In 2021 most opportunities in the energy sector and in business in general will go to those who show up and negotiate better deals and get involved in making African resources work for us. Forget handouts, foreign aid and government handouts.

As I wrote in the second edition of Billions at Play: The Future of African Energy and Doing Deals, in 2021, young African dealmakers, negotiators and lawyers will have to embrace a new mindset to win. They will have to mobilize their resources and advocate for important principles of personal responsibility, smaller government, lower taxes, free markets, personal liberty, and the rule of law.

In 2021, African gas projects are going to be in the news. Companies will push to get them going, from Mozambique to Nigeria and from Equatorial Guinea to Tanzania.

If some extremists have their way, none of these projects should happen and our people should be left in the dark. Question we must also ask is how Africans are going to participate when it comes to jobs and contracts. In 2021, we cannot be bystanders. We all can’t afford to.

Africa’s economic recovery from Covid-19 and our global significance in the era of energy transition and attacks on our energy sector must be driven by the talent and entrepreneurship of its people.

Our continent is still struggling when it comes to establishing democratic and trade institutions, we must push for more democracy. Democracy isn’t perfect but it is the best of all political practices and we must embrace it.

I have a few words of advice for this generation, for Africa’s young attorneys, entrepreneurs, rising stars and dealmakers:

Never lose sight of the significance of your work.

By negotiating effectively for African businesses and governments, you can play a huge role in transforming the lives of hundreds of thousands of Africans. Few things in life are more satisfying.

I am proud of the law group I have built, but I consider the work I have done to get justice for and empower African individuals, businesses, and communities among my greatest successes.

I am the first to advise many young people to avoid feeling entitled to anything. No one owes you ot us anything. We have to earn it. Our approach and success in oil and gas negotiations stem from our deep preparation and mindset. More of that is needed in 2021.

 

I have stated many times: you succeed when you look for mentors and let them mentor you. It’s important to have someone who is promoting you when you are not in the room. Next, be stubbornly loyal. Don’t try to pull a fast one because you know more than others! Further, embrace your trials and shortcomings for they teach you to be a better person and lawyer. I have seen too many young lawyers or rising stars who get a chance to be on a podium, and then tend to spend more time being celebrities than being around colleagues or supervisors.

Many so-called celebrities have not earned a deal and completed one, so avoid having a big head. For me if you have not closed a deal and are not making money, you need to keep your philosophies to yourself. It is crucial to have a strong focus on building your skills because clients and business partners really want you to be good at what you do. Your writing, critical thinking, commercial mindset and in-depth industry skills cannot hurt you. Most clients want to know who is working on their deals, and they do not care about your race or nationality. They want to know you are qualified and can get the job done.

When you finally get a deal done and you get your first bonus or check, do not fall in the trap of buying that fancy car or getting into fast life. You will get broke so quickly. Spend wisely even when you think you have arrived where you need to be. Always think there is more and stay hungry. Look at the Texas oil boys, they are always hungry. They wear their cowboy boots and continue searching for the next big discovery.

Hashtags do not pay the bills. Get off your phone.

Get offline, social media is nice but it isn’t everything, we have seen people who prefer to seat on their phone even during business meetings rather than engage on real business. How do want a deal when you are busy on your whatsapp group chats? Why have a meeting with someone when you will be on your phone while they are talking? Get out of the room and take the call or send a message. If you decide to work on your Instagram while talking to me, I walk you out of my office or end the meeting. When you don’t get the job or the contract, don’t be so quick on blaming the “White Man” or Racism.

I know this will get the young generation annoyed, but its real. We need to start having a post covid mindset and know we will have to engage again. I am not crazy about Zoom meetings, but we have to do it. Business is not about who had the best tweet two hours ago or who does the best hooting and hollering. Get down on the ground and make money. Do not believe those who tell you money is bad. We know it is bad being broke and we hate being broke. You should never apologise for working hard and making money. To do that, you must be focused and yes, get off your phone.

Commit to work. Pay your dues. Your time to shine will come

Always ask yourself, “Am I adding value to the firm or the company?” Don’t think you are in the firm to be the labor union representative or the head of diversity.

Do not walk around the firm or even a negotiation with arrogance or give off a sense that you are entitled, or that your opinion matters on every subject. You are not owed anything. It is important not to cry over discrimination on every issue, whether it is sexism, racism, or xenophobia.

You beat them with excellence and success. We see it every day and you will be surprised it comes from the same liberals who claim to love all humans and want to save the world. They will love to patronize you and put you in your place. I have experienced it myself. I just work harder, and success follows.

You must understand that building a successful practice or business calls for something not taught in law school or business school or any school: the ability to hustle and deliver on deals. I have always had run-ins with young lawyers because I can be a tough, goal-oriented taskmaster. I have a fierce sense of urgency that many others don’t share.

Working for Centurion is not for the naïve or the fainthearted—we don’t tolerate young lawyers viewing Centurion as merely a job. Everyone has to give their maximum effort all the time.

The truth is, I am harder on myself. I am never satisfied, and I just believe I can win bigger and do the deal better. The most important outcome for me is to have people around me achieve more than they ever thought they could.

Lean in and take the heat for your client or causes you believe in, and for Africa

In 2021, you will have to visible, be vocal in defending the African energy sector from those that want to end it and you must capitalize on the opportunities that you see. One of the key things you must do in 2021, is take the heat for your clients. I have never had a problem being called an ambulance-chaser in the past. Today I am that ambulance that is being chased and many know i will always stand with them and I built a strategy of taking the heat for them. Don’t let them push on your client or kill your issue. Develop a thick skin and let them hit you. If I can’t take the heat, I have no business being in the kitchen.

I have been pushed, been kicked, sometimes been spat on, lied on, demonized, talked about and even derided in the media. Its does not bother me one bit, I always know I am going to outlast my distractors or competition. In 2020, we made more money than any other year with Centurion Plus, our latest on-demand service. I have also been invited to meet with Presidents, Ministers, CEO’s and even Royals. But I never lost my way.

Never take your eyes off the prize. Be patient, play chess, keep smiling, be ready to take a punch and definitely hit back and do it harder. Maybe a combination of Jabs, Uppercuts and Hooks. That’s going to be you in 2021. Its going to be a fight to stay alive, stay employed, stay in business, stay relevant and stay sane when everything and everyone around you is going crazy.

You are going to be tested. They are going to come after you. sometimes even your own friends and those who laugh with you then stab you in the back. You will be called a traitor to most of your liberal elitist friends who feel entitled, drink latte with soy or almond milk. They sometimes cannot believe that this kid who was their darling and their best boo does not buy into their tree hugging, cry me a river ideology. You and I will have to believe and fight for Africa first, against energy poverty, and for personal responsibility, free markets, limited government and yes we must not be ashamed of being people of faith.

The wisdom and advice my law school mentor and professor John Radsan, who used to serve as the CIA’s assistant general counsel and Ron Walters shared with me hold true for you today: each one of us has a mandate to use our education and skills to impact communities and to promote economic growth and empowerment.

So, yes, seek career success and prosperity in 2021. But, in the end, choose to do good: use your skills to make sure that everyday Africans receive their fair share of the benefits the continent’s natural resources can provide.

NJ Ayuk is Executive Chairman of the African Energy Chamber, CEO of Centurion Law Group, and the author of several books about the oil and gas industry in Africa, including ‘Billions at Play: The Future of African Energy and Doing Deals.’

Africa stands at a precarious juncture, where the transition from fossil fuels to renewables intersects with the economic benefits of a strategically managed oil and gas industry.

Down one road, the continent expands exploration and production of its vast natural gas and oil reserves to bring electricity, fuel, and financial power to millions. Down the other, it yields to pressure to help achieve climate targets, including outright bans on fossil fuels that would eliminate funding for natural gas projects.

Is it possible to put one foot on each path? Absolutely. Doing what’s best for Africa and what’s right for the environment do not have to be mutually exclusive. Some form of balance is always possible.

On a continent where millions of families are using traditional, hazardous biomass for cooking, where 600 million people lack access to reliable electricity, the idea of leaving valuable oil and, especially, natural gas, in the ground seems neither practical, palatable, nor appropriate. In fact, as the African Energy Chamber’s newly released African Energy Outlook 2021 says, beyond the calamity created by COVID-19, in the short-term, the drive to curb carbon emissions is one of the conventional oil and gas industry’s biggest challenges — and one of Africa’s, too.

Curbing emissions is a noble and essential goal. The problems associated with climate change aren’t something we can look on from afar and let someone else worry about. After all, Africa is considered more vulnerable to the effects of climate change than many other areas, especially since so much of the population depends on regular rainfall to grow food crops. With a warming planet bringing drought and dust storms to one part of the continent and floods to another, affecting quality of life and livelihoods, we know first-hand how important climate justice is. We also understand that it’s our responsibility as global citizens to participate in energy transition.

Within reason, that is.

Energy transition, the so-called path from fossil-based to zero carbon, cannot be applied with a broad brush. What will work in Norway isn’t always feasible in Namibia. What makes for sensible policy in London isn’t necessarily pragmatic in Lagos.

For one thing, Africa uses so little energy now, our emissions from oil and natural gas are minimal. In fact, the World Economic Forum estimates that if all of sub-Saharan Africa tripled its electricity consumption overnight using only natural gas, the additional CO­₂ would be equivalent to just 1% of global emissions.

Admittedly, as rising incomes and population growth propel energy demand in Africa — we have the fastest growing population in the world, as well as the youngest — greenhouse gas emissions are likely to increase as well. That is, unless we follow an intelligent, modern energy plan that incorporates renewables along with natural gas. There’s room for both, as well as need: While solar power and wind can help provide electricity to fill the current and impending power void, neither can furnish feedstocks for industry, gasoline for transportation, or process heat for manufacturing.

Solar Power Has Great Potential

Harnessing a renewable resource for electricity is something African has history with. We’ve been using hydropower for decades. It makes sense, then, that we can transfer our experience to the adoption of solar power.

In fact, when it comes to solar power the future, pardon the pun, seems bright. Africa has already made considerable progress using solar photovoltaics (PV) to capture and convert abundant sunlight to ample energy. South Africa, for example, has eight of the 10 largest solar plants in Africa; the continent’s largest is in Morocco. At the same time, we’ve also seen advances in bringing off-grid, home-scale solar systems to rural villages in sub-Saharan Africa. The International Renewable Energy Agency (IRENA) suggested that, with the right policies in place, by 2030 Africa should be able to generate more than 70 gigawatts (GW) of solar PV capacity. Considering 1 GW could realistically power 300,000 American homes, that’s a significant figure.

But is it enough?

According to the International Energy Agency (IEA), demand in Africa today is 700 terawatt-hours (TWh), with the vast majority — more than 70% — of the total derived from North African economies and South Africa. But the IEA predicted that by 2040, the fastest demand growth will come from sub-Saharan nations.

Can solar scale up to meet accelerated needs in time? Without natural gas in the energy mix — especially without the gas-to-power initiatives that are part of the 2030 Roadmap — will people remain in the dark?

And what can be done to take natural gas off the banned fossil fuels list?

We Must Curb Wasteful Gas Flaring

The biggest concern about the continued use of natural gas comes down to one word: Flaring.

Flaring is the practice of routinely burning off associated natural gas that is produced from the reservoir during oil production. Flaring is often done for technical, safety, or regulatory reasons, but there’s no denying that routine flaring, which happens when the economics don’t support using the natural gas, is a waste of a precious resource. And even though nearly all — 99% — of natural gas is combusted when flaring is done under the right circumstances, when there are problems with the flame or other operating conditions, flaring can create a significant environmental problem. Estimates from satellite data put the amount of CO₂ released into the air by flaring at 300,000 tons per year. And, unfortunately, that figure is on the rise: Between 2018 and 2019, the total increased by 3%.

It’s worth noting, however, that most of the increase during that period came from three countries: the United States, Venezuela, and Russia. Specifically, emissions during gas flaring rose 23% in the United States alone. Venezuela’s total increased by 16% and Russia was up by 9%. If you include Iran along with the other three, just four countries were responsible for 45% of all global gas flared between 2017 and 2019.

By contrast, in the rest of the oil-producing world, gas flaring has declined, down approximately 10% between 2012 and the first quarter of 2020.

That includes Nigeria, where flaring has dropped 70% over the last two decades, and Angola, where reducing flaring is part of a program to capture natural gas and convert it to liquefied natural gas (LNG) for export. State-owned Sonangol has partnered with four oil and gas majors, Chevron, BP, Eni, and Total, to develop a $12 billion offshore project to produce 5.2 million tonnes of LNG per year.

It’s heartening to know that five African countries — Algeria, Cameroon, Republic of Congo, Gabon, and Nigeria — are among the nations, companies, and organizations that have joined in The World Bank’s Global Gas Flaring Reduction Partnership (GGFR). This forward-thinking group is dedicated to identifying and overcoming the barriers to flaring reduction on a country-by-country basis. Through research, sharing best practices, and advancing flare measurements and reporting, GGFR is equipping the world to live with natural gas, the fossil fuel with the lowest carbon footprint, rather than try to live without it.

We Can Find a Balance

Like GGFR, the African Energy Chamber also seeks to balance what on the surface may seem like competing interests. While their mission is to make plentiful natural gas even cleaner so it remains a viable alternative in tomorrow’s modern energy mix, we would like to see a diversified energy industry in Africa where people and local businesses benefit from both fossil fuel activities and clean energy production.

We have only to look as far as Kenya to find a pertinent example.

The nation, which is home to east Africa’s largest solar generation plant, derives 93% of its electricity from renewables. Along with wind and hydropower, solar is responsible for increasing the proportion of the population who have access to electricity from 63% in 2017 to 75% today — a nearly 20% increase in just three years. As renewables become increasingly affordable, it is likely that wind and solar development will continue, although for now, it’s tough to find investors and financing to bring new projects online.

Economics are also at the heart of Kenya’s new oil and gas developments, and in a positive way. With the discovery of the massive Turkana fields in the nation’s north-western region, Kenya has an opportunity, albeit one that may be years away, to grow its oil and gas service sector, continue its new role as an oil exporter, and further diversify its economy. Legislation regulating oil exploration and production and outlining revenue-sharing will help local communities as much as they protect the government and companies.

This Isn’t The Time to Leave Resources Stranded

As the Chamber has stated, we are all for a diversified energy mix and are looking forward to seeing cleaner energy developments surface across the continent. Currently, however, solar and wind projects rely on global value chains, which limits their ability to support local jobs, business opportunities, and capacity building. Until this can be resolved,  the renewable energy industry simply cannot offer Africa the same value as a strategic approach to our oil and gas industry. Natural gas production is particularly important, not only because of the role it can play in alleviating energy poverty, but also because of its potential to be monetized, to facilitate infrastructure development, and to foster the creation and strengthening of other sectors. And that, in turn, can lead to even more jobs, business opportunities, and economic growth for African communities.

Africa needs natural gas to light the way in both a literal and figurative sense. Our future is at stake, and we need to make our voices heard: We can curb emissions without cutting off a pathway to economic growth for the 20 African nations that have natural gas reserves. We can embrace clean energy without missing out on a critical means of giving more African households and businesses access to electricity. That’s a message we can’t let others drown out. The road to energy transition might be bumpy for all of us, but the idea of banning all fossil fuels makes it exceptionally treacherous, if not impassable, for Africa.

 

NJ Ayuk is Executive Chairman of the African Energy Chamber, CEO of Centurion Law Group, and the author of several books about the oil and gas industry in Africa, including Billions at Play: The Future of African Energy and Doing Deals.

Africa has already made an indelible mark in the oil industry. It is home to four of the world’s top 20 crude oil producers — Nigeria, Angola, Algeria, and Libya — and these same four countries also have some of the largest oil reserves in the world.

So far, it hasn’t made quite as much of a splash in the gas industry. The only African countries on the list of the world’s top 20 gas producers are Algeria and Nigeria, and one of the states that has the largest gas reserves is Mozambique, which is still several years away from bringing its major fields on line.

But the gap between African oil and gas doesn’t have to be permanent. The continent’s gas industry is on the verge of real transformation, as the African Energy Chamber (AEC) notes in our 2021 Africa Energy Outlook, released earlier this month. I’d like to describe what forms that shift might take — and explain how the changes would benefit Africans.

New Sources of Production

 Some of the change I expect is going to happen in the upstream sector — that is, in the realm of exploration and production.

First, the continent’s current leading producers are likely to produce more. North African states such as Egypt and Algeria will account for part of this increase, as they are looking to ramp up development at existing natural gas fields. But another part of it will stem from programs designed to reduce the flaring of associated gas found in oil fields. Both Nigeria and Angola, for example, have plans to expand the use of associated gas. The former aims to deliver its production to the domestic market, while the latter is looking to split its production between the local market and the export-oriented Angola LNG project.

The upshot of these trends is that the list of Africa’s top gas producers will probably remain static until the middle of the decade. As the AEC’s outlook explains: “The (continent’s) top five crude oil producers — Nigeria and Angola from the west, and Algeria, Egypt, and Libya from North Africa — complete the top five natural gas producers for 2020 and 2021. These five countries contribute about 90% of the overall natural gas output from the continent for both (2020 and 2021), and the expected forecast suggests the share of these countries will remain the same going into the mid-2020s.”

At that point, though, new producers will start to play a more prominent role. Mozambique is due to launch its first greenfield project at Area 1 in 2024, and its offshore zone may become a major source of natural gas by 2025-2026. The Mauritania-Senegal offshore zone may follow a similar timeline, as the Greater Tortue/Ahmeyim blocks may begin yielding natural gas in 2023, followed later by the Yakaar-Teranga and BirAllah projects. What’s more, all four of the projects mentioned in this paragraph will support gas liquefaction plants capable of producing and exporting LNG.

By the end of the decade, then, there will be more than five countries accounting for the bulk of Africa’s total gas production. Nigeria, Angola, Algeria, Egypt, and Libya will be joined by at least three others —Mozambique, Mauritania, and Senegal.

Domestic Consumption vs. Exports

 Meanwhile, consumption patterns are going to shift along with production patterns. Once again, this shift is likely to begin once the large new fields in the Mozambique and Mauritania/Senegal provinces come online.

The change may not be obvious on a macro level, because it won’t be evident in the split between exports and domestic consumption. That is, Africa will continue to use about 70% of the gas it extracts and will export continue to the remaining 30%. As the AEC’s outlook explains, though, the geography of African gas exports will not remain static.

“The pattern has been relatively stable since 2012 with about 70% serving local markets, 20% exported to Europe and 10% exported to Asia,” the report states. “The mid-2020s LNG startups are also expected to distort this picture by increasing the market share for East Asia LNG exports. This development is, however, not (a consequence) of local markets’ (rising demand), but rather the shrinking ability of North African countries to maintain their export capacity to Europe on the back of strong domestic demand growth. By 2030, the expectation is effectively for East Asia and Europe to be inverted, while domestic market share remains constant.”

In short, Africa is on track to produce more gas by the end of the decade but will keep the same share of the total for its own use. At the same time, Asia will replace Europe as the most important market for African gas exports.

Gas Means Jobs

 These trends are interesting, but you may want to ask: What do they mean for ordinary Africans, for people who are less concerned with production data and trade balances than with questions about how to support their families?

They mean a great deal.

As I’ve mentioned, the 2021 Africa Energy Outlook report projects that African gas production is going to rise, especially after new fields come on line and ramp up development in the middle of the decade. It also anticipates that African gas consumption will rise, even if domestic consumption continues to absorb a full 70% of total production.

As production goes up, upstream operators will create jobs. They will need people to help them build, operate, maintain, and repair production, transportation, and processing facilities. They will also need people to administer their local operations. Additionally, they will need to meet legal requirements or contractual commitments for local content, so they will need to hire African contractors. Those African contractors, in turn, will need employees of all kinds, and so will hire African workers.

And as consumption goes up, even more jobs will be created. Distributors will need new pipelines to deliver the gas to end-users, so they will need people who can help them build, operate, maintain, repair, and administer those pipelines, along with associated infrastructure facilities such as storage depots. And even in the absence of pipelines, they will need to acquire tankers and containers so that they can bring gas to customers by road, rail, or river. Accordingly, they will need people to procure, operate, maintain, repair, and administer these operations.

Meanwhile, there’s more. The hiring of more African workers is sure to have knock-on effects. If, for example, employees of upstream operators need a way to get to a remote worksite, local transportation companies may be able to serve them. If so, those transportation companies may have to hire more people to drive their vehicles. Likewise, if African construction firms need to procure extra building materials to uphold their contracts with upstream operators, local suppliers may be able to meet their needs. And if so, those local suppliers may have to hire more people to handle their inventory.

In other words, as Africa’s gas industry grows, it has the potential to create thousands and thousands of jobs! Of course, some of them, such as construction jobs, will be temporary. Some of them will be more permanent, though, especially if the governments of gas-producing states work with upstream operators to develop local hiring and training standards that expand the capacity of the local workforce.

All the Way Down the Value Chain

 But the knock-on effect doesn’t have to stop there.

In my most recent book, Billions at Play: The Future of African Energy and Doing Deals, I urged African oil and gas producers to look as far down the value chain as they could. I advised them to pursue projects that treated hydrocarbons not just as exportable raw materials but as inputs for value-added operations such as fertilizer or petrochemical manufacturing. I also suggested that they look for ways to focus on gas-to-power projects with the intent of improving domestic electricity supplies — and not just because new power grids would benefit African businesses.

It is true, of course, that some African businesses will be able to create more jobs if they do not have to worry about blackouts. Likewise, it is true that gas-to-power projects will create jobs of their own in areas such as construction, operations, maintenance, and administration. But it is also true that African households need and deserve access to reliable energy supplies, regardless of employment levels — and that gas-to-power plans can help them!

’m hardly the only person to reach this conclusion. When I wrote Billions at Play, several African countries had already rolled out ambitious gas-to-power schemes. Nigeria, for example, was in the process of implementing a program that promoted associated gas as fuel for new power plants. Since then, others have followed suit. For instance, as the AEC’s energy outlook notes, Senegal has unveiled plans for using its future gas production to generate electricity for the domestic market. Mozambique already has a couple of gas-to-power projects in the works, too.

But it shouldn’t stop there. I’d like to see more gas producers do this as they ramp up gas production in the second half of the decade. If they do, they will have accomplished something beyond merely increasing output levels. They will have taken concrete action to strengthen their economies and benefit their own citizens. And in so doing, they will have made their mark on the world!

NJ Ayuk is Executive Chairman of the African Energy Chamber, CEO of Centurion Law Group, and the author of several books about the oil and gas industry in Africa, including Billions at Play: The Future of African Energy and Doing Deals.

 

 

Last spring, the Maersk Voyager, an ultra-deepwater drillship under contract by French supermajor Total, drilled a wildcat well in the deepest water ever — 3,628 meters (11,903 feet) in Block 48, a massive area with potentially huge oil reserves in the Congo basin offshore Angola.

The record-setting achievement wasn’t a success just for Maersk and Total. It also represented a victory for Angola and state oil company Sonangol in their search for new oil, part of a campaign to reverse a recent trend of production declines. The high-impact concept well was long anticipated, and it didn’t take long for other global players, including Qatar Petroleum (QP), to buy in. As part of its bid to expand its exploration portfolio, QP acquired a 30% stake in Block 48 in August, its first venture into Angola’s promising deepwater acreage.

If Angola were the only southwestern African nation making oil and gas news, that would still be a pretty good story. But the fact is, Africa’s southwestern coast is home to perhaps the most globally anticipated wildcats of 2020 and 2021 — exploration that continues despite the added challenges of COVID-19, which has constrained operating and capital budgets. As the African Energy Chamber noted in our 2021 outlook, if successful, prospects in Angola, Namibia, and South Africa, could “open new basins for development and trigger big investments towards the latter half of the 2020s.”

That’s headline-making, indeed.

Combined with Block 48, the Venus-1 prospect in Namibia, and South Africa’s Brulpadda and Luiperd, the region holds world-class resource potential. The key is translating that potential into real benefits for all Africans.

Production is Building Momentum in Angola

For nearly 70 years, oil has been a mainstay of the Angolan economy, contributing about 50% of the nation’s gross domestic product and around 89% of exports. The country holds the continent’s second-largest proven oil reserves and is behind only Nigeria in terms of production. (Angola also has Africa’s fourth-largest proven natural gas reserves, although historically it hasn’t produced much commercially.)

In recent years, though, the drop in oil prices scared off foreign investment, putting pressure on Angola’s well-established oil and gas industry as well as its oil-based economy. Despite its vast resources, not only was production on the downturn, there had not been a major new discovery since 2011. Without fresh finds, consultants Rystad Energy, S.A. said, volumes could drop below 1 million barrels per day by 2025, far below capacity and less than half the 2008’s daily output.

That forecast was more than enough to spur Angolan President João Lourenço into action.

Following his election in 2017, he promised Angola an “economic miracle” and immediately began incentivizing participation in the nation’s oil and gas industry as part of his turnaround plan.

Lourenço’s lures, including better contract terms that would make foreign investment more profitable, paid off. With reforms such as tax relief and a standalone oil industry regulator in place, Total — which has been operating in Angola for six decades — moved quickly in 2018 to take over Block 48 and was awarded Block 29 in the Namibe basin earlier this year; Italy’s Eni was awarded neighboring Block 28 about the same time. Angola also awarded several offshore blocks to Norway’s Equinor and BP. (There are approximately 50 blocks in the Namibe basin, but whether they will all be put into play remains to be seen.)  Eni and its partners also began production at Agogo-1, pumping a modest 10,000 barrels per day. While that may sound small, it contributes to a much larger sum: Taken together, Rystad said, production from new Angolan projects — that is, those begun just in the last five years — should yield 549,000 barrels per day by 2025.

Fiscal Regime Sets Stage for Success in Namibia

If early seismic data is to be believed, compared to Angola there is equal, if not even more, promise in new discoveries offshore Namibia. Altogether, more than 11 billion barrels in oil reserves have been found off the Namibian coast, and scientists compare Namibia’s geology favorably to the pre-salt fields offshore Brazil, which hold 16 billion barrels of crude reserves. Yet Namibia’s basins are considered underexplored, meaning there’s ample opportunity for foreign and domestic investment. The possibility of high-impact discoveries has attracted the likes of Total, ExxonMobil, QP, and Kosmos Energy, which has had significant wildcat success in Africa over the past dozen years.

Currently, all eyes are on Total’s possibly play-opening Venus 1- prospect, which may turn out to be the largest discovery in Africa in a decade. An ultra-deepwater well in the Orange Basin, which straddles the border with South Africa, Venus-1 is thought to have at least 2 billion barrels of oil in place. If Venus-1 is successful, it’s like to attract even more attention to the area. Fortunately, the Namibian government’s oil-friendly policies make it easy for foreign companies to do business there. The fiscal regime is positive, and the state-owned oil company, the National Petroleum Corporation of Namibia (NAMCOR), is a cooperative partner.  It also helps that Namibia is politically stable and has some of the best-developed infrastructure on the continent, including a modern electricity distribution grid.

We’re Seeing Growing Excitement in South Africa

Like its neighbors to the west, South Africa has been the site of considerable excitement over frontier discoveries, including Total’s Brulpadda, which opened up the Outeniqua basin in 2019. Brulpadda is considered a world-class oil and gas play that holds as much as 1 billion barrels of oil equivalent of gas and condensate light oil.

Brulpadda is considered an antidote to the cascade of ailments South Africa — like many countries with petroleum resources — has experienced in recent years: a drop in oil and gas exploration following a decline in commodity prices. It is likely that PetroSA’s gas-to-liquids (GTL) plant will provide a ready domestic market for Brulpadda, as will the nearby petrochemical and industrial facilities. It is also possible the discovery will help South Africa accelerate the use of gas for electricity.

Total continues to explore other parts of the Outeniqua basin and just last month discovered gas condensate on the Luiperd prospect, where it is a joint venture partner with QP, CNR International, and an African consortium called Main Street.  In an announcement, Total said that the Luiperd well was drilled to a total depth of about 3,400 meters and encountered 73 meters of net gas condensate pay, making it even larger than the main reservoir at Brulpadda. Total and its partners have decided to commercialize the Luiperd gas rather than drill another exploration well in the program.

Africans Must Realize the Benefits

There’s no question that these discoveries have made southwestern Africa an exploration hot spot.

Neither is there any doubt that the governments of Angola, Namibia, and South Africa have facilitated and even accelerated the discovery and development processes by making it easy to do business there. (In the case of South Africa, its fiscal terms for oil and gas companies are described as “very generous.”)

What remains uncertain is to what degree each country will continue working to ensure its natural resources, whether newfound or long-established, are used to lift people out of poverty. True, African involvement in joint ventures leads us to assume that the best interests of every citizen are being considered.

But this is a time for the oil and gas companies that are involved in these mega-opportunities to redouble their efforts to support local communities and people. These companies are our guests in Africa, but the price of a welcome to our resource riches can’t be merely contractual, a handshake between governments and businessmen. The more they profit, the more Africans should benefit.

This idea is at the heart of the concept of Shared Value, which has been defined as “a framework for creating economic value while simultaneously addressing societal needs and challenges,” and as the “practice of profit in a way that creates value for society.” Shared Value doesn’t suggest that businesses should act as philanthropies or charities, giving handouts to those who exhibit need. It goes beyond the idea of corporate social responsibility, which is often based on volunteerism and one-off donations. Perhaps most important, Shared Value recognizes that companies can only stay in business if they are making money. As consultants FSG described it, the value companies and the community are sharing is “worth,” that is, economic value on a financial sheet and societal value in the form of progress on social issues.

Shared Value recognizes that companies have a responsibility to take on social challenges through the business itself. It is in their economic interest to do this. In Africa, one way they can do that is by supporting capacity-building. As the Shared Value Initiative noted, despite the substantial economic output of the oil and gas industry, it has “not always translated into societal improvements in host countries and communities… companies are losing billions of dollars a year to community strife,” much of it due to underemployment.

As more companies are attracted to southwestern Africa and these exciting new developments, we can only hope that they will recognize that where opportunity exists for them it should exist for everyone. And they have the power to make it so.

That would be really big news.

The future of the global oil and gas industry has been a subject of great fascination and debate for decades. Since COVID-19 surfaced, there has been even more conjecture on this topic and, in particular, the most likely timing for “peak oil,” when crude production reaches its maximum rate before going into permanent decline.

Predictions run the gamut: OPEC’s latest World Oil Outlook, for example, forecasts increasing oil demand for two more decades. But the International Energy Agency stated in its 2020 World Energy Outlook report that demand for oil probably will plateau after 2030. And the 2020 energy outlook from BP states that the world has already passed peak oil and predicts even greater drops in demand as countries comply with carbon dioxide abatement measures.

While no one can pinpoint exactly how the energy industry will evolve, or when major changes will unfold, it makes sense to assume that decreased demand will occur at some point — and to prepare for the new era that follows.

In the case of African countries with oil and gas reserves, those preparations should include a close look at their fiscal regimes: the systems they have in place to determine how extractives revenues are shared among companies and the government. These could include royalty requirements (money paid to governments for the right to extract and sell their resources), taxes, production-sharing agreements (which determine how extracted resources are split between governments and oil companies), bonuses, and similar mechanisms. The key is to develop fiscal regimes that ensure fair treatment for the state without burdening companies with unreasonable obligations on top of their project risks, local content requirements, and the expenses associated with exploration and production such as rig and labor costs. Unless we give local and international companies a fair chance to profit, production activity will decline.

As our recently released 2021 Energy Outlook notes, “African nations with petroleum resources will most likely have to adapt their fiscal regimes similar to how other nations have adapted them in light of the new era with more supply and less demand. Failing to do so can lead to stranded resources and outcompeted resources.”

The African Energy Chamber has said since it was founded that African countries with petroleum reserves must adopt competitive fiscal regimes to promote thriving oil and gas operations. In the COVID-19 era and the years that follow, a wise approach to fiscal regimes will be even more important. Without them, indigenous companies will struggle to launch new projects, and international oil companies (IOCs) will choose other, less financially onerous locations for their upstream activities. If that happens, African countries miss out on invaluable opportunities to harness oil and gas to grow and diversify their economies, to minimize energy poverty, and to create a better future for Africans. That’s why countries that haven’t fine-tuned their fiscal regimes must start now. They have plenty of strong examples to look to.

Angola Continues to Show How It’s Done

In my recent book, Billions at Play: The Future of African Energy and Doing Deals, I praised Angola President João Lourenço for implementing transformative policies, including Angola’s new Natural Gas Regulatory Framework — Angola’s first law regulating natural gas exploration, production, monetization, and commercialization — and the creation of an independent regulator, the National Agency for Petroleum, Gas, and Biofuels, to manage Angola’s oil and gas concessions. By encouraging more efficient and transparent governance, Lourenço made his country a more appealing choice for oil and gas exploration. This year, Angola continued to demonstrate wisdom in its response to pandemic-related lockdowns, oil price drops triggered by dramatically diminished demand, and OPEC+ production cut requirements implemented last spring to stabilize the market. Angola’s National Bank implemented new fiscal policy measures that included extending credit and renegotiating debt payments to help oil and gas companies boost their liquidity.

Angola, which relies heavily on oil revenue, is still feeling the negative effects of the pandemic: The government declared a state of emergency, decided to free 30% of its goods and services budget, and suspended capital expenditures (CAPEX). However, the government’s fiscal measures have appeared to ease major oil and gas project cancellations in Angola. What’s more, these efforts to give companies a fair chance to operate profitably in Angola, most likely, will contribute to a healthy oil and gas industry for years to come.

We can learn from fiscal policies implemented before the pandemic, too.

Impossible n’est pas Camerounais. Cameroon’s Tax Holiday Is a Wise Move

When the Cameroon Senate approved updates to the country’s 1999 Petroleum Code in 2019, it positioned the nation for resiliency and long-term success. The new upstream legislation included a tax holiday for oil and condensate project development and seven more years for natural gas project development. The legislation also allows production sharing contracts (PSCs) to be modified so companies can recoup exploration expenses.

The chamber commends Cameroon for these measures. In fact, the chamber recommended tax holidays in 2020, after Cameroon updated its code, to help African countries prevent oil and gas project cancellations in the COVID-19 era. Tax holidays allow oil and gas companies to control revenue reductions, improve liquidity, and prevent job losses. Tax policies like these could play an important role in keeping African petroleum-producing countries competitive when demand for oil and gas begins to decrease.

The humanitarian, political crisis and violence in the English-speaking Anglophone region with vast oil and gas reserves has increased reputational risks for oil and gas exploration in Cameroon. A fact that has made foreign oil and gas companies nervous when it comes to taking advantage of the improved fiscal frameworks.

The government’s involvement in what is being perceived internationally as one of the worst refugee crisis and its inability to end the overall political impasse creates a more bearish view of the country’s resource potential. The ongoing political uncertainty, Covid 19, regulatory uncertainty from BEAC and low oil prices have thrown a curveball on potential FID’s for many planned oil and gas production projects at a time when Cameroonian officials are seriously exploring options on how to increase oil and gas output, revenues for the state and revive an ailing economy. Massive potential, great hope and super returns, if they get it right, as they saying goes Impossible n’est pas Camerounais.

Gabon Has Positioned Itself for Success

Gabon has taken proactive measures as well to encourage ongoing oil and gas production activity. The country’s 2019 hydrocarbon code, a modification of Gabon’s 2014 law, was written with the express goal of encouraging more exploration and production activity there. There have been several tax requirement changes. For example, companies no longer are required to pay a separate corporation tax on top of the production share that goes to Gabon. And, instead of a “one-size-fits-all” hydrocarbon tax rate for petroleum products, rates will be at different, and lower, levels — and the hydrocarbon tax rates can be negotiated before PSCs are finalized.

Gabon has taken additional measures, as well, to increase investments by making it easier for companies to be profitable. They include:

• PSC requirements have been modified with companies’ needs in mind. The state’s minimum stake in an exploration company, for example, has been cut in half.
• Government royalties for shallow blocks have gone from 13% to 7%.
• Royalties for deep-water production has gone from 9% to 5%
• The state’s share of the profit has been reduced, too, from 55% to 45% for shallow blocks and from 50% to 40% for deep-water operations

The changes did not go unnoticed by oil and gas companies: By early 2020, Gabon had signed 12 PSCs with foreign countries. And while COVID-19 has stalled drilling activity, for now, Gabon has positioned itself to see activity, and even more investments, resume after the pandemic.

Remember What’s At Stake

Ideally, developing competitive fiscal regimes should be done in concert with other measures, such as fine-tuning local content laws and working to ensure greater government transparency — anything that can be done to make African countries more appealing choices for oil and gas companies.

I realize that African countries have their hands full between the pandemic, economic struggles, and the challenges that existed long before COVID-19 surfaced. But, one could argue that there never will be a perfect time to revamp oil and gas policies. This process is simply too important to put off. We must do what we can to fully capitalize on Africa’s oil and gas resources so African governments can start using revenue to encourage the creation and growth of other economic sectors. So there are more opportunities for IOCs to share knowledge with indigenous companies and play a role in African capacity building. And, vitally important, so natural gas produced in Africa can be utilized for more gas-to-power projects, which can play a huge role in bringing electricity to more African communities.

While we don’t know the specifics of what’s ahead for the world’s oil and gas industry, we are aware of steps we can take to help us benefit from it as long as possible. Now is the time to act on them.

NJ Ayuk is Executive Chairman of the African Energy Chamber, CEO of Centurion Law Group, and the author of several books about the oil and gas industry in Africa, including Billions at Play: The Future of African Energy and Doing Deals.

If I called 2020 a terrible year for the oil industry, no one would take exception. Demand collapsed in the spring, during the first wave of the COVID-19 pandemic, and it has yet to recover fully. Prices then collapsed in April as OPEC and Russia walked away from production curbs and flooded the market with crude that no one wanted or needed, and once again, they have yet to regain all of the ground they have lost.

There have been a few bright spots, though. One of those is Libya, which has managed to overcome some very daunting challenges. I’d like to tell you the story of how that happened.

Starting Near Rock Bottom

When the African Energy Chamber (AEC) started drawing up our 2021 Africa Energy Outlook, which was released on Nov. 10, Libya’s oil industry was still struggling in the face of persistent civil conflict.

At that time, the country was still producing less than 100,000 barrels per day (bpd) of crude, down from more than 900,000 bpd at the start of 2020. Its refineries, pipelines, and Mediterranean export terminals were almost entirely idle because of the blockade mounted by the Libyan National Army (LNA), a militia headed by Field Marshal Khalifa Haftar, during a major offensive campaign that began in mid-January. As a result, most of its oil fields were also idle. The National Oil Corporation (NOC), which was determined to remain neutral in the conflict, made several attempts to lift force majeure declarations and recommence production over the summer, but without success.

These struggles are addressed in our 2021 forecast: “Libya struggles to maintain (its) sustainable oil production capacity (of) around 1 million bpd. In the latest ongoing struggle for power between GNA, an UN-recognized body (set up) to govern Libya, and LNA forces, (an) army of rebels led by General Khalifa Haftar (supported by Russia, Egypt, and UAE), force majeure has been imposed on oil exports in the country from January 2020. Due to this, currently, Libya’s oil production has plummeted to almost 10% of its capacity.”

Because of all these challenges, Libya has languished. It has had no way of monetizing its primary export commodity and source of cash. It has lost many billions of dollars. It hasn’t even been able to extract or refine enough crude to cover domestic demand for fuel.

And it certainly hasn’t succeeded in resolving the disputes over regional distribution of oil revenue that helped drive the LNA’s attacks on the Government of National Accord (GNA), an interim government based in Tripoli and backed by the United Nations. Nor has Libya been able to find a way to rid tank farms and other oil infrastructure of the foreign soldiers and mercenaries deployed by Turkey and the other third parties with an interest in the country.

But things began to change in mid-September, when the LNA and its allies sat down with the GNA for yet another round of UN-brokered peace talks.

A Month of Progress

Initially, there didn’t seem to be much reason for optimism. After all, the two sides had failed to come to terms so many times before!

This time, though, was different.

This time, the GNA and the LNA struck a deal.

They didn’t go so far as to sign a peace agreement. Instead, they announced a one-month cease-fire deal on Sept. 18. The parties indicated they hoped to draw up a final agreement within the next month. They also made clear that Haftar had agreed to lift the oil blockade while the temporary deal remained in force.

Immediately after the cease-fire was declared, the NOC got right to work. It started bringing coastal terminals back online so that Libya could export oil again. Its regional production units began lifting force majeure declarations on one oil field after another. It started bringing refineries back into production. It started the process of inspecting infrastructure facilities to determine whether they were “safe” — that is, not occupied by foreign troops — and therefore eligible to resume regular business operations.

And by the time the one-month cease-fire expired on Oct. 18, the NOC had already managed to bring oil production back up to 500,000 bpd.

This was a huge achievement. Think of it! In just a few short weeks, Libya managed to increase output by more than 400,000 bpd, thereby regaining about half of the ground it lost as a result of the LNA blockade. And it did so despite the extensive damage inflicted on oil infrastructure during the blockade.

There was a problem, though.

Big Breakthroughs

When the cease-fire ended on Oct.18, the GNA and the LNA hadn’t yet achieved their goal of signing a final agreement. Fortunately, though, they had agreed to extend talks for another six days. As a result, the LNA did not impose another blockade, and the NOC and its subsidiaries continued to put fields, pipelines, terminals, and refineries back into action.

Then on Oct. 23 — one day ahead of the new deadline —  there was another breakthrough during talks in Geneva.

On that day, the UN Support Mission in Libya (UNSMIL) declared that the parties had finalized a more comprehensive cease-fire agreement. It described the deal as permanent and applicable to the entire country.

What’s more, the agreement also removed one of the biggest problems facing the Libyan oil industry — the challenge posed by the foreign soldiers and mercenaries still occupying oil fields and infrastructure facilities. According to Stephanie Williams, the UN’s Acting Special Representative for Libya, the deal made provisions for all such troops to leave Libya within three months.

As a result, the NOC has been able to push forward with its campaign to restart the oil industry.

On Oct. 26, the company said in a statement that it was in a position to “(declare) the end of the blockades at all Libyan fields and ports.”

Then on Nov. 9, it announced that it had brought production up to more than 1 million bpd. (To be exact, it reported that oil output had reached the level of 1,036,035 bpd.)

This is another huge achievement. Again, think of it! In less than two months, Libya has managed to go from producing just a fraction of its usual volume to more than 1 million bpd. It has pushed crude oil output up more than tenfold, bringing major fields such as Sharara and El Feel back into action. It has also succeeded in reactivating the export terminals on the Mediterranean coast and is working to ramp up processing operations at its refineries.

Challenges and Lessons

All of these successes make for a good story, don’t they? Even better, the story is true.

(I’d like to think it also reflects well on the AEC, which did predict in our Africa Energy Outlook that Libyan crude oil production was set to recover as civil conflict simmered down.)

But is the story really over? Probably not.

First, we have to wait and see whether the cease-fire holds. All of the parties involved seem optimistic, but they haven’t yet revealed whether they’ve managed to resolve quarrels about how to distribute oil revenues. The LNA, which controls most of southern and eastern Libya, has often claimed that the GNA, which holds the northwestern part of the country, keeps an unfairly large portion of these revenues for itself. In turn, their conflict has negatively affected NOC, despite the company’s attempts to remain neutral so that it could continue operating (and bringing in money) despite the civil conflict. Those challenges likely will continue if the question of oil revenue distribution isn’t answered to the satisfaction of all concerned parties.

Next, if Libya does manage to hold together and keep output up, it will have to come to terms with OPEC, which is still working with Russia and other countries to support oil prices with a regime of production quotas. Libya hasn’t been subject to those quotas this year because of the blockade, but it’s now extracting more than 1 million bpd. What’s more, it expects to bring production up to 1.3 million bpd within the next few months, and Mustafa Sanalla, the head of the NOC, has said that Libya won’t fall into line with the quota system until it can stabilize yields at 1.7 million bpd. OPEC may not agree with that proposition, especially since world crude prices have fallen in response to reports of renewed development activity in Libya.

Whatever the case, there are at least two lessons to be learned from Libya’s recent victories.

One is persistence. Despite the repeated failure of attempts to work out an agreement between the LNA and the GNA, the UN and other parties did not give up. This should be a lesson for other African countries that count civil conflict as one of the obstacles to the development of oil and gas resources. Certainly, this approach appears to have benefited South Sudan, which has been embroiled in civil war for most of the time since it attained independence in 2011. The country has been under the rule of a unity government since the finalization of a peace agreement between President Salva Kiir Mayardit and his long-time rival Riek Machar Teny Dhurgon earlier this year.

The other is the necessity of paying attention to regional issues. The conflict between the GNA and the LNA wasn’t just a battle for supremacy. It was also a quarrel over how best to distribute revenues between the central government and the regions that were home to most of the oil fields and other infrastructure that generated those revenues. This is definitely one of the lessons that Nigeria has had to learn. The West African country’s federal government has seen over and over again that the residents of oil-bearing regions such as Ogoniland are willing to fight if they believe they are being denied a fair share of the money that comes from the places where they make their homes.

Neither of these lessons is easy to absorb. It’s easy to give up on negotiations when you’ve already failed repeatedly, and it’s easy to ignore the periphery if you’re one of the lucky people in the center. But I’d like to see other African producers think about them as they watch Libyan production continue to ramp up.

The African Energy Chamber recently announced the release of the African Energy Outlook 2021. The report explores the forces shaping up continent’s energy market after the historic shocks of 2020, and analyses the upcoming recovery on the back of the global energy transition and persisting market uncertainties. Executive Chairman, NJ Ayuk shared some guidance and solutions for African energy stakeholders to navigate troubled waters and support a strong recovery in 2021 and beyond with journalist, Angelo Coppola.

This week, the African Energy Chamber will publish a report outlining its short-term predictions for the continent. That report, Africa Energy Outlook 2021, identifies Nigeria as the country with the most potential for increasing hydrocarbon production. But it also points out that Nigeria faced certain challenges with respect to realizing this potential.

Of course, some of the challenges have their roots in the events of 2020 — the coronavirus (COVID-19) pandemic, the dramatic fall in global energy demand, and the oil price war between Russia and Saudi Arabia that briefly sent crude prices into negative territory. However, the country is also facing a number of ongoing challenges.

One of these is the need for a new oil and gas regulatory regime.

Africa Energy Outlook 2021” notes that Nigeria’s government has been working for years to meet this need. So far, all of its attempts have failed. In 2018, for example, members of the Senate voted to approve legislation known as the Petroleum Industry Governance Bill (PIGB), only to have President Muhammadu Buhari veto its version of the bill and send it back to the floor.

Buhari’s administration has not given up, though. Earlier this year, the president declared that his administration was determined to draft a new version of the oil and gas law and secure its passage through both houses of the National Assembly before the end of 2020.

Signs of Progress … But How Much?

The AEC’s report expresses some doubt about Buhari’s ability to get that far with the new Petroleum Industry Bill (PIB). I see this skepticism as understandable, given that Nigeria has been trying — and failing — for nearly two decades to effect change on this front. But I also want to point out that Abuja has made some genuine progress this year.

First, the government completed the draft version of the PIB and submitted it to the National Assembly in August.

Second, the government secured pledges from both houses of the legislature to expedite discussions on the PIB so that it can be passed before the end of the year.

Third, the bill passed its first reading in the House of Representatives and the Senate on Sept. 30.

Fourth, the bill passed its second reading in the House of Representatives and the Senate on Oct. 20.

Fifth … well, is it reasonable to list a fifth sign of progress? Perhaps not. Almost immediately after the PIB passed its second reading, Nigeria’s Senate suspended plenary sessions until Nov. 24 so that it could focus exclusively on drawing up the federal budget for next year. Additionally, it gave the relevant Senate committees eight weeks to make the required legislative inputs into the bill.

Short on Time

Because of these developments, the timeline for securing passage for the bill has shifted.

As I mentioned previously, President Buhari has said he wants to sign the PIB into law before the end of this year. But if the Senate continues to focus exclusively on the budget until Nov. 24, it will have just over a month to meet that deadline — or even less, if the committees take the full eight weeks allotted to them for making legislative inputs. Either way, it will have a great deal to do in a short time. It will have to wrap up committee discussions, pass the new oil and gas law in its third reading, secure the assent of both the House of Representatives and the Senate to the final version of the legislation, and then send it to the president for signature within just a few weeks.

In theory, the PIB could lose momentum during any of these stages. If the committee discussions run for the full eight weeks, they will end on Dec. 15, leaving very little time before the end of the year. If legislators propose amendments during the third reading, they may need extra time to debate and vote on their proposals. If the House of Representatives and the Senate turn out different versions of the PIB and are unable to come to terms quickly, the initiative could stall. If President Buhari takes exception to any changes made during earlier steps in the legislative process, he could veto the bill.

If any of these things happen, the government may find itself ending 2020 without a new oil and gas law in place.

But would that really be such a bad thing?

More than Money

Yes, I think it would.

For years now, uncertainty about the legal regime has been discouraging companies from making commitments to the West African state’s oil and gas industry. According to Nigeria’s Department of Petroleum Resources (DPR), the repeated failure of attempts to adopt a new oil and gas law costs the country about US$15 billion each year in lost investments. It’s therefore reasonable for Buhari and his government to seek passage for the PIB as soon as possible. After all, Nigeria can ill afford to keep losing so much money — especially at a time when its oil and gas industry is under extra strain because of the extraordinary events of 2020.

But it’s not just about the money. I believe there is an objective need for reform — and that the PIB can meet that need.

Nigeria’s oil and gas sector has earned the reputation of being corrupt, non-transparent, and inefficient. This reputation drives potential investors away, thereby depriving the country of money — and, what’s more, depriving it of jobs (in both the industry itself and in related sectors such as construction and transportation) and also of opportunities for partnerships, training, technology transfer, and other things that help support and amplify economic growth.

In other words, without the PIB, Nigeria can’t use its vast oil and gas reserves to optimal effect!

Needed Reforms

The PIB does try to address the deficiencies of the current system.

For example, it calls for dismantling state-run Nigerian National Petroleum Corp. (NNPC) and dividing its functions up among three separate entities. It provides for NNPC’s regulatory and administrative functions to be transferred to two new government agencies: one to supervise upstream operations and another to supervise midstream and downstream operations, including domestic gasification programs. At the same time, it assigns the company’s commercial functions to a new entity that will be known as NNPC Corp.

This one change has the potential to make a big difference. With respect to transparency and efficiency, the bill draws a clear line between Nigeria’s need to monitor and regulate the companies that work in the oil and gas sector and its need to have the capacity to develop its own resources. It also calls for NNPC Corp. to be audited annually by an independent company — rather unlike the current version of NNPC, which has come under fire in the past for its less-than-transparent accounting practices. And with respect to corruption, it establishes NNPC Corp. as a purely commercial entity with no access to the federal budget — and, therefore, fewer opportunities to function either as an instrument of state policy or as a shady space in which government officials can move money around for their own purposes.

Of course, these aren’t the only good things the PIB could do. For example, the bill also contains provisions that might settle investors’ questions about the Deep Offshore and Inland Basin Production Sharing Contract Act, a controversial piece of legislation that some energy companies have described as little more than a revenue grab. Additionally, it eliminates two state bodies that haven’t been doing the best job at monitoring the downstream fuel sector: the Petroleum Products Pricing Regulatory Agency (PPPRA), which oversees fuel pricing, supplies, and distribution, and the Petroleum Equalisation Fund (PEF), which distributes cash with the aim of making motor fuel prices uniform throughout the country. Moreover, it puts a single agency — the new midstream and downstream agency mentioned above — in charge of domestic gasification initiatives. This makes sense, given that gasification depends on the construction and expansion of transportation and distribution networks. It could also help coordinate the process by putting all activities under a single umbrella.

Don’t Stop Pushing

There are other attractive features to the PIB, but I don’t have the time or space to list them all here.

I do want to emphasize, though, that I think Nigeria needs this new law, both in general and with the particular details included in the government’s draft version. Buhari is therefore right to push the National Assembly to pass it as quickly as possible — and he should keep pushing, even if legislators miss his Dec. 31 deadline.

In other words, the president should hold members of the National Assembly to the commitment they made earlier this year to accelerate this process! If he does, he should see the PIB pass soon — and once it takes effect, it can lay the foundation for a more efficient, less corrupt, and more transparent oil and gas sector in Nigeria. And, equally important, Nigeria can start capitalizing fully on its oil and gas resources.

Despite the COVID-19 pandemic, not all of the economic news in Africa has been negative. We continue to see promising developments.

Look at Uganda’s oil and gas industry. Following multiple petroleum discoveries in Uganda’s Albertine Graben, foreign investments there have reached nearly $20 billion. The resulting projects include a refinery being built by the Uganda National Oil Company in joint partnership with four Italian and Mauritian companies. Through another joint venture, in this case with the Tanzania Petroleum Development Corp. and Total, Uganda’s National Oil Company is building a 1,445-kilometer pipeline to the Tanzanian seaport that represents numerous opportunities for new jobs and economic growth.

The oil discoveries also have resulted in new food supply chain, equipment, and logistics businesses and the development of an airport in the Hoima district. And the government is looking at using oil revenue to boost other sectors including agriculture, health, and education. Because of the oil-related growth of businesses in the Bunyoro region, new roads, health centers, and schools have already been developed.

And this is one of multiple examples. In Senegal, President Macky Sall announced in late September that his country is on target to see double-digit economic growth, 13.7%, by 2023, thanks to new oil and gas field developments. What’s more, Senegal has been reaping the rewards of a long-standing partnership with Germany, which has resulted in more than €1 billion in funding, including significant support for small-scale power plants and renewable energy projects.

The news has been promising in Rwanda as well, where government efforts to draw foreign investment are yielding fruit, including more and more investments by Turkish businesses. Turkey’s biggest investment in Rwanda, by Hakan Mining and Electricity Generation Inc., involves the construction of an 80-megawatt power plant in the southern part of the country.

These encouraging events have a running theme: Through foreign investments and partnerships, these African countries are strategically harnessing their oil and gas resources to make sustainable improvements for their people. They’re bolstering economic growth and addressing the need for widespread access to electricity.

Africa needs more of this.

That is why the African Energy Chamber works so hard to empower investment activity. It’s why we created a Regulatory Affairs Committee this year with the goal of making African countries more competitive for global investments. It’s why we developed common-sense guidelines for maintaining international oil company (IOC) production activity in Africa during the pandemic. It’s why, in August, we Co-hosted the “Germany-Africa Economic Relations: Making Deals Post COVID-19,” webinar with CNN’s Eleni Giokos to mobilize more German investment into the African energy sector. Investments are key to Africa’s economic growth. They can result in valuable technology transfers among countries. They help us battle energy poverty, and they result in projects that lead to local revenue, jobs, training opportunities, and entrepreneurship.

We address the value of investment activity in our upcoming 2021 Africa Energy Outlook. “Investments are required to convert resources in the ground to revenue and value,” the report says. “The investments represent jobs and business for a plethora of oil field service providers and is therefore an important metric to the wider activity level around the oil and gas industry.”

While the report describes widespread declines in capital expenditures in the continent’s oil and gas industry, it notes that they are taking place, primarily, because of COVID-19. An investment rebound is possible after the pandemic, the report says, if oil prices exceed current expectations.

While there is little we can do to influence oil prices, there are tangible steps that African countries can, and should, be taking to increase the chances of much-needed investment dollars going into their energy projects. These include working toward increased government transparency, passing legislation that protects the sanctity of contracts, and implementing more competitive fiscal regimes. We need to be working on these measures now. This is how we will make a lasting difference in Africa. This is how we will empower people to develop the necessary skills to land well-paying jobs. This is how we will promote stability.

The Job and Investment killer CEMAC Currency Exchange Regulation

The BEAC Forex regulations set to go into force in January 2021 is a classic example of what we should not be doing in Africa. Bureaucrats are not listening because they are comfortable with tax dollars and killing businesses and investment.

If the BEAC, IMF and World Bank bureaucrats really mean what they say about helping Africa and CEMAC countries bounce back from Covid 19, shouldn’t they be listening to what the people who actually run businesses have to say about job creation? After all, business employs 80 percent the regions private sector workforce and accounts for more than 99 percent of its employers.

When over two-thirds of job creators especially energy companies tell us how to create jobs in an economy that desperately needs them, bureaucrats and politicians should not only listen, they should do something or get out of the way and let business work. Africa should not focus on development aid in exchange for job and investment killing regulations. We can do better than this. Free markets, limited government, cutting red tape,  and individual liberty are still our best bet to than begging for bailouts and foreign aid.

Investments Allow Us to Tackle Pressing Needs

One area where investors can have a tremendous impact is the battle against energy poverty. The need is acute. Currently, about 595 million people in sub-Saharan Africa, 55% of the region’s population, are without access to electricity. World Bank Vice President Rachel Kyte summed up the problem effectively when she said, access to energy is fundamental in the struggle against poverty. “It is energy that lights the lamp that lets you do your homework, that keeps the heat on in a hospital, that lights the small businesses where most people work,” she said. “Without energy, there is no economic growth, there is no dynamism, and there is no opportunity.”

This is where IOCs truly can make a difference, and on multiple fronts. By investing in oil and gas projects, IOCs create opportunities for revenue that can be channeled into new and improved energy infrastructure. And, by participating in upstream, midstream, and downstream natural gas projects, investors help create a path for valuable gas-to-power projects.

We Need Investors As We Monetize Our Natural Gas

For years, when I’ve called for strategically harnessing Africa’s petroleum resources to bring about prosperity and stability for Africans, I’ve discussed the importance of monetizing our vast supplies of natural gas. Instead of flaring gas or exporting all of it, African countries should be using it to diversify their economies and establish new revenue streams, from petrochemical and fertilizer manufacturing to liquified natural gas (LNG) plants. Partnering with foreign investors, more African countries could build midstream and downstream infrastructure, from pipelines and ports to refineries. Each of those projects, in turn, would generate more revenue and open the door to even greater diversification efforts. Investors would have an important role in this process. Not only could they partner with countries on infrastructure development, but by investing in capacity building and local content, they could enable individuals and businesses to qualify for the job and contract opportunities that result. This will create monetization that truly benefits local economies.

Knowledge Transfers Contribute to Long-Term Growth

Not only does the continent need ongoing foreign investment, it also needs the technical knowledge and expertise that the international business community can provide. Knowledge transfers empower local companies — including oil and gas industry suppliers, service companies, and indigenous oil and gas companies — to cultivate the skills and technologies necessary to thrive in a continuously evolving industry.

What’s more, knowledge sharing plays a valuable role in eliminating the need for foreign assistance. We realize that, with the COVID-19 pandemic wreaking havoc upon African economies, there has been more talk of aid packages to meet basic needs. And while donations and aid are appreciated and valuable during crises like the one we’re experiencing now, they can do nothing but serve as a temporary emergency safety net. Rather than doing things “to help Africans,” I’d like to see more foreign governments and companies partner with African countries to make sustainable changes for the better. Equipping African countries to thrive is a highly effective way to do that. Knowledge transfers contribute to stronger economies, increased entrepreneurial activity, and job creation.

How We Get There

There’s no question that foreign investments are beneficial, and necessary, for African countries. But when it comes to attracting investments from IOCs, we’re not where we need to be yet.

So how do we foster more investment, both now and after the pandemic? As I’ve said, African countries must work to create an enabling environment.

To make doing business easy with their countries, government leaders should be looking at their tax frameworks so investors can be sure their hard work will yield fair dividends. They should be looking for ways to eliminate red tape, implement better fiscal regimes, and ensure transparency. And while countries should have local content policies in place to benefit individuals in businesses, they should put effort into creating policies that are fair, not burdensome, to IOCs. What’s more, governments must enact legislation that ensures the sanctity of contracts so investors know their agreements will be respected.

Along with these efforts, oil and gas project developers and owners have their own role to play in drawing investors. It has become increasingly important for oil and gas projects to adopt strong environmental, social, and governance (ESG) standards. While these will vary by project, examples could include carbon emissions reduction and operational energy efficiency in the area of environment. Social standards could include health and safety measures and relationships with local suppliers and service companies. Examples of governance policies could include leadership diversity and reporting transparency. Investors are considering ESG, and project developers must do the same.

Foreign investment opportunities will play an important role in supporting economic growth and eliminating energy poverty in Africa for years to come. That’s why the African Energy Chamber will continue to work to help African countries make themselves more attractive to investors and to make potential investors aware of the many opportunities Africa offers them. It’s worth a different kind of investment on our parts as Africans, investments in time and effort.

The end result? More promising developments like the ones emerging in Senegal, Rwanda, and Uganda. Economically vibrant African countries. Thriving African households and entrepreneurs. Growth and hope.

On Oct. 1, 1960, everything seemed possible for Nigeria: After nearly 80 years of colonialism under Great Britain, it was finally an independent nation.

During the newly independent nation’s earliest days, there was every reason for Nigerians to envision a bright future for themselves and their country, one in which Nigeria’s vast oil and gas reserves would deliver widespread prosperity. One of stability and growth.

Tragically, Nigeria’s story moved in a different direction. Yes, there was a brief period of economic growth, but that was followed by multiple coups, civil war, military rule, corruption, and poverty. Instead of helping everyday Nigerians, the country’s oil wealth went to an elite few in power while leaving communities, particularly those in the Niger Delta, to deal with environmental degradation and dwindling means of supporting themselves. Instead of using its oil revenue to strengthen other sectors and diversify the economy, Nigeria has made oil its primary source of government revenue. In recent decades, instability in the region has only worsened and contributed to the rise of terrorist groups like Boko Haram.

I still believe that 60 years of independence is an important milestone. We still have much to celebrate, including a future in which we can right the wrongs of our past.

While getting Nigeria to the point where it can realize the full potential of its petroleum resources has been slow going, the country appears to be on the right track. As I write this, Nigeria’s long-awaited Petroleum Industry Bill (PIB) — intended to bring transparency and new life to the country’s oil and gas sector — is closer than ever to passage. Nigeria is working to monetize its natural gas resources, and we’re seeing great interest in the latest marginal field bidding round.

So like those who celebrated their nation’s independence in 1960,  I’m hopeful about Nigeria’s future. My optimism might be tempered a bit by Nigeria’s unresolved challenges, including continuing concerns about government transparency, but it has not by any means been extinguished. I truly believe that Nigeria can learn from its mistakes, take a strategic approach to the opportunities before it, and create a country where all Nigerians can begin a chapter of safety and prosperity. Nigeria’s energy industry can realize its full promise.

Nigeria is Rich in Resources, Poor in Policy

Just like I believe that Nigeria’s oil and gas are key to improving the country’s future, I see that mismanagement of these resources has contributed to many of its struggles. Too many times during the last 60 years, Nigeria’s government has missed opportunities to channel the country’s oil and gas resources into economic growth. It has been particularly frustrating to see Nigeria — with natural gas reserves at an estimated 185 trillion cubic feet — struggle with energy poverty. Only about 45% of Nigerians have electricity, and even those with access to the power grid deal with regular power outages.

Again, weak governance plays a role in this. Violence and security issues, and Nigeria’s reputation for corruption, have slowed Nigeria’s ability to develop sufficient power plants and hindered foreign investment infrastructure. Meanwhile, Nigeria is paying a steep cost for its power shortages: about $28 billion or 2% of Nigeria’s gross domestic product, as lack of power impedes Nigerian entrepreneurship, private investment, and job creation.

I’m certain that Nigeria could bring reliable power to more people by harnessing its natural gas resources. And, to its credit, the government has been talking in recent years about putting an end to Nigeria’s costly and wasteful natural gas flaring — more than 276 billion cubic feet of natural gas was burned off from Nigeria’s oil fields between September 2018 and September 2019 alone — and capitalizing on this valuable resource. But up to now, Nigeria’s progress on this front has moved at an agonizingly slow pace. The government, for instance, set a Zero Routine Flaring target for 2020 but announced in August that it will not be able to reach its goal. It also has failed to set a new goal.

Then there is the issue of corruption, which has fed into dangerous chain reactions. In 1966 and 1967, shortly after Nigeria gained its independence, corruption was used to justify coups that led to civil war, and ultimately, to military rule for nearly three decades. More recently, frustration over corruption has eroded confidence in local governments, which in turn, has made it easier for terrorist group, Boko Haram, to radicalize and recruit young Nigerians. What’s more, corruption and mismanagement in Nigeria’s security sector have hampered Nigeria’s ability to effectively protect Nigerians from Boko Haram.

This year, with Nigeria’s economy dealing with the one-two punch of the COVID-19 pandemic and low oil prices, decisive government action is more critical than ever. As of late August, the economy had contracted by 6.1%, and 27% of Nigeria’s labor force was unemployed.

I want to be clear: I’m not saying that Nigeria’s problems are insurmountable. Not in the least. In fact, Nigeria is better positioned to start strategically capitalizing on its natural resources than ever before. And if the country can do that, it will be well on its way to a better future.

All is Not Lost – Far From It

While there’s no guarantee that Nigeria’s PIB will become law this year, it has reached an important milestone: President Muhammadu Buhari approved an updated version of the bill and presented it to the National Assembly Sept. 28 for their approval. Both chambers of the National Assembly have to pass the bill before it can be sent to the president for his final signature. If it is passed, the PIB would be transformational for Nigeria’s oil and gas industry and, ultimately, for the country as a whole. It would play a vital role in addressing the inefficiencies plaguing the Nigerian National Petroleum Corporation (NNPC), from slow approval for oil projects to budget shortfalls that hinder its ability to pursue public-private partnerships. What’s more, the bill would create a supportive environment for both IOCs and indigenous petroleum companies, help protect the environment and the interests of host communities, support economic diversification in Nigeria, and critically important, promote transparency in Nigeria’s administration of petroleum resources.

Putting the oil industry on strong footing also could give the government more room to maneuver when it comes to resolving problems in the Niger Delta — including environmental concerns, lack of economic opportunities, crime, and militant activity — and implementing reforms to restrain the advance of Boko Haram. If oil and gas production stabilize, for example, Nigeria’s government will be better positioned to create jobs in the region, both in petroleum and other sectors, which likely would contribute to greater stability there. More investment by IOCs also could lead to much-needed infrastructure in the area, educational and job-training programs for locals, and environmental initiatives. And greater oil and gas revenue — followed by economic growth and diversification — would help Nigeria to fund the security resources it needs to enforce anti-terrorism measures.

The PIB’s progress is good news, but it’s not the only reason I’m optimistic for Nigeria. The government also deserves praise for launching, through the Department of Petroleum Resources, its first marginal field bid round in nearly two decades. Marginal fields hold discovered resources that have been left unattended for more than 10 years. Nigeria is offering 57 fields with total resources estimated at about 800 million barrels of oil and 4.5 trillion cubic feet of gas. Already, interest in the marginal fields has been high, and this could be just the jumpstart Nigeria needs to rekindle interest in the country’s untapped resources.

I also find it encouraging that Nigeria has moved a step closer to natural gas monetization through the Department of Petroleum Resources’ creation of the Nigerian Gas Flare Commercialization Program. Proper channeling of flared gas could impact the country’s gross domestic product by up to $1 billion per year, the department estimates. It could create up to 300,000 jobs, produce 600,000 million tons of liquefied petroleum gas per year, and generate 2,5 gigawatts of power. I commend the federal government for creating this program. Next, Nigeria needs to put in place the legislation, infrastructure, and pricing regulations necessary to make commercialization possible. Nigeria already has successful liquified natural gas (LNG) projects in place — just this year, Nigeria LNG Ltd. signed a $3 billion corporate loan to finance the construction of its seventh LNG train — and with the right policies, they can be even more beneficial.

Also working in Nigeria’s favor has been the country’s membership in OPEC. Not only has OPEC played a critical role in stabilizing global oil prices through production cuts this year, it also has been working to secure the fair value of member countries’ oil resources with the understanding that a thriving petroleum industry contributes to economic growth and improved standards of living. I believe Nigeria’s membership in the OPEC Fund for International Development, a multilateral development finance institution that targets key projects – primarily in energy, transportation, agriculture, water, education, and health —will be beneficial as well.

It has been encouraging as well to observe the fantastic working relationship among OPEC Secretary General Mohammad Barkindo, Minister of State for Petroleum Resources Chief Timipre Sylva, and NNPC Group Managing Director Mele Kyari. In fact, Barkindo recently expressed a strong vote of confidence in both Nigerian officials. “I’ve known both Timipre Sylva as a friend and Mele Kyari as a colleague for a very long time,” Barkindo said last year. “I had worked with both, and I know that if they work together, they will make a good team that will provide the leadership and the corporation that the industry requires.” The cooperation and respect among these leaders can only work in Nigeria’s favor.

Nigeria’s Independence Must Be Respected

As Nigeria takes measures to revamp its petroleum industry, leaders should be prepared to stand their ground against external forces eager to remake Nigeria’s future in the image they want for it. I’m referring to western environmental groups intent on influencing is how Nigeria, and other African countries, transition from fossil fuel production to sustainable energy sources. Many have been pressuring investors to stop supporting oil and gas projects in Africa to prevent climate change. Frankly, they need to back off.

Nigeria is celebrating 60 years of independence. This is not the time to go backward. Outsiders need to respect Nigeria’s right to control its own destiny — and to choose the path it takes to improve its future. Nigeria must be the one to map out and executive its energy transition. And it must do it on its own timetable. And Nigeria already is, by the way, beginning to embrace green technologies. With a $350 million World Bank loan, Nigeria plans to build 10,000 solar-powered mini-grids by 2023. The government also is investing in hydropower projects, including the $5.79 billion Mambilla Power Station in central Nigeria.

All of those projects can work hand in hand to contribute to Nigeria’s economic growth. No one should be pressuring Nigeria to miss out on the many benefits its petroleum resources offer. And today, when the country is finally moving toward harnessing its oil and gas resources in a way that could truly benefit everyday Africans, it would be heartbreaking to see non-Africans knock Nigeria off-course.

Nigeria is So Close

Sir Abubakar Tafawa Balewa, Nigeria’s first prime minister, had this to say about an independent Nigeria: “Our political advance will be of no value if it is not supported by economic progress.”

He was absolutely right.

Nigeria needs revenue to resolve its challenges, and that revenue is within Nigeria’s reach. With the necessary legislation in place, Nigeria can revitalize and capitalize upon its oil industry. And instead of flaring its abundant gas to power, Nigeria can start using it to power households and businesses. To provide feedstock for petrochemicals and help diversify the economy. The gas can even play a valuable role in Nigeria’s energy transition by providing revenue for green initiatives.

All of this is possible, Nigeria simply needs the kind of legislation and policies that are conducive for business to thrive. One of the best ways Nigeria could celebrate its 60th anniversary as an independent nation would be to finally put those measures in place.

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By the Fall of 2019, NJ is releasing his new and second book, "Billions at Play: the Future of African Energy". The book will set a new foundation to discuss major issues facing Africa's energy sector.

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