Institutional investors aren’t being overlooked when it comes to oil and gas investment opportunities in Africa.
At this year’s Africa Oil Week event, a number of business leaders shared their thoughts on how to effectively explore the immense oil reserves abundant in Africa. In particular, the panel discussions focused on the role of institutional investors within Africa’s energy industry.
The key message they delivered was that they were ready to invest further in the region but were looking for investment opportunities that could offer them assurance in terms of fiscal and political stability.
Fiscal stability key to investments
Pam Darwin, vice president Africa Exxon Mobil admitted that there is no silver bullet to achieving success in Africa, but one thing that is crucial going forward is access to capital.
“Our industry must continue to strive to meet energy demand for reducing environmental impact,” she said. “To do that we face competition for capital. All our efforts take capital and the competition is greater than ever.”
According to her, stable and desirable fiscal regimes attract investments. She particularly singled out the United States where investment in the shale industry increased dramatically following the enactments of regulations that promote the development of oil and gas.
“As a consequence, US liquid production has more than doubled over ten years, generating billions of dollars. In contrast, over the last ten years, African liquid production has steadily decreased. In order to tap Africa’s immense reserves, commercial terms must be in place to draw those investments.
“Investment also needs to focus on making communities strong, this is really important for us as a company. We fund programmes and training, education, and women’s empowerment along with health issues such as malaria. We’ve invested nearly $4 billion since 2000 in these kinds of programmes, over a billion just in education, and 120 million in women’s economic empowerment.”
BP’s strong focus in Africa
Jasper Peijs, exploration vice president Africa, BP, explained that BP’s current activity and presence is right across the continent of Africa. The company has already delivered major projects in various countries and is on course to complete a few others in Algeria, Angola, and Egypt.
“We have a strong multi decade positions in Angola, Egypt and Algeria, where we are currently producing 400,000 barrels a day.”
Peijs lauded Angola for providing a positive environment for investment through incentivisation of investing opportunities. He added that BP’s strong focus in Africa is mainly due to untapped potential, massive growth opportunities and competitive partnerships offered by various African nations.
BP’s next major investment project in Africa is Greater Tortue Ahmeyim which will be commissioned in Mauritania and Senegal.
Meanwhile, Mike Sangster, MD Total E&P Nigeria, identified key technologies that would propel Africa to succeed in the global petroleum market.
“There are four main technologies that we need to be strong in to succeed – deepwater, LNG, petrochemicals, and lubricants. Here in Africa, we are very much present with three of those four technologies with deepwater and energy as well as retailer and lubricants on the downstream side.”
Africa Oil and gas industry challenges
Colette Hirstius, vice president exploration Middle East & Africa, Shell explains that the industry faces unique challenges and opportunities.
“These are often driven by geology, the maturity of the industries and in the case of customer facing businesses, the size and structure of the market,” she said.
“Some of these challenges include the lack of infrastructure, security issues, unstable fiscal and regulatory environments and limited access to energy.”
Hirstius suggested that these problems could be resolved through long-term partnerships between the industry and government built on trust and commitment. She highlighted the role of government in creating an enabling environment for investments while stressing the need for companies to establish local capabilities and capacity to help Africa achieve its full economic potential.
“Shell believes strongly in partnerships and that everyone has their role to play, the role of government is all about creating an enabling environment that encourages the industry to invest. This includes developing and communicating a clear energy strategy. As well as creating strong, effective, and predictable, regulatory and fiscal regimes along with respecting the sanctity of governance and contracts and providing a secure operating environment.”