p>Local Content: Striking a Balance<\/p>\n<p>African countries need to develop fair, balanced local content policies<br \/>\nthat create economic and educational opportunities for Africans without<br \/>\noverly burdening foreign investors and discouraging them from operating<br \/>\nhere. A shining example of this kind of balance can be found in<br \/>\nEquatorial Guinea, which I wrote about in Billions at Play. \u201cThe<br \/>\ngovernment enacted requirements for international companies to hire<br \/>\nEquatoguineans, contribute to training programs, and work with local<br \/>\nsubcontractors. They were careful to balance the need to boost local<br \/>\nindustry, however, with the limitations of the current local industry.<br \/>\nThey understood how unrealistic it was to require 100 percent local<br \/>\ncontent until more training, education, and local capacity in that field<br \/>\nis created.\u201d<\/p>\n<p>I\u2019d like to see more African countries consider the example of<br \/>\nEquatorial Guinea, along with successful local content policies in<br \/>\nNigeria and Angola, also covered in my book. Effective local content is<br \/>\nkey to helping everyday Africans realize the benefits of Africa\u2019s oil<br \/>\nand gas resources. This is a good time for leaders to look at what works<br \/>\nand what doesn\u2019t in their own policies and make the necessary<br \/>\nadjustments.<\/p>\n<p>It\u2019s Time for More Tech<\/p>\n<p>COVID-19 has forced companies around the globe to rely on technology to<br \/>\nfunction, whether they\u2019re using it to hold virtual meetings or monitor<br \/>\nvital assets. I\u2019m confident that technological solutions will play an<br \/>\nimportant role in the comeback of Africa\u2019s oil &amp; gas industry, too. In<br \/>\nmy book, I described technology\u2019s potential to help indigenous African<br \/>\noil &amp; gas companies operate more efficiently and boost profits, which in<br \/>\nturn, benefits their communities and promotes economic growth.<br \/>\n\u201cInnovations such as the development of new ways to drill wells and<br \/>\nhandle equipment, the design of new seismic data collection programs,<br \/>\nthe management of petroleum data systems, and the monitoring and<br \/>\nprotection of internet-connected equipment have the potential to<br \/>\nredefine how business is done in this sector.\u201d<\/p>\n<p>Now, with economic difficulties and low oil prices, benefits like these<br \/>\ncould be more valuable than ever. I encourage African oil and gas<br \/>\ncompanies to work with one another, and with local tech firms, to<br \/>\naugment their technological capacities. African companies also should be<br \/>\npursuing partnerships with foreign investors that are open to technical<br \/>\nknowledge and skills transfers. Billions at Play describes the successes<br \/>\nthat Angola-based Friburge Oil &amp; Gas has had partnering with<br \/>\ninternational technology providers to drive efficiency and<br \/>\nenvironmentally friendly production methods. We need to see more<br \/>\ncompanies doing the same. Governments can support these efforts through<br \/>\nlocal content policies that call for knowledge sharing, along with the<br \/>\ncreation of educational initiatives and public-private partnerships.<\/p>\n<p>Long before the unthinkable happened, and COVID-19 changed our world, I<br \/>\nmade a case for strategically harnessing Africa\u2019s oil and gas resources<br \/>\nto create stability and economic growth. Now, because of the pandemic,<br \/>\nwe find ourselves in a difficult place with extremely low oil prices and<br \/>\nfaltering economies. As a result, some of those strategies I\u2019ve<br \/>\nrecommended may have to go on hold. Nevertheless, the steps I\u2019ve put<br \/>\nforth to help us reap the full benefits of our petroleum resources will<br \/>\nstill have merit when we emerge from this trial. If we start preparing<br \/>\nnow to set them in place, they\u2019re even more likely to be successful.<\/p>\n<p>Distributed by APO Group on behalf of African Energy Chamber.<br \/>\nView multimedia content<\/p>\n<p>NJ Ayuk is Executive Chairman of the African Energy Chamber, CEO of<br \/>\npan-African corporate law conglomerate Centurion Law Group, and the<br \/>\nauthor of several books about the oil and gas industry in Africa,<br \/>\nincluding Billions at Play: The Future of African Energy and Doing<br \/>\nDeals.<\/p><\/div>\n<\/div>\n<div class=\"mail-message-footer spacer collapsible\"><\/div>\n<\/div>\n<div id=\"m#msg-f:1665783839609473669\" class=\"mail-message expanded\"><\/div>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content --><!-- AddThis Related Posts generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>There has been a ray of hope: a landmark production-cut agreement among OPEC, OPEC+ and G20 stakeholders on April 12 put an end to the oil price war Stunning drops&hellip;<!-- AddThis Advanced Settings generic via filter on wp_trim_excerpt --><!-- AddThis Share Buttons generic via filter on wp_trim_excerpt --><!-- AddThis Related Posts generic via filter on wp_trim_excerpt --><\/p>\n","protected":false},"author":1,"featured_media":19059,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"link","meta":{"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[7],"tags":[],"class_list":["post-73186","post","type-post","status-publish","format-link","has-post-thumbnail","hentry","category-articles-opinions","post_format-post-format-link"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Way Forward: How Africa Can Make a Comeback from the Oil &amp; 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