Africa Oil and Gas Opportunities

On November 5th, 2011, posted in: News by

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The International Energy Agency (IEA) had projected that about $17 trillion new investments would be needed between now and 2025 in the emerging and developing economies, out of which $8 trillion is expected to be in Africa.

To a newcomer to the Africa oil & gas sector, the figures above could be daunting, but in real terms, 19 African countries are currently among significant contributors to the global oil and gas market. New African oil producers such as Ghana are on their way to join the global league of oil & gas exporters.

False Start:

Some past African leaders signed 50 years exploration contracts with international oil companies not considering the long-term economic implications for their countries. These self-styled African leaders favourably preferred getting kickbacks of a few cents per barrel of oil sold by international oil companies; more rewarding than developing infrastructures with the oil proceeds. That is why some oil-producing African countries are still struggling with infrastructure deficit in the very sector that generated most revenue for their economies.

New Direction

According to the McKinsey Global Institute 2010 report, African oil and gas have become important components of the world’s hydrocarbon supply-demand balance. By 2015, 13 percent of global oil production will take place in Africa, compared with nine percent in 1998 — a five percent compound annual growth rate (CAGR). African oil projects have attracted substantial investment thanks to their cost competitiveness compared to those in other regions.

In recent years, new kinds of competitors have entered and grown in Africa, once the domain of the large international oil companies. Smaller independent oil companies (such as Addax, Heritage Oil, and Tullow Oil) have made successful finds in emerging basins. National oil companies from outside Africa, including China (CNPC, CNOOC, Sinopec), Malaysia (Petronas), and Russia (Gazprom) have also aggressively invested in the continent, linking broader infrastructure investments and government-to-government relationships with access to resources.

Business/Investment opportunities:

In the last few decades, Africa’s hydrocarbon industry witnessed a renaissance with major new producing countries. These developments have thrown up tremendous opportunities for investment in the areas of exploration, production, refining and infrastructure in the oil and gas sector

Opportunities in the gas sector include:

  • Engineering design and related services
  • Fabrication and construction
  • Pipe mills, pipe laying and support activities
  • Equipment leasing; civil works
  • Logistics and haulage
  • Financial services
  • Hospitality services and legal services

Opportunities in the oil Sector include:

  • Petroleum engineering services
  • Upstream, midstream, downstream and ancillary projects
  • Greenfield projects
  • Multilateral & bilateral financing
  • Co-funding of studies and research projects
  • Equity positions in oil projects
  • Strategic stocking facilities
  • Joint-ownership participation in oil projects among others

Challenges:

One key challenge ahead of new entrants in Africa’s hydrocarbon industry is to build sustainable enterprises and local capabilities beyond the scope of an individual project or investment.

According to the McKinsey Global Institute, Africa’s oil producers face the same challenges confronting other petroleum rich countries in the world. One of them is maintaining political momentum for the economic reforms necessary to spur more private business development in the sector.

This post was initially published on the Dynamic Export website.

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jpgOperators say the Nigerian Liquefied Natural Gas (NLNG) Limited has the capacity to supply 150,000 metric tonnes per annum of LPG to the Nigerian market. For this modest aspiration, the country would require 225 trucks, 180 bottling plants, 5.8million cylinder requirements, and 96,000-bottles/day cylinder bottling capacity. Due to the impact of deforestation, an indigenous oil and gas company is gradually making forays to meet the nation’s requirements in the sector. GODWIN HARUNA writes…

As the world begins another series of talks on the climate change conundrum in Cancun, Mexico, people around the globe are looking for solutions that would mitigate its impact. Deforestation is one of the major challenges confronting Nigeria in the effort to maintain a sustainable environment. Domestic cooking gas has come as a veritable alternative to curb deforestation in order to have a sustainable environment in the country.

The statistics look scary, but it is not insurmountable. Operators of the Liquefied Petroleum Gas (LPG), popularly known as cooking gas, maintain that out of the 225 trucks so required, to distribute the product in the country, only 131 trucks are available. Of the 5,800,000 cylinders required only 80,000 are available. There are just 50 working plants in the country, out of the needed 180 plants, and of the 96,000 MT daily bottling capacity plants, only 18,000MT daily bottling capacity is accessible. These figures are reflective of the difficulties in making LPG available in every home in Nigeria in spite it’s obvious advantages over firewood for the cooking needs of the citizenry.

Source: thisdayonline.com/   Image: businessdailyafrica.com

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Recent explorations have indicated that Sierra Leone could become a major exporter of oil and gas in the near future, making the energy sector a key area of growth.

Investment opportunities

oilRehabilitation and expansion of the Sierra Leone Petroleum Refining Company

The government is actively seeking a strategic partner with extensive experience in operations and management to rehabilitate and expand the moribund Sierra Leone Petroleum Refining Company (SLPRC).

Established in 1970 as a joint venture with major international oil companies, SLPRC ceased production ten years ago. However, the site has attracted significant interest based on its proximity to an operational oil jetty and the existing infrastructure.

The refinery had the capacity to produce 450 000 tonnes of crude oil per year. The refined products included premium motor spirit, domestic purpose kerosene, aviation turbine kerosene, automotive gas oil, bunker gas oil, fuel oil, bunker fuel oil, lead-free naphtha, liquid petroleum gas, marine diesel oil, and special distillate.

When rehabilitated, the refinery would be exceptionally well positioned to capitalize on the discovery of an exploitable hydrocarbon resource off the coast of Sierra Leone.

Interested investors will benefit from the following;

• Location: Sierra Leone is uniquely positioned to supply markets in US, Europe and the rest of Africa. The project is close to a sheltered deepwater harbour and international shipping lanes.

• Stock: Potential investors would have access to multiple oil producers in the Gulf of Guinea and South America, and possibly in Sierra Leone. Recent hydrocarbon discovery by petroleum company Anadarko in offshore Venus prospect indicate the likelihood of major oilfields in the country.

• The US and other nations provide a guaranteed market because they are encouraging the exploitation of oil resources in West Africa, with a view of reducing dependence on supplies from the Middle East.

Source: TradeInvestAfrica      Image: constructionweekonline

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