The fact that Nigeria has countless tourist gems like Yankari Game Reserve, Bar Beach, Millennium Park, Nana Living History Museum, The Ancient Nok Settlement, New Afrika Shrine, Abuja Arts And Crafts Village, Kainji National Park, Lekki Conservation Centre, River Ethiope, Gobaru Minaret, Turunku Hills, Dumi Hills, Porto Minijibir, and Alok Ikom Monoliths, among many more, means that any visitor to the country would need to return several times to get the full picture of what the country can offer.
Executive Chairman of the African Energy Chamber’s recently conducted a working visit to Nigeria with a sole mandate to expand cooperation, reaffirm critical energy partnerships, and promote the country as a premier investment destination, backed by the recently passed Petroleum Industry Bill (PIB) and the Decade of Gas initiative. By reiterating the value of the Cape Town-hosted African Energy Week (AEW) 2021 as a platform whereby Nigeria can facilitate impactful energy deals, market the country’s reformed energy sector, and attract both regional and international investor interest, both the AEC and AEW 2021 remain committed to driving investment and associated deals in Nigeria.
Backed by the country’s recently passed Petroleum Industry Bill (PIB), the ‘Decade of Gas’ initiative, and the prioritization of local content, Ayuk’s visit to Nigeria comprised meetings with industry leaders, including H.E. Chief Timipre Sylva, Minister of State for Petroleum Resources, and officials from the Department of Petroleum Resources (DPR); private sector executives; and national oil companies including representatives from the Nigerian National Petroleum Corporation. As Nigeria promotes the fact that it is officially open for business, AEW 2021 serves as the ideal platform to market the country, uniting international investors with lucrative Nigerian opportunities.
Notably, the visit aimed to emphasize the role of Nigerian oil and gas developments in a bid to attract international investor interest to new and existing projects. Through meetings with marginal field producers, the NNPC and the DPR, Ayuk opened a discussion on the role of oil and gas in Africa’s energy transition, drawing attention to the value and competitiveness of African projects. By showcasing the country’s new and existing oil and gas projects – such as the $2.8 billion, 614km Ajaokuta-Kaduna-Kano pipeline and the $10 billion Nigerian Liquified Natural Gas Train 7 project – both Nigeria and AEW 2021 aim to drive oil and gas directed investment, expanding Nigeria’s sector and accelerating long-term socio-economic growth.
Meanwhile, with the country’s Decade of Gas initiative – a comprehensive strategy to enhance gas monetization and utilization through a number of large-scale projects – comprising top of the country’s energy agenda in 2021, a meeting with H.E. Chief Timipre Sylva served to promote Nigeria’s gas industry, with the Minister declaring an ambition to enhance gas-directed investments, accelerating growth across the sector and the wider economy. Under the Decade of Gas initiative, Nigeria is committed to fully exploiting its natural gas reserves – which represent the largest in Africa estimated at 206.53 trillion cubic feet – and is, therefore, prioritizing gas-to-power projects and associated developments. H.E. Chief Sylva remains committed to energy investments and has confirmed that the upcoming AEW 2021 will serve as the ideal platform for deals to be made that will kickstart Nigeria’s Decade of Gas enabled by the passage of the PIB.
There are many deals to be made in Nigeria and AEW 2021 will be the place to make them
Ayuk’s meeting with the Minister additionally focused on the benefits initiated by the PIB, reiterating the role that this progressive legislature will play in spurring investment in Nigeria. The recently passed PIB will pave the way for an influx of international energy investments across the entire value chain in Nigeria, creating an enabling environment for international stakeholders, in which reduced taxes and royalties coupled with Hydrocarbon tax exemptions for deep offshore oil and gas production has positioned Nigeria as one of the most competitive investment destinations in Africa. Accordingly, the PIB has not only completely overhauled the country’s regulatory structure, but has significantly enhanced its attractiveness, serving as a catalyst for new investments that will drive growth in the wake of the COVID-19 pandemic. AEW 2021 will showcase Nigeria’s post-PIB opportunities in a bid to drive investment and deal-making.
“Nigeria is open for business. The passing of the PIB coupled with demonstrated political will has emphasized and reaffirmed the country’s enabling environment and we can expect an increase in both regional and international partnerships and investment. AEW 2021 will work hard to promote Nigeria as a top investment destination, with the Nigerian delegation offering valuable insight into new and existing project developments and opportunities. There are many deals to be made in Nigeria and AEW 2021 will be the place to make them,” stated Ayuk.
Additionally, meetings with Nigerian service companies led to a discussion on the role of local companies and the private sector in driving regional energy growth and Africa’s energy transition. By emphasizing the role that Nigerian companies can play in regional markets – including but not limited to Angola, Gabon, and the Republic of Congo – both Ayuk and the Minister promoted the value of Nigerian businesses in sharing valuable experience, showcasing successful projects, and consequently, driving growth across the entire region. Increasing Nigeria’s footprint in regional markets will not only initiate regional growth but will open up numerous investment opportunities for both Nigeria and the wider region.
With regards to Africa’s energy transition, Ayuk’s visit opened a dialogue on Nigeria’s pragmatic approach to an energy transition, emphasizing the value of a Nigerian-focused and adapted strategy to achieving net-zero emissions by 2050. Meetings with both the NNPC, the Minister and the DPR comprised in-depth conversations around the role of oil and gas in Africa’s energy transition, the recognition of the private sector as a key driver, and the need for a multi-stakeholder approach. AEW 2021 will extend on this narrative, emphasizing the fact that Africa’s energy transition is market-based and cannot conform to Western ideologies. Rather, both Nigeria and AEW 2021 will demonstrate how an Africa-centric approach is most suitable in initiating an energy transition while at the same time ensuring energy poverty alleviation and economic development.
Serving as a form of prelude to AEW 2021, Ayuk’s visit to Nigeria introduced valuable discussion points which will be further examined at AEW 2021. With a strong delegation of industry leaders, private sector executives, and national oil company representatives, coming to Cape Town in November, led by H.E. Chief Timipre Sylva, AEW 2021 comprises the official platform whereby deals regarding Nigeria’s energy sector will be made. Both the AEC and the Ministry are fully committed to driving investment in Nigeria, facilitating deal-making, networking and collaboration.
Air Peace has started two direct flights weekly from Lagos, Nigeria to Johannesburg, which was recently announced at the inaugural ceremony of flight operations in Johannesburg yesterday.
The airline said it will operate two flights weekly between the two cities. Flights will depart Johannesburg for Lagos on Thursday and Sunday for the six-hour journey.
The 4,524 -kilometer route currently has the likes of Ethiopian Air, RwandAir, Kenya Airways, ASKY, Egypt with one or more stopovers but Air Peace passengers will fly directly in a three-class Boeing 777-300 configured with 320 seats.
The gradual reopening of borders will definitely boost Air Peace plans to provide affordable flights between the two biggest economic hubs on the continent.
The inaugural launch of Air Peace flight operations into South Africa at the Johannesburg OR Tambo Airport. Photo Source: FacebookPhoto session at the inaugural ceremony to commemorate launch of regular flight operations in South Africa held at Johannesburg. Photo Source: Facebook
Air Peace is a Nigerian private airline that provides passenger and charter services. The airline boasts a fleet size of 23 covering 17 destinations serving major cities of Nigeria and West Africa. Travel Class. Air Peace provides passengers with an all-economy class cabin equipped with comfortable seating and great service.
An interview with the Group Executive Director of Dangote Group.
Q: Your foundation has obviously got a lot of influence in Nigeria, what are your main objectives for this year?
A: One of the main pillars is health. Nutrition determines the state of one’s health and we are investing towards nutrition, specifically primary health care, and most importantly towards eradication of polio, that itself is a good example of what Public Private Partnerships should put on the top of their list. This year’s Dangote Foundation (www.Dangote.com/Foundation/) is partnering with Bill & Melinda Gates Foundation and the Nigerian government. It is crucial for us to get buy in from each state government that we partner with; so Dangote Foundation, government and B&M Gates Foundation have equal responsibilities and we do really see the impact when we each are accountable. Through impact assessment in the rural areas, studying the root causes, we are able to determine where we want to see results and how to achieve progress. The formula is working and we will keep at it as there is a lot to cover.
Q: Healthcare and infant mortality obviously is a huge issue across the poorest countries in Africa. What could other corporates do to get more involved into helping, following your model?
A: The business sector is the most important in this model, and we put a strong emphasis to really pull the business sector, like the ones here at the Health Business Forum. This thing that we are pushing to get 1% of the tax dedicated to health; we need the support of other businesses do it as well? All of us corporate can just contribute and see this would ultimately help the health sector, and I mean, the way the foundation sees it, when investing in health, it should not be considered a cost, it is a huge investment in the future generations and it’s going to cost us a lot more if we don’t start now, a lot more.
We are changing and influencing people to keep aiming for a better lifestyle and to take better care of their health and well-being of their loved ones
Q: What are your proudest moments?
A: I am extremely proud of being able to make a difference in this world, that collectively we are changing and influencing people to keep aiming for a better lifestyle and to take better care of their health and well-being of their loved ones.
Q: If you had one single most important message from you personally to the world, what would it be?
A: I think, every single person has a role to play, and it is important to search deeper and find ways to contribute. Ultimately it can be very little, but you have to make an effort to participate. It’s not just about saying it. It is about being honest with yourself and having the courage to walk the talk. We all live on the same planet. Our communities within our cities play a strong role in the way we live with one another. Everybody has to participate! Everyone deserves to be healthy and happy!
In line with its commitment to building a safer online world for all, Facebook (Facebook.com) is supporting Safer Internet Day (5 February) with a campaign spanning 15-plus African countries. Aligning with the Safer Internet Day call to action – “Together for a better internet” – by joining hands with more than 20 non-profit organisations and government agencies, the campaign aims to raise awareness about Internet safety and security concerns such as cyber bullying and cyber-crime.
The campaign aims to raise awareness about Internet safety and security concerns such as cyber bullying and cyber-crime
Facebook is supporting the Safer Internet Day by:
Sponsoring the printing of online safety awareness booklets.
Facilitating training sessions.
Creating a family-friendly animation to help raise awareness of the Facebook Safety Centre (https://www.Facebook.com/safety)
“We know that safety is a shared conversation, which is why we are excited to be working with so many stakeholders around the continent to make the Internet a better place,” says Sherry Dzinoreva, Public Policy Programs Lead at Facebook Africa. “Together, with Safer Internet Day as a platform, we can address emerging online concerns, so that people and especially children and the youth, can get the most from their Internet experience.”
The campaign covers most of sub Saharan Africa, including Benin, Cameroon, the Central African Republic, Côte d’Ivoire, the Democratic Republic of Congo, Ghana, Kenya, Malawi, Mauritius, Nigeria, Senegal, South Africa, Tanzania, Uganda, Zambia and Zimbabwe.
Facebook’s highlights for the week of Safer Internet Day include:
South Africa
Facebook is partnering with The Film and Publication Board (FPB), Media Monitoring Africa (MMA), Google, Department of Telecommunications and Postal Services (DTPS) to launch the Web Rangers Programme 2019. Facebook is also supporting this effort with educational content. Facebook’s Emilar Gandhi will participate in panel sessions to talk about how Facebook strives to keep its community safe.
“Together for a Better Internet is a call to action for every government agency, private company, civil society organisation and citizen of South Africa. A force for good, the digital world also holds some dangers. But these dangers are all created. In and of itself the internet can only cause harm if it is used expressly for that purpose. We all need to respect the rights of others on the internet, as much as we expect our rights to be respected,” says Film and Publication Board spokesperson, Lynette Kamineth.
Kenya
Facebook is supporting Watoto Watch’s Safer Internet Day event for students at Ngunyumu Primary School in Nairobi. The event is the launchpad for the “A Million Campaign”, which seeks to raise awareness about online safety among schoolchildren. Facebook is providing ad credits and safety booklets for the event.
“The Internet enables us to connect with friends and family, access a wealth of knowledge and information, and express our thoughts and creativity,” , says Lillian Kariuki, Executive Director at Watoto Watch. “Along with these positives, children also need to understand how they can manage online risks as they make use of the Internet’s resources. Our aim, with the help of Facebook, is to equip children with this knowledge.”
Nigeria
Paradigm Initiative Nigeria is running workshops on safer internet use as part of its LIFE program in Kano, Lagos and Aba. Facebook’s Safe Online trainers will run two-hour workshops in both PIN’s LIFE Centers and at schools in Kano and Lagos for this initiative.
“Working with Facebook on online safety aligns with our focus on driving digital inclusion and educating the youth about their digital rights,” Tope Ogundipe, Director of Programs at Paradigm Initiative Nigeria “This programme promises to equip the children who participate with skills and knowledge that will enable them to make confident use of the Internet in their day to day lives.”
The ongoing investment in refining, petrochemicals, fertilizer and gas is driven by the desire to bring innovation and efficiency into all aspects of Nigeria’s oil and gas sector, the President/Chief Executive, Aliko Dangote has said.
Dangote, who made this disclosure yesterday at the ongoing Nigeria International Petroleum Summit in Abuja, said the company is committed to the concept of energy efficiency and innovation in the oil and gas sector.
The business mogul, whose 650,000 barrels-per-day capacity refinery is the largest in Africa, was represented by the Group Executive Director, Government and Strategic Relations, Dangote Industries Limited (Dangote.com), Engr. Ahmed Mansur.
Addressing participants at the forum, Mansur said the theme of the conference, “Shaping the Future through Efficiency and Innovation”, was quite apt; given Nigeria’s quest for economic transformation.
According to him, Aliko Dangote is passionate about efficiency and innovation in the oil & gas sector through adding value to the hydrocarbon process.
Mansur said the company’s passion and drive is seen in the building of the project, which will become the world largest single train refinery on completion and therefore a boost to Nigeria’s economy.
He stated: “The Refinery can meet 100% of the domestic requirement of all liquid petroleum products (Gasoline, Diesel, Kerosene and Aviation Jet), leaving the surplus for export.
This high volume of PMS output from the Dangote Refinery will transform Nigeria from a petrol import-dependent country to an exporter of refined petroleum products.
“This high volume of PMS output from the Dangote Refinery will transform Nigeria from a petrol import-dependent country to an exporter of refined petroleum products. The refinery is designed to accommodate multiple grades of domestic and foreign crude and process these into high-quality gasoline, diesel, kerosene, and aviation fuels that meet Euro V emissions specifications, plus polypropylene”, he said.
Mansur disclosed that Dangote is also constructing the largest fertilizer Plant in West Africa with capacity to produce 3.0 million tonnes of Urea per year as part of the gigantic economic transformation project. He explained that the Dangote Fertilizer complex consists of Ammonia and Urea plants with associated facilities and infrastructure.
“Nigeria will be able to save $0.5 billion from import substitution and provide $0.4 billion from exports of products from the fertilizer plant. Thus, supply of fertilizer from the plant, which is set for commissioning before the second quarter of 2019, will be enough for the Nigerian market and neighbouring countries,” he added.
Speaking further, he said at a time when the oil and gas industry and the global economy is in a state of flux, it is most appropriate that attention should be given to the future especially given the incredible speed and quantum of change taking place in every facet of human endeavour.
“Our economy in particular cannot afford to ignore these massive changes. Our decades of dependence on this industry for our economic well-being and the urgent need for diversification has been widely recognised and is clearly the most critical challenge for our policy makers.
“But even as we seek to diversity from oil, and we are, indeed, making observable progress in this regard, we cannot ignore the need to continue to exploit this God-given resources in a more efficient and innovative manner,” he added.
He commended the Management of the Nigerian National Petroleum Corporation (NNPC) for its unwavering support in Dangote’s quest to make Nigeria self-sufficient in the production of petroleum products.
After a year of rebound and recovery, Africa’s old and new hydrocarbons markets have an opportunity to further entrench the continent’s position as the world’s hottest oil and gas frontier in 2019. However, the new year also brings a new set of dynamics and challenges set to influence the future of the industry, from presidential elections to mega projects developments, amidst intensifying international competition.
New African frontiers opening up
Independents are leading the way in exploring and opening up new frontiers across Africa. This year will be key for the advancement of new exploration and production development projects from West to East Africa. Developments to watch notably include Senegal’s SNE field development, where FEED works are ongoing and a final investment decision (FID) is expected by Woodside Energy and Cairn Energy this year; Niger’s Amdigh oilfield development, where Savannah Petroleum’s $5m early production scheme is set to start anytime soon; and the opening up of Kenya’s South Lokichar Basin by Tullow Oil, where FID is also expected before year end amidst rising tensions with the Turkana local community.
A year to confirm Africa as a global exploration hotspot
Ongoing bidding rounds in key existing and new African hydrocarbons markets will tell if Africa further confirms its position as the world’s new exploration hotspot and manages to attract necessary investment in its oil and gas acreages.
Amongst well-established African producers, OPEC members Gabon and Congo-Brazzaville each have ongoing bidding rounds. Gabon’s 12th shallow and deep-water licensing round is set to close in April 2019 and Congo-Brazzaville’s License round phase II in June 2019. With both countries struggling to implement their new Hydrocarbons Codes, the success of these rounds will tell if investors have been convinced by policy reforms developed over the past two years.
Two bigger African producers and also OPEC members, Nigeria and Angola, are set to launch landmark and out-of-the-ordinary bidding rounds this year. Nigeria will auction its gas flare sites under the Nigerian Gas Flare Commercialisation Programme, likely to happen after the February general election, and Angola will hold its Marginal Fields Bidding Round, result of a new May 2018 policy enacted by President Lourenço, and to be launched at the Africa Oil & Power conference in Luanda in June 2019. With the Nigerian Petroleum Industry Bill yet to be signed and the ink still fresh on Angola’s new policy regime, both rounds will also be key in assessing investors’ interest for both countries’ business environments.
*Secretary General of OPEC, Mohammed Barkindo in a handshake with Minister of State for Petroleum, Emmanuel Ibe Kachikwu at the recent Nigeria Oil and Gas Conference and Exhibition in Abuja recently. Photo Credits: www.businesshilights.com.ng
Also attracting interest is the newest and arguably one of the upcoming entrants – Ghana – holding its 1stformal licensing round set to close in May 2019 which has reportedly got the attention of 16 oil companies, including majors ExxonMobil, BP, Total and ENI. As a hopeful new East African offshore frontier, Madagascar is also putting 44 concessions on offer until May 2019, none of which has ever been tendered or explored before. For a country without any major oil discovery to date, the ongoing license round is a wager test.
Africa’s struggling FLNG industry
After the start of commercial operations at Golar LNG’s Hilli Episeyo FLNG vessel in Cameroon in June 2018, hopes were high that Equatorial Guinea would soon move forward with its own Fortuna FLNG project, set to be Africa’s first deep-water FLNG development. While Fortuna was to be game changing for the gas industry of Equatorial Guinea and the rest of the continent, the development of the $2bn project has stalled due to a lack of financing. And the clock has been ticking since. The lack of progress on this plan has been so slow that operator Ophir Energy has been denied the extension of its license to operate block R (as of January this year), which contains the giant Fortuna gas discovery. While Equatorial Guinea’s FLNG aspirations look more uncertain than ever, 2019 will tell if the country can find the right partners to put the project back on Africa’s FLNG map.
Meanwhile, new entrants in Africa’s hydrocarbons stage are making remarkable advances towards the development of their own FLNG industry. On December 21st last year, BP finally announced its FID for phase 1 of the cross-border Greater Tortue Ahmeyim development between Senegal and Mauritania, which involves the installation of a 2.5MTPA FLNG facility. It became the third African FLNG project to reach FID after Cameroon’s 2.4MTPA Hilli Episeyo and Mozambique’s 3.4MTPA Coral South FLNG.
Mega projects on the move
Africa’s come back on the global oil and gas map is not only due to the vast natural resources found in its soil and waters, but also to the continent being home to mega energy projects set to transform the future of the industry.
On the upstream side, the recent inter-governmental cooperation agreement between Senegal and Mauritania, and BP’s FID on its cross-border Greater Tortue Ahmeyim development, bodes well for the future of West Africa’s hydrocarbons industry. The project aims at extracting the 15Tcf of gas estimated to be held in the Tortue gas field, located at a depth of 2,850 metres. However, the ability of both Senegal and Mauritania to work out their differences to ensure a more sustainable development of their offshore reserves and facilities around the MSGBC Basin is a factor to watch out for.
African mega gas projects are not the sole property of the continent’s West coast, with Mozambique moving forward with two landmark projects putting the Southern African nation on the global LNG map. Following the launch of the Coral South FLNG project by ENI in June 2017, a FID is now expected in the coming months for the Anardarko-led Mozambique LNG project, an onshore LNG development initially consisting of two LNG trains totaling 12.88MTPA to export the gas extracted from the offshore Area 1, estimated to contain a whooping 75Tcf.
Sub-Saharan Africa’s biggest petroleum producers, Nigeria, is also moving forward with massive oil development projects in 2019. Last year already saw the launch of Total’s $3.3bn Egina FPSO in Nigeria, where production officially started in the first days of 2019 and is set to peak at 200,000 bopd. FID is now expected on Shell’s Bonga Southwest offshore field in Nigeria early this year, a multi billion-dollars development whose production is expected to reach 180,000 bopd.
International contenders and pretenders
As Africa strengthens its position at the centre of global transformations, it is increasingly becoming the playground for international actors willing to benefit from the continent’s vast resources.
Independents are leading the way in exploring and opening up new frontiers across Africa
While China has asserted its position of a contender in the continent, will new continental dynamics lead the Asian giant to change its investment strategy or portfolio? With Russia’s intentions on the continent becoming clearer and clearer, will the first Russia-Africa Summit this year translate into more concrete Russian deals across the continent? At the same time, will the US’ “Prosper Africa” initiative launched in December 2018 be able to counter both rising international competition and declining US influence on the continent?
A complex energy diplomacy dilemma for OPEC in Africa
With a majority of its members made up of African nations since the joining of the Republic of Congo in June 2018, OPEC’s evolving relationship with the continent as it strives to manage the global supply glut will be requiring skillful diplomatic ingenuity.
On one side, Africa’s biggest producers and OPEC members Algeria, Libya, Nigeria, Angola and Congo-Brazzaville, are striving to boost their domestic output, which makes it harder and harder for the Organisation to negotiate its production cuts.
On the other side, the continent is also home to a flurry of upcoming petroleum producers like Senegal, Kenya or Uganda, or old players making a comeback like South Sudan, some of them part of OPEC’s Declaration of Cooperation, whose upcoming or increasing output adds another layer of complexity to the formulation of OPEC’s global oil prices management strategy.
An increasing African output from OPEC and non-OPEC member countries only complicates OPEC’s maneuver capabilities and increases its dilemma of both providing a stable pricing environment conducive to investments, while avoiding a worsening of the supply glut that would push prices further down.
Africa’s biggest petroleum producers casts their ballots
Amongst the series of elections happening in the continent this year, from Senegal to Mozambique, none will be more important for the African oil sector than that of Nigeria this February. The Nigerian presidential election is set to shape the future of the industry, not only because Nigeria is Africa’s biggest oil & gas producer, but because what happens in Nigeria impacts the rest of the subcontinent one way or the other. While both Muhammadu Buhari, seeking re-election, and his ally turned rival Atiku Abubakar have committed to the signing of the Nigerian Petroleum Industry Bill, the ability of the future President to get his office in order and get the bill passed quickly will heavily influence investments within Nigeria’s hydrocarbons sector for years to come.
North, Algeria and Libya are also entering an election year, with the 2019 Libyan general election set for the first half of the year, and Algeria’s for April. Both countries are on a transformation path. Libyan authorities plan to more than double the country’s output to 2.1 million bopd by 2021, providing politics doesn’t tamper hydrocarbons governance and the work of the National Oil Company. With Muammar Gaddafi’s son Saif al-Islam Gaddafi set to stand for election and the country still divided between West and East, maintaining the stability required by investors will prove challenging.
In Algeria, where a wave of reform is shaking the entire hydrocarbons sector, elections are expected to maintain a relative status-quo, at least politically speaking. The country’s national oil company, Sonatrach, has launched an ambitious transformation strategy that will see it investing $56bn over the next four years and internationalizing its operations across major global energy markets. 2019 could even see the state-owned giant and Africa’s biggest company further expand south of the Sahara.
Angola’s steady road to reforms
Since taking office in the summer of 2017, Angolan President João Lourenço has been implementing a bullish reformist agenda which is drastically transforming the governance of the country’s oil & gas sector. Angola is reforming fast, but will market forces allow changes to happen at that pace and yield the results that the government is looking for?
While international investors seem to think so, with Total and BP signing major agreements to boost their Angolan operations over the past few months, 2019 will tell if the international oil industry is being convinced of Angola’s return as a competitive African frontier or not.
To showcase the work being done by Sonangol and the Angolan government to generate more investment in the country’s oil & gas industry, Angola is backing up an international conference being organized by Africa Oil & Power in Luanda on June 4-6, 2019, where it will be launching the Angolan Marginal Field Bidding Round. This will be the first official investment roadshow organized in Angola under the current administration, and one that is set to unveil a new set of reforms and investment commitments.
South Sudan’s march to peace
The major progression in South Sudan, and one on which the entire economy relies, is that of the peace accords. The Sudanese and South Sudanese authorities have time and again demonstrated their commitment to the peace process, which has remained peaceful for the most part. However, will peace deals translate into investment promises and money being invested into the South Sudanese economy this year? Some signals point to that direction, with South Africa’s Central Energy Fund committing $1bn to South Sudan late last year, but markets are still skeptics and observers will remain pragmatics and wait to see how the peaceful transition is managed and how oil production resumes before making any concrete moves.
A year to improve market access for East African producers
With Uganda set to join the club of African petroleum producers by the early 2020s, efforts are on the way to develop adequate infrastructure for the evacuation of oil that will be produced from the Lake Albert Basin. The project seemed to be positively moving forward when Uganda and Tanzania exchanged the inter-governmental agreement for the 1,443km East African Crude Oil Pipeline in May 2017. However, the partners in the pipeline’s construction, French major Total, China’s CNOOC and Tullow Oil, are yet to make a final investment decision on the project. Meanwhile, the Host Government Agreements are to be signed this January, but delays in concluding the pipeline’s financial deal have already pushed back Uganda’s oil production ambitions from 2020 to 2021. The pipeline is crucial for the further integration of the East African community and to set a positive record of joint planning, financing and implementation of landmark energy projects in the region.
With production declining and investment scarce, the Angolan leadership has put in place a number of new policies to reboot its oil industry and propel economic development. However, those changes take time and renewed deep-water oil and gas exploration for fresh reserves will take years to yield the desired results and stop the daily production crunch.
In the meantime, the government is targeting what it already knows exists, the country’s multiple deposits of what has been dubbed marginal oil fields, which will go on sale this year during the Angolan Marginal Field Bid Round.
Marginal fields are defined by reduced profitability or lack of commercial viability. These can, at times, represent considerable amounts of crude oil in the reservoirs, but that, due to costly recovery processes, are not worth the investment under the existing legal and fiscal framework. In the Angolan deep offshore, several of these prospects have been found over the years and dismissed in the pursuit of more profitable opportunities. However, in the wake of the lack of investment in exploration in the country over the last four years, these marginal reserves have become more relevant for Angola’s macro-economic outlook.
So, in May 2018, President Lourenço’s government published a new framework specifically designed to promote investment in these areas. According to the official text, the law considers marginal fields those discoveries with proven oil reserves of less than 300 million barrels (exceptions are considered for bigger reserves in particularly expensive working conditions), standing at or below 800 meters of water dept, that do not give returns to the State of more than USD$10.5 cents per barrel, returns for the operator of no more than USD$21 per barrel and that have an average return on investment after taxes of less than 15%. For those that fit these conditions, the government offers extensive tax and fiscal benefits, as well as, easier conditions for cost recovery, in order to make those reserves commercial and promote their development.
Angola is not the first to try this tactic. In 2003, Nigeria had already had a bid round for its marginal fields with a certain degree of success. The majors are not likely to be particularly attracted by these relatively small prospects, but they represent great opportunity for smaller independent African and non-African oil and gas companies that can work efficiently and with less overheads than its bigger counterparts, while having the business certainty of working prospects with guaranteed reserves. The government is hoping that development in these marginal fields will help raise the current crude oil production (expected to be stagnant in the run up to 2022), while it promotes renewed investment in exploration and production in unexplored acreage.
The Marginal Fields Bid Round is expected to be launched in Luanda in June 2019 at the Angola Oil & Gas Conference, organized by Africa Oil and Power with the endorsement of the Angolan Government. It is likely to include onshore and offshore blocks in the Congo, Namibe and Cunene basins, and has already received considerable attention from industry players in the region.
The Nigerian experience tells us that seeking capital in the local financial sector can be challenging
Lessons learned
The Nigerian experience with marginal oil field development had measurable success, with 24 licenses awarded to 31 companies, some as sole operators and others as joint-ventures. The 2003 marginal field bid round opened a number of opportunities to local and regional industry players while it contributed to increase the country’s oil output and promoted indigenous participation in petroleum upstream activities. For companies like Oando, Waltersmith, Shoreline Energy, Seplat, Sahara Petroleum or Brittania-U, these fields represented important opportunities to farm-out some acreage from the majors and lead their own projects. While some developments have been slower than expected, the outcome of the process was mostly successful. Today, around a third of the licenses issued produce meaningful amounts of crude oil.
Nigeria’s plan to earn additional $14.100 billion (N4.314 trillion) from 300 million barrels of crude oil is uncertain as licensed marginal fields are unable to engage in meaningful exploration and production activities 13 years after. The country targets daily earnings of $4.23 million (N1.29 billion) from an average of 90,000 barrels of oil per day. Experts say that 18 of the marginal fields with an average capacity of 5,000 bpd each could produce 90,000 bpd of crude oil.
However, there are a couple of lessons to be learned from the Nigerian experience that apply to the Angolan reality. Firstly, marginal fields are particularly attractive for smaller indigenous or regional companies that can operate well with smaller profit margins. These companies are also much more cash-strapped than the likes of ExxonMobil or Total and therefore need investment capital to develop their acreage. The Nigerian experience tells us that seeking capital in the local financial sector can be challenging. Nigerian banks have been resistant to awarding credit lines to small operators in this kind of project. Normally, banks issue loans against equity or assets used as collateral. These oil operators’ attempt to use the oil reserves as collateral hasn’t been well accepted by the Nigerian financiers, and that has delayed field development. This means that inviting foreign partners with access to capital becomes paramount. Local Angolan companies are advised to seek the partnership of mid-size players like Tullow Oil, Trident, Kosmos, Noble, Perenco and many successful Nigerian oil firms, with extensive African experience and available liquidity that can help them progress and be successful in their endeavors.
Secondly, there is the issue of legal clarity. The Nigerian Petroleum Industry Bill, which in its many forms has been under discussion for over two decades, continues to create disruption and uncertainty in the industry and delaying new bidding rounds. If the current form of the bill is approved, marginal field operators are expected to receive significant cuts in the taxes and royalties, but that remains unclear for the time being.
On that second note, the Angolan government’s action must receive praise. In record time, a simple and clear framework was created for the marginal fields concessions. It will be important that action is also taken in finding solutions to facilitate the financing of many of these projects so that these efforts have a measurable impact on the country’s oil industry. A December 2018 article on the Nigerian newspaper The Oracle, titled “Angola pulls investment attention off Nigeria”, blamed the ease of doing business and clear fiscal framework created for the marginal field bid round taking place in June as the main drivers in moving investors from the complicated dealings of Nigeria into the Angolan market, a sign of a job well done by the Lourenço administration.
NJ Ayuk is the founder and CEO of Centurion Law Group and the executive chair of the Africa Energy Chamber of Commerce. João Gaspar Marques is an energy analyst and a seasoned Africa specialist with in-the-field reporting experience from Africa’s petroleum hotspots
In sum, Angola’s journey towards revitalizing its oil industry and boosting production is already yielding positive results, with the perception of international investors already shifting towards a more positive outlook. Just in December, ExxonMobil and BP have pledged new investments in the country, while French Major Total launched its USD$16 billion Kaombo project in November and indicated further investment in the country in the near future.
These are important developments at a time when Sonangol tries to restructure and recapitalize to once again focus on exploration efforts. At the same time, the exploitation of the country’s marginal fields within this new framework has the potential to, alongside steps to extend the life of declining fields, help maintain oil output as new major projects are developed. If all continues in the direction it is now, it stands to reason that within three or four years we could again see the Angolan oil industry flourish. However, good governance and business-friendly policies coupled with clear fiscal and legal frameworks need to continue to be developed and upheld if the promise of the Angolan oil industry is truly to be fulfilled.
Three iconic African fashion designers were brought on board to create 12 extraordinary outfits from vast amounts of data extracted from the cities of Nairobi, Lagos and Johannesburg.
The power of technology and fashion have combined in a thought-provoking project that demonstrates how data can transform African cities. Tech leader Siemens (Siemens.com) used data from the cities of Lagos, Nairobi and Johannesburg and wove it into unique fabrics which tell a story about each city. Three iconic African fashion designers then used the fabrics to create one-of-kind outfits, which are as stylish as they are smart!
FABRIC – launched in Johannesburg on 23 August – showcases how digitalization of the industrial world is fast becoming the biggest transformation of our time, and highlights how data combined with smart technology will ensure that tomorrow’s cities are more connected, efficient and powered.
Three iconic African fashion designers were brought on board to create 12 extraordinary outfits from vast amounts of data extracted from the cities of Nairobi, Lagos and Johannesburg. The intricate garments by John Kaveke (Kenyan), Zizi Cardow (Nigerian) and Palesa Mokubung (South African) outline a variety of patterns from power grids, shipping and tonnage to population densities, transport and areas of connectivity. Data from each of these sectors tell a powerful story about each city and how digitalization can transform them. All of this is told through the universal language of fashion and design.
As urbanization rapidly increases, cities need to start preparing for the effects it will have on infrastructure, energy, water and transportation systems
“This is how we thought to express the aspect of digitalization. As urbanization rapidly increases, cities need to start preparing for the effects it will have on infrastructure, energy, water and transportation systems,” said Keshin Govender, Group Communications Head for Siemens South Africa.
Data gives greater insight on what makes each city tick, helping us make calculated decisions and improve service delivery to the people. Through the FABRIC project, it was evident that the challenge is not what to do with the avalanche of data but rather accessing reliable and recent data.
“This project has highlighted the need for access to data in order to make sound urban planning decisions,” explained Govender.
Siemens is well positioned in automation, electrification and digitalization to find solutions to the various challenges of today. It is uniquely positioned to unlock the potential of digitalization through its combination of digital expertise, domain know-how and understanding of hardware in order to leverage digital technologies and optimize operations.
While there is a growing adoption of intelligent machines within certain sectors like the automotive industry, the real opportunity for Africa lies in sectors where it has not yet been explored like manufacturing, energy and transportation. This is a remarkable opportunity for Africa which will result in the establishment of new industries and new jobs, while exponentially increasing skills development and contributing to GDP.
Lagos, Nigeria’s business nerve center and commercial capital of West Africa has every odd stacked against it yet it remains one of the most popular cities of the world. For anyone that loves to sleep a lot, Lagos is not the city for you because it is popularly known as the city that never sleeps. As early as 3:00, residents are already on the road and around 5:00, traffic begins to build up.
No one knows when the last person leaves the street – that’s even if the street could even remain empty. Unlike several other cities across Africa where security guards restrict movement and business activities to specific hours, no one can tell Lagosians (as residents of Lagos are popularly called) when not to go around.For West Africans, Lagos is Dubai, London, New York and Mecca. It is an African city with the Golden Fleece, the place where all dreams could come true.The city attracts skilled, semi-skilled and unskilled workers from across West Africa and beyond due to the large number of companies, organizations and multinationals that are in the city.It is therefore not inappropriate to call Lagos the best city in West Africa.
What did Lagos do right, what can other cities learn from it, and what challenges should the state prepare for as it contends with overpopulation? Lagos’ development started when it became Nigeria’s federal capital city. Like almost all capital cities in West Africa, Lagos is on the coastal region and had large sea ports where ships do berth. When the capital of Nigeria was changed to Abuja, many West Africans thought the growth of Lagos had been punctuated. That wasn’t the case as the rate of growth and development in Lagos state continued to increase. More businesses opened in Lagos, many are still opening. It is now very clear that Lagos is Africa’s New York.
In terms of governance which is central to the development of any city, Lagos has been extremely lucky. The last four governments had been continuous, each continuing where the last stopped unlike in other parts of West Africa where there are conflicts, accusations, allegations and natural tendency of the incumbent administration to pull down the former’s legacies. Although Lagos state is the smallest state in Nigeria, West Africa, with an area of 356,861 hectares of which 75,755 hectares are wetlands, yet it has the highest population, which is over five per cent of the national estimate. As at 2006, the population of Lagos State was 17.5 million, (based on the parallel count conducted by the state during the National Census) with a growth rate of 3.2%, the state today has a population that is well over 21 million. This was corroborated by the recent immunization exercise carried out across the state where over 4 million children were immunized.
According to the United Nations, at its present growth rate, Lagos state will be third largest mega city the world by 2015 after Tokyo in Japan and Bombay in India . Lagos’ strongest bargaining currency is its large population which is higher than that of many countries of the world. Lagos state has the largest market in Africa and it is also riding on the success of the organized private sector and multinationals that started and continues to grow, extending to other parts of West Africa. The nightlife in Lagos state is incomparable to anywhere else in Africa. Whatever your status, Lagos has at least a place for you where you can cool off, chill out and relax. It has numerous clubs, beaches, parks, malls and several others for different categories of residents. Many West Africans believe Lagos is attracting more attention than other cities in Western Africa because it supports all categories of individuals.“Anyone can survive in Lagos. Even if you don’t have any form of qualification you can still find a thing to do in Lagos.
The population here is so large that anything can sell. That is why everyone is coming here,” says Okorie Augustine who sells bottled water at night on the Lagos Third Mainland Bridge. Ayo Akanji is a technology expert who relocated permanently to Lagos. He says it is easier to meet potential partners in Lagos than any other part of West Africa.“If you go to the right clubs and other locations, you would meet the right people that you need to advance your business. This is not easy in elsewhere because the gap is wide.”It is therefore clear that the success of Lagos is not as hard as rocket science to decipher; it is all about its huge population. The companies here are making profits because the population is large enough; the government is being applauded because it is attracting more investments and startup scene continues to expand because of innovations aimed at solving the challenges that the large population is facing.
Heavy traffic is probably the singular challenge that the city is battling with. For residents who stay off the Lagos Island, they have to be on the road as early 4:00 to escape the heavy traffic. Accommodation is also expensive, forcing residents who cannot afford to the high cost to move to the neighboring cities across West Africa. New projects are springing up in Lagos state and more land is being re-acclaimed from the waters to give way for new structures. Settlements are getting upgraded. And more jobs are being created for the ever-expanding population who still see Lagos as the place where dreams could be fulfilled.
The city is not void of controversies; as a matter of fact, it is almost impossible for any other African city to become more controversial than Lagos. Recently, the state government was at the center of an extensive controversy and national outbursts especially from Nigerians who are indigenes of the southeastern part of the country. They raised dusts when the Lagos state government ‘deported’ some of their natives who were found roaming about on the streets of Lagos. The affected regions vowed to discourage their natives from contributing to the development of Lagos state, yet buses from this region are filled daily with people heading towards the state.
The reason for this is not farfetched; according to Francis Madojemu, founder of BridgeHub Incubation Center, more than 70 per cent of Nigeria’s revenue is spent in Lagos.“Out of every dollar made in Nigeria, 70 cents is spent in Lagos. The rest of Nigeria including the Abuja Federal Capital City shares the remaining 30 cents. That is just to show the enormous influence that Lagos has on the Nigerian economy.” He added that any serious company will strive to be in Lagos. “It is so simple and straightforward.Lagos has the resources, opportunities and the market is large enough for most products, why stay elsewhere? I don’t think this will change anytime soon.” Although Lagos is relevant in the present, many still see it as a city for the future because of the numerous futuristic projects such as the Eko Atlantic City project that was commissioned by US former president Bill Clinton earlier this year. The state also recently commissioned Africa’s first suspended bridge and the tallest hotel in the entire West African region.Several other similar landmark projects are underway, one of such is the Lagos Bullet Train project; the state is also rejuvenating old infrastructures and residents are having the closest experience to what happens in the developed world.“Lagos is like a country on its own and it is very unique. I am so proud of the achievement the city has been able to record over the years. It shows that even in the midst of the hullabaloos and bad news that characterize Nigeria in the foreign media, Lagos offers a beacon of hope for the nation,” says Seun Akande, a Lagos resident.World leaders are already aware of the beacon of hope radiating from Lagos, southwest Nigeria which is why it is almost impossible for any world leader to visit Nigeria without visiting Lagos. One of the latest visitors is the world’s richest man, Microsoft’s Bill Gates.When music legends visit Nigeria, they are hosted in Lagos.
“According to the United Nations, at its present growth rate, Lagos state will be third largest mega city the world by the end of 2015 after Tokyo in Japan and Bombay in India. Lagos’ strongest bargaining currency is its large population which is higher than that of many countries of the world.”
It is no surprise that Mary J Blige, Kerry Hilson, Beyonce, Yolanda Adams, Rick Ross and several other international musicians weekly throng the city. Even local artistes are all interested in winning their share of the Lagos market since all the major record labels are operating from Lagos.
In contemporary Africa however, Lagos continues to attract more people from across the world because it offers the much elusive Golden Fleece.It also supports hustling more than any other African city.E ven though many detest the long hours spent in traffic, the opportunities are overwhelming and the residents are already adjusting to the Lagos lifestyle.
“People keep talking about the traffic; only those who are new in Lagos complain about the traffic. I don’t really encounter major traffic. The secret is to know the right time to leave the house, the route to take and the type of transportation to use,” says Eben Sowah a Togolese resident in Lagos. According to him, there is no manual that gives all necessary information one needs to survive in Lagos; one acquires the knowledge as one becomes more familiar with the city.He said: “It took me just 3 weeks to know the city; for my friend, it took him several months. I don’t know about you. What I know is that at the end we will all come to love Lagos.”
Lagos state is rich in history, relevant in the present and positioned for the future. Little wonder the city slogan is Eko o ni baje (Lagos will never be destroyed). It will always be the only African city that never sleeps.
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“This project has highlighted the need for access to data in order to make sound urban planning decisions,” explained Govender.
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