Sunday, November 10, 2024

Oil and Gas in Africa

NJ Ayuk is the CEO of Centurion Law Group, a pan-African legal and advisory conglomerate with its headquarters in South Africa and offices in Equatorial Guinea, Ghana, Cameroon and Mauritius.
He is particularly active in the structuring, negotiation and implementation of petroleum, mining, LNG, and other natural resource projects for leading private operators in Equatorial Guinea, South Sudan, Uganda, Angola, Congo-Brazzaville, Nigeria, Senegal and other sub-Saharan countries.
As part of his most recent work on African content development, he has advised the Ministry of Petroleum and Energies of Senegal, the Ministry of Petroleum of South Sudan and the Ministry of Mines and Hydrocarbons of Equatorial Guinea on their national local content implementation strategies. He has also been part of the most strategic investments and projects shaping Africa’s energy sector in recent years, including the drafting of South Sudan’s first exploration and production sharing agreement and the launch of Equatorial Guinea’s offshore gas mega hub in 2019, the first such project on the African continent.
Since 2018, he is also the executive chairman of the African Energy Chamber where he leads continent-wide efforts to build domestic capacity and advocate for a stronger and more united African energy industry.
He strongly advocate fighting against aid and welfare and focus on managing natural resources and move forward to further attract foreign investors. Capital talked to him about the future. Excerpts;

Capital: What do you think the future holds for Ethiopia’s oil and gas sector?
NJ Ayuk: We see some pockets of progress in Ethiopia, in the areas of gas exploration and production but also power generation and rural electrification. In 2019, the signing of a deal between Ethiopia and Djibouti to build an export gas pipeline sent very promising signals on the future of the country’s hydrocarbons sector. China’s Poly-GCL Petroleum Investments has made good progress in the development of the Calub and Hilala fields. The near future could see the development of a gas-value chain in Ethiopia which would be very beneficial to the entire economy if managed well and could help further attract foreign investors.

Capital: What key areas does Ethiopia needs to focus on to make the most out of its recently discovered oil resources?
NJ Ayuk: The discovery of hydrocarbons in a new petroleum province needs to be accompanied by proper revision of the national regulatory framework, and the putting up of capacity building initiatives to prepare local industries and the workforce to participate in the development of the sector. Because Ethiopia also discovered gas, the release of a gas master plan could also help in structuring the country’s gas value chain, especially when it comes to gas monetization, and in attracting necessary investments to further explore.

Capital: How will the energy industry across Africa embrace innovation?
NJ Ayuk: There’s huge potential for innovation and to bring more sophisticated software and tools such as AI and ML in oil and gas, as opposed. African tech innovations do not need to be limited to mobile money, retail trade, entertainment, healthcare, and telecommunications. Instead of importing technology at great cost from Europe and the United States, I’d love to see more African countries take bold steps towards developing new ways to drill wells and handle equipment, design new seismic data collection techniques and petroleum data management.

Capital: How can new technology benefit the oil and gas industry?
NJ Ayuk: It would address the underdeveloped nature of the industrial and manufacturing sector in Africa. Technology providers drive efficiency and environmentally friendly production methods. Investment in tech infrastructure is crucial. Technology is the only reason why the US shale is still competitive even when global commodity prices are low. There is a huge scope for technology adoption and gas.

Capital: You boldly raise the issue of corruption as hindering business growth on the continent, so what should be done by stakeholders like civil society, advocates, governments and the African Union?
NJ Ayuk: The industry needs to prioritize higher transparency initiatives and good governance policies. Regulations play a big role in supporting the development of such processes. The civil society on its side needs to hold government and industry leaders accountable for the deals they sign, and for the operations they conduct in their country. Public oversight is necessary to entrench a sense of accountability and responsibility across all stakeholders.

Capital: You want African countries to look at each other and work together to create a stronger, more stable oil and gas industry. How can this be materialized? What are your suggestions?
NJ Ayuk: It’s up to us, as African community members, leaders, and business representatives to do as much as possible to encourage trans-border oil and gas operations. Africa has been presented with a unique opportunity, the African Continental Free Trade Agreement for example. African countries should embrace the notion that a strong regional economy will give the continent a competitive edge in the global economy and it will make a lot of pan-African work easier. Let’s win together.

Capital: You advocate fighting against new aid and the welfare culture that young Africans are moving towards. Would you tell us the magnitude and how can African discourage them from that kind of culture?
NJ Ayuk: Nobody wants hand-outs, but we all want to contribute meaningfully to our country. I do encourage foreign investment over aid, especially if such capital goes into African companies and young businesses. It worked for me, and I believe it can work for more African business owners. When I first started, I had the benefit of partnering with an American law firm that offered to invest in our people and helped me build my workforce alongside that of our clients. That period in my life really shaped my company and gave us a lot more to work. I enhanced my foreign education, instilled good business ethics and staffing skills, whilst using my African heritage to channel all what I gained towards building a prosperous future for our continent. Foreign partners are essential to Africa’s growth, they can teach us the transferrable skills that we need and bring capital to expand our infrastructure. But we must be willing to sign the right deals that ensure profits for investors and benefits for the local economy.

Capital: In Africa, we don’t have strong multinational oil companies like TOTAL, MOBIL etc. What should be done to attract giant companies and benefit Africans?
NJ Ayuk: African National Oil Companies (NOCs) can play a significant role in building a strong African content but need to do more. NOCs play a vital role in providing revenue for their countries—revenue that, ideally, is used strategically to provide much-needed infrastructure and to promote stability, sustainable employment opportunities, and economic diversification. On the continent, from country to country, NOCs can play a significant role in supporting a vibrant oil and gas economy. Their impact depends on their ability to mobilize resources, whether on its own or through strategic joint ventures with partners of its own choosing. Similarly, we are seeing the emergence of strong African Oil Companies (AOCs), many of them born in Nigeria and now seeking regional expansion across the continent. These independent and private companies have had tremendous success at home and are now taking on a new challenge of expansion. Watch out for them, they are building the future of the African content!

Capital: What are the challenges and prospects of oil and gas in Africa?
NJ Ayuk: We have already discussed issues of transparency, lack of good governance and the need to invest in technologies. Additional issues include burdensome tax policies, excessive red tape, unrealistic local content requirements, security issues, lack of diversity in the workplace, lack of contracts’ sanctity— and the list goes on. We need African solutions for African challenges. It’s up to Africans to address the challenges of Africa. The prospects are great. So many lucrative gas discoveries have been done in this year alone. We’ve stepped into a new era of real, tangible impact the oil and gas industry have on our societies, on the continent. We are not in shortage of people determined to improve Africa’s future, and we have what we need to fuel their efforts: enormous stores of oil and gas resources and plenty of young talent to harness them.

Related Stories