When Anadarko Petroleum Corp. confirmed last year it would be constructing a $20 billion liquified natural gas (LNG) plant in Mozambique, this was major news. Mozambique’s first onshore LNG plant would be creating tens of thousands of jobs — and contributing to sustainable, long-term economic growth that would impact millions of people.
Two additional LNG projects have been announced since then: the $4.7 billion Coral FLNG Project by ENI and ExxonMobil, and the $30 billion Rovuma LNG Project by ExxonMobil, ENI, and the China National Petroleum Corporation. While these two have been postponed by the COVID-19 pandemic, the original LNG Mozambique project has been moving forward.
French oil major Total acquired the project and finalized project funding in July, even in the face of recent terror attacks in northern Mozambique’s Cabo Delgado province, where Total’s LNG plant will be constructed.
That’s why it’s so disheartening to learn that a UK-based environmental group is pursuing actions that could jeopardize the project’s timely progression, all in the name of preventing climate change. Friends of the Earth has said it will initiate a legal challenge against the UK’s decision to provide $1 billion in funding for the Mozambique LNG project.
Never mind the project’s importance to everyday Africans. Never mind its potential to grow and diversify the economy. Never mind that projects like this are just what Mozambique needs to address its energy poverty, or that the Mozambique government has invested considerable time and resources into making this LNG project possible.
This is not the first time that not so well informed radical activist have attempted to interfere with Africa’s energy industry in ways that do not help poor Africans but serve their own interest. International organizations, including the World Bank, and private investors, under pressure by environmental groups, have been dropping support for African fossil fuel production. A lot of poor people are suffering from this and hundreds of millions more will if we to change direction.
I find it stunning that, during a time when much of the world is talking about the need to respect black perspectives, environmental groups seem to have no qualms about dismissing African voices.
As I’ve said in the past, I agree that climate change should be taken seriously. And I understand the risks it poses to Africa. The thing is, why are non-African organizations trying to dictate how African countries address those risks? The message in this case seems to be that “they know best.” That idea is insulting, and interfering with an African country’s efforts to build up its economy – simply because fossil fuels are involved – is completely unacceptable.
A ‘Missed Opportunity?’ Really?
UK Export Finance (UKEF) is one of eight export credit agencies to provide funding for Total’s Mozambique LNG project, which includes the construction of a two-train liquefaction plant with a capacity of 12.9 million tonnes per year.
UKEF’s $1 billion commitment includes awarding $300 million in loans to British companies working on the gas project and guaranteeing loans from commercial banks worth up to $850 million. The UK’s parliamentary under-secretary for the Department for International Trade, Graham Stuart, has pointed out that Total’s LNG project could be transformational for Mozambique and create 2,000 jobs in the UK as well.
But Friends of the Earth has said they will seek a judicial review into the UK government’s decision to help finance a project that, as they put it, will “worsen the climate emergency.” The group’s director, Jamie Peters, also expressed his disappointment in a letter to the UK government. The UKEF’s funding decision, Peters said, represents a “lost opportunity” for the UK to be a world climate leader.
My question to Mr. Peters is, what about Mozambique’s opportunities? To help everyday people improve their lives? To earn a decent living? To have a reliable source of energy? I’m talking about an opportunity to nudge the average life expectancy in Mozambique above 59 years, where it stands now.
The Mozambique LNG project is poised to make those things possible. As far as I’m concerned, losing that opportunity would devastating.
What Mozambique Stands to Gain
I can’t overstate the far-reaching implications and potential that Total’s Mozambique LNG project represents for local businesses, communities, and individuals.
Total estimates that its plant will generate about $50 billion in revenue for Mozambique’s government during its first 25 years in operation. That revenue can be directed toward much-needed infrastructure, educational programs, and economic diversification programs.
Consider direct foreign investment in Mozambique: Total’s US$25 billion investment in the LNG plant is more than twice Mozambique’s current GDP.
How about the plant construction project? Not only will it generate tens of thousands of local jobs, but it also will provide training opportunities for local people. Indigenous companies will be contracted to provide goods and services.
This pattern will continue once the plant is operational. Locals can train for and take a wide range of positions, including professional and leadership roles. Over time, subject matter experts who can share their knowledge in Mozambique, and with other African companies, will be cultivated. And, once again, the plant will be looking to local companies to provide products and services.
LNG Can ‘Em-power’ Mozambique
In addition to these far-reaching economic opportunities, the LNG produced at the plant will provide affordable energy for Mozambique.
The need is urgent. Only about 29% of the population has access to electricity today. Medical care is hindered. Education is impacted. And sustainable economic growth is an uphill climb.
Earlier this year, I praised the government of Mozambique for negotiating for part of the LNG production to be diverted to the domestic market, meaning it can be used for power generation. Since then, the government secured financing for a 400MW gas-fired power plant and transmission line to Maputo, the country’s capital, which will dramatically improve power reliability there.
By the way, when the Mozambique government ensured that some of the plant’s LNG production would be available for domestic use, it also laid the foundation for monetization and economic diversification. In Mozambique, LNG will be available to serve as feedstock for fertilizer and petrochemical plants. It can be exported by pipeline to neighboring companies. And that, in turn, can help Mozambique build even more infrastructure and contribute to even greater widespread prosperity.
Mozambique Has Been Working for This
I’d also like to point out the thought and preparation that the Mozambique government has put into making its natural gas operations beneficial for the country as a whole since approximately 180 trillion cubic feet of natural gas reserves were discovered there in 2010.
Mozambique’s national oil company, ENH, hired global energy research and consulting firm Wood Mackenzie to help it prepare for the responsibility of managing and selling its corresponding portion of the resources. Since then, ENH formed a consortium with international oil and gas trader, Vitol.
The government also has sought the support of more experienced energy producers and international partners. Earlier this year, President Filipe Nyusi met with Norway’s Crown Prince Haakon and signed an agreement for support on natural gas resource management.
But even before that, Mozambique laid the foundation for a successful oil and gas industry with the new Petroleum Law of 2014. And with that legislation in place, the country completed a successful bidding round for exploration blocks. These efforts, along with careful negotiations with international oil companies, is what brought Mozambique to where it is today: on the cusp of becoming a major LNG producer. And these efforts are what will make Mozambique’s LNG industry a success, not just in terms of government revenue, but also in improving the lives of everyday people.
We Must Put People First
Mozambique is not asking for aid to lift its people out of poverty. It’s attempting to capitalize on its own natural resources. The government isn’t trying to make a quick buck. It’s working to lay a foundation for long-term growth. And efforts like the Exxon and Total Mozambique Projects are more than an opportunity for international oil companies, or even Mozambique’s government. They have the potential to improve the lives of millions of everyday people.
I recognize the need to protect our planet and prevent climate change. But interfering with financing for Africa’s fossil fuel projects is not the right path. We must not dismiss the value of projects like these or their ability to make meaningful changes for the better in Mozambique. And we must not put environmental ideals ahead of the pressing needs that are facing people right now.
NJ Ayuk discusses the role that African countries have contributed to OPEC and the current state of exploration projects that have seen challenges throughout the year due to Covid-19 and other pressing factors. He further elaborates on the six decades OPEC has managed to overcome and celebrates as global oil leaders.
“Flatten the curve.” Do you remember that phrase? It was on everyone’s lips back in the spring, when the novel coronavirus (COVID-19) pandemic began rampaging across the world in earnest.
At the time, the idea was that the best way to combat the germ known as SARS CoV-2 was to go home and stay there long enough for hospitals, clinics, and other medical facilities to build up the capacity needed to handle the expected flood of new patients. Most of us expected that this departure from routine would be a temporary thing. We hoped it wouldn’t last long — that we’d be able to return to our normal routines after a brief disruption, with confidence that all necessary safeguards were in place.
Of course, it didn’t turn out that way. We spent far more time than we expected sheltering in place, unable to visit friends and family, attend school, or go to work in the usual manner. Many of us lost our jobs and saw our businesses fail, and the cumulative result of all these individual disasters was that the global economy took a sharp downward turn.
We Still Need To ‘Flatten the Curve’ … But How?
Along the way, of course, we’ve learned quite a bit more about SARS CoV-2 — how it makes people sick, how to treat it more effectively, what kind of resources our medical providers need most, and so on. But we’ve also stopped talking about “flattening the curve.” Even in places where hospitals and clinics have been able to build up their stocks of personal protective equipment (PPE), ventilators, and other necessities, we’ve moved on to other topics.
In my view, this is a mistake. I’d like to explain why I think so.
It’s not because our understanding of the virus has changed over time.
It’s not because we’ve seen infection rates rise after the lifting of lockdown orders.
It’s not because we don’t have a vaccine yet.
It’s not because the idea of “flattening the curve” seems callous when more than 900,000 people out the nearly 28 million infected around the world have already died of COVID-19.
It’s because we need to rethink the idea of what “flattening the curve” means.
And I believe President Macky Sall’s call for African debt relief is a good place to start that rethinking.
The President’s Perspective
First, let’s look at what President Sall has to say.
In late August, the Senegalese leader urged members of the G20 group of countries to continue helping African nations balance their obligations to creditors with their obligations to their own citizens in the face of a deadly pandemic. Speaking to a group of business leaders at the French Entrepreneurs’ Conference, he noted that the group had taken up his call for a moratorium on the collection of debt from impoverished countries in Africa and elsewhere in April. He suggested that this moratorium be extended into 2021 rather than allowed to expire at the end of 2020.
“For the most part, and for all African countries, internal efforts will not be enough to lessen the shock of COVID and revive economic growth,” he said. “We need more financial capacity, which is why, with other colleagues, I have made a plea for substantial relief of Africa’s public debt and private debt on terms to be agreed upon.”
What the President’s Words Mean
Sall’s statements reflect the fact that the emergence of SARS CoV-2 was not a one-off event that sparked a short-term crisis, but rather the start of a struggle that will take a long time to resolve. They recognize that the outbreak is likely to be a drag on the world economy for years to come — and that the countries battling COVID-19 outbreaks need time to build up their capacity to fight back.
What’s more, the president’s words advance the idea that African states will be in a better position to meet their financial obligations in the future if they take the time and the trouble to address the public health situation first. Indeed, he made a point of stressing that Africa takes its financial commitments seriously, since he mentioned debt relief and not debt forgiveness. (He also suggested that members of the G20 group offer debtors the same kind of breathing room they have granted themselves, such as temporary exemption from rules limiting debt to 3% of GDP or less.)
In other words, Sall is asking the G20 group to give Africa time and space to flatten the curve. He may not have used those exact words, but that appears to be his goal. He is hoping creditors will agree to suspend business as usual so that African states can build up their capacity for economic growth, just as regular citizens of many countries around the world agreed to disrupt their usual routines of work and school and leisure activities so that hospitals could build up their capacity for patient care.
Sall also understands that this flattening of the economic curve is not a simple process. He knows it will take more than one round of deferred payments to compensate for the economic consequences of the pandemic, and that is why he has now asked the G20 to extend the debt moratorium, which was originally due to expire at the end of 2020, into next year.
Compensating for the Setbacks of the Last Six Months
And make no mistake: Africa needs that extra time. The continent has suffered enormously over the last six months.
On the economic front, the pandemic has triggered a global recession that has caused millions of salaried African workers to lose their jobs. Meanwhile, many more millions have seen their livelihoods dwindle or disappear because restrictions on movement have stifled the informal sector and forced the closure of small businesses. Additionally, the continent has experienced shortages of fuel and other essential goods as a result of disruptions in the supply chain.
Some parts of Africa have also weathered political disruptions. Mali suffered a coup in mid-August, following more than two months of anti-government demonstrations. Libya’s civil war, pitting the UN-backed Government of National Accord (GNA) in Tripoli against Khalifa Haftar’s Libyan National Army (LNA), has continued to grind on, effectively crippling the country’s lucrative oil industry. Investors in liquefied natural gas (LNG) projects in Mozambique have grown more nervous since a militia with ties to the Islamic State group, also known as Daesh, seized control of a key port in Cabo Delgado state.
Under other circumstances, African fossil fuel producers might have been able to use their reserves to help build up the cash needed to cope with the consequences of COVID-19. After all, as I explained in my latest book, Billions at Play: The Future of African Energy and Doing Deals, the oil and gas industry has the potential to serve as a springboard, amplifying and accelerating economic growth. It can create opportunities for economic diversification and — through petroleum companies’ research and investments — help pave the way to the creation of a renewable energy sector.
Unfortunately, though, world oil prices crashed earlier this year, partly because of the competition between Russia and Saudi Arabia for market share and partly because the pandemic undercut energy demand. Prices hit historic lows in late April. And since they have yet to recover completely, African producers will need more than oil and gas to compensate for the setbacks they have experienced this year.
A Necessary Step: Debt Relief
That’s where debt relief comes in.
Debt relief will help African states weather the storms caused by the pandemic.
Debt relief will help African states take the steps needed to help people go back to work or build up their businesses.
Debt relief will help African states re-establish stability following political disruptions.
Debt relief will help African states make up for the sharp decline in oil and gas revenues and begin building renewable energy sectors.
Debt relief is necessary to flatten the curve. It’s what will give Africa time and space to start carving out a path towards recovery — to take the steps necessary to bring new investment to the oil and gas industry, to build Africa’s sustainable energy sector, to expand business and residential consumers’ access to electric power, to revive small businesses, to promote innovation and entrepreneurship, to foster job creation, and to remove red tape and regulatory obstacles.
Asking for More: Debt Forgiveness
Senegal’s president understands this — and I hope the leaders of the G20 group’s members do, too. I hope they can see how reasonable it is for impoverished countries in Africa and other regions to ask for what they need to flatten the curve.
But I’d also like to take it a step further. I’m going to ask for more.
I’m going to ask for debt forgiveness.
I’m going to suggest that members of the G20 group agree to forego payments from African debtors — specifically, from eligible African debtors. And by eligible debtors, I mean countries that commit themselves to a forward-looking agenda that includes wide-ranging and market-oriented reforms, as well as safeguards for economic freedom, good governance, free trade, and investment in education.
All of these points are in line with the ideals that have helped most G20 member states achieve so much with respect to economic growth. What’s more, they are exactly the sort of things that African states ought to do in order to maximize their chances of building up the momentum lost as a result of the pandemic — and to extend their recovery far into the future, beyond the point when vaccines, cures, and more effective treatments remove the threat of COVID-19.
I hope that G20 lenders to Africa will see it my way. I hope they will agree to help Africa do as much as it can to flatten the curve.
Under the best economic circumstances, paying for legal services can be difficult for small businesses and startups. With the COVID-19 pandemic currently wreaking havoc on the global economy — and companies’ cash flow — there’s a good chance that businesses around the globe are putting their legal needs on the back burner. It wouldn’t be the first time; during the Great Recession, for example, growth in demand for U.S. law firm services dropped from 4.1% in 2007 to -5.1% in 2009.
While putting off legal services now, given market conditions, is understandable, it’s a risky practice that leaves companies vulnerable to oversights in areas ranging from drafting contracts to establishing employment policies. That, in turn, increases the risk of costly liability when it might be more difficult than ever for companies to pay for a legal defense or settlements.
The thing is, quality legal services shouldn’t be beyond businesses’ financial reach, regardless of their size, and it’s up to the legal profession to make sure they’re not. We should be making meaningful changes to the way we operate that will meet businesses’ needs now and during whatever new economic normal we face after the pandemic.
Earlier this year, American Lawyer commended North American attorneys for “stepping up to the plate” by maintaining open communication with clients and being flexible in how they offered services during difficult times.
More of us, around the world, should be doing the same.
I believe that offering flexible legal services, also known as legal services on demand, is a significant step in that direction. Flexible models allow businesses to work with premium attorneys on a per-project basis for considerably less money than they would spend to engage a law firm or employ in-house counsel. Companies get access to affordable legal services without sacrificing quality. This model helps attorneys, too, by providing work opportunities they wouldn’t necessarily have otherwise and giving them more control over their hours.
Centurion Law Group launched a flexible services model, Centurion Plus, at our offices in Berlin and Frankfurt, Germany, earlier this summer. We’re not the first to offer this option, but our research showed that there continues to be a shortage of flexible legal services across Europe and in many countries around the globe. I hope other law firms follow our lead: It would be beneficial for our clients and for the legal profession.
The Flexible Model Makes Quality Legal Services Affordable
While flexible legal service programs vary by provider, the general idea is that businesses work with attorneys on a per-project basis. Firms that offer this service cultivate large pools of vetted attorneys with a wide range of specialties who work on a contract basis. When a business contacts them with a need, qualified lawyers can accept the project and go to work immediately. In most cases, the attorneys work remotely. There are no requirements for attorneys to meet billable hours quotas, and their rates don’t factor in employee benefits or overhead expenses. All of this makes flexible legal services convenient and affordable, even for companies with limited financial resources.
The Flexible Model Helps Attorneys
The flexible model meets attorneys’ needs, too, and during the COVID-19 era, it protects participating lawyers’ livelihood. Instead of facing the risk of layoffs, attorneys in the flexible model are more likely to continue getting work because they represent a more affordable option than traditional law firm associates or in-house counsel. Plus, in a flexible model, participating attorneys can be “shared” across departments, and even among law firms with agreements in place, giving them more opportunities to be matched with clients who need their skills and expertise.
The flexible model also considers the needs of attorneys with children: Practicing law when there’s uncertainty about schools remaining open can be extremely challenging. In Germany, for example, governments are hopeful schools will be able to continue in-person classes, but there are no guarantees.For attorneys with children, flexible scheduling and the ability to work from home can be invaluable. Not only that, working remotely through a flexible legal services program is ideal for attorneys who have underlying health issues or vulnerable family members who can’t risk being exposed to COVID-19. Even when we return to a strong economy and the pandemic is a thing of the past, flexible models will give attorneys the ability to avoid the long workdays that are common in our profession while continuing to pursue their passion.
We Must Be Innovative
As I have mentioned, flexible legal service is not a new concept. In fact, some American and European firms started offering this service more than a decade ago, in the aftermath of the Great Recession. We simply need to see more firms around the globe willing to embrace this new model — and to continue innovating from there. Firms should be looking at potential clients’ needs and pain points; how can we better address them? We should be looking for ways to support the people in our profession, across all levels; how can we help them succeed? Successful businesses in other fields are in a constant state of evolution, of problem solving and, when necessary, re-inventing themselves. Law firms should be doing the same.
If we are going to be effective in the COVID era and whatever follows, we must be willing to break away from tradition and adapt creative new ways to operate. We need to start looking ahead now so we can successfully meet clients’ needs in the future.
As Eskom seeks to increase tariffs to 25%, NJ Ayuk discusses the energy lessons that Eskom can implement and what the electricity crisis in South Africa looks like for the next 18 months for businesses, government and the average citizen. He further explains the political will and explains how different methods can be applied to sustain the current climate.
NJ talks about Mozambique’s Gas Projects and Energy Security. Following the recent increase in armed violence in the Cabo Delgado province of Mozambique, concern rises as one of the largest natural gas investments in the world were to be approved, estimated at $60 billion. Ayuk stresses that these threats should not be taken lightly and emphasises efforts that can be implemented by government.
This interview was originally published on thenergyyear.com
NJ Ayuk, president of the African Energy Chamber (AEC) and CEO of Centurion Law Group, talks to The Energy Year about how the Covid-19 pandemic has impacted African economies and the path forward for attracting investment and generating local jobs in the changing energy industry. The AEC promotes the interests of the African continent, its companies and its people.
What is your overall sentiment on the pandemic and its impact on African economies?
The pandemic was a gradual tsunami in the world markets. We always say that when Western countries have a recession, Africa has a depression. With a pandemic that came on as a wave and put the whole world in shock and then an OPEC meeting without an agreement in March 2020, now we have a new shock again, where the markets have collapsed.
African nations rely a lot on commodities, such as returns on the sale of crude, so the collapse hit Africa very hard. And when this happens, we see jobs being cut. When a job is lost in the Permian Basin in Texas, many people know because of the media. But in African oil-producing cities like Malabo, Port Harcourt or Accra, there have been a lot of silent waves of people losing their jobs, and companies just have not been able to perform. We at the chamber believe that we need to move away from the narrative of talking about oil and gas from the perspective of just prices and tariffs. It is about people, and how it affects everyday people’s survival.
This pandemic has been a nightmare and for emerging oil basins it gets even more difficult because now, with stringent rules and guidelines put in place, you have to figure out how you get people in and out and keep them safe. It has been a tough time, but we are resilient people and we firmly believe that we can come out of this stronger. We don’t see this pandemic as a time to bury our heads in the sand; we see it as an opportunity to start planning the comeback and how we can make Africa better and stronger.
We have to live with this new world order, where things like Covid-19 are going to happen. This has been our main focus at the chamber. We also share the pain of lives lost and companies going bankrupt. We have to pay attention to the many developments that have happened with small companies and local content, while also watching the FIDs on the continent and the new oil and gas hotspots like Mozambique and Senegal.
Some of the FIDs that were close to finalisation were postponed, as companies elected to wait and see. Ongoing projects in Republic of Congo and Nigeria were delayed, along with investments that were much needed to spur economic development in these areas. But there is hope. In the midst of this pandemic, Total was able to reach an agreement with Tullow [on the Lake Albert project in Uganda]. There has been a lot of pain, but also a lot of progress. We have found in this situation that some governments are paying close attention and trying to find ways to work with the chamber. With a massive number of companies working with the chamber, we were able to give them a voice and get them in front of governments, who have been able to listen and pay more attention. There has been more dialogue based on knowing that we are all in this together, and that we can find common solutions.
Can Africa use the current period as a catalyst to embrace local content?
We have to embrace local content more; we have to be ready. For example, those operating in Republic of Congo or Equatorial Guinea can’t move people in or out. They are going to require locals to do the job and keep the platforms and fields going. And if they want to bring in expats or services, it might be too expensive. Now, this gives us an urgent need to empower skilled Africans and start programmes to bring them back home.Local companies have to be ready. They can’t just play the game of setting up a company and taking commissions from the international players. That has to stop: African companies have to become more accountable and responsible during these moments. That is the only way forward. We must move away from being agents and towards being entrepreneurs. This is how we will survive the next phase of oil and gas; local content has to have a major role in it. We need a corrective course.
The chamber is very focused on seeing incentives put in place. Countries cannot legislate and regulate themselves to prosperity. They cannot continue to tell international companies that they must do A, B, C and D. It is all about sticks and carrots. On top of that, you cannot love jobs but hate those who create jobs.
We need rules that create changes. So we proposed a tax incentive for services companies that will train, prepare and qualify locals to replace expats. You might see some revenue being lost today, but in the long term you create local taxpayers. You will have more contracts being created locally, more services offered locally. This is what we see as the future of local content. Of course, there have to be some regulations and they have to be carefully worded and drafted to fit within the market to make sure that market forces do work with them.
What would be a role model for frontier exploration countries in Africa to follow?
The beauty of starting late is that you have a chance to pick and choose. I can’t say I would take much out of the Nigerian or Ghanaian local content model and implement it in Mozambique. It would not work. There is one thing I remind my friends about in Europe and the US: Africa is not a country. It consists of 54 states with different people, businesses and communities, so you have to get local. You have to think globally, but act locally.
So you look for the fundamentals of local content such as training and development. You can look at how Oman, Nigeria and Ghana have been able to do something in that area and learn from them. When we talk about procurement contracts and domestic supply chains, we need to look at what has not worked.
We like to have rights, but what about responsibilities? Governments have a responsibility to set up the fundamental frameworks like education. We cannot expect the IOCs to be the ones who are going to train, develop and prepare our people to serve the industry. It is not their job; we have to set up our education and ensure schools are ready and competitive globally. Once you set up that base, every African child can compete. It is about rights and responsibilities.
We celebrate the implementation of the African Continental Free Trade Agreement, but it cannot come without African content. In a small country like Gabon or Equatorial Guinea, when companies can’t find qualified people, they immediately go to Europe or the US to find them. We need to think in terms of African content: If you can’t find them in the local community, you should look within Africa. We can’t be people that do not employ, promote and contract Africans to compete for projects around Africa.
You also have to consider the role of black women in local content. While they represent 40-50% of the African population, only 5% of workers in Africa’s oil and gas industry are black women. This is a time for us to make a paradigm shift. For the chamber, there is no real local content without a very firm role for women in oil and gas. Women should be at the forefront of African oil and gas. Women have proven to be better managers and employees and more ethical workers, and they deserve a great place in Africa’s energy industry. This industry is not just about prices and stocks; it is about being a catalyst for our economy to become what we dream of.
What was the impetus behind launching your job portal?
We want to bring African talent and give companies a chance to provide African jobs for this talent. Most of the time, when an IOC or an international service company wants to hire people, they advertise the job in Houston or London and Africans do not always see those jobs. We have partnered with governments and IOCs and every energy job that is coming out of Africa will be on this portal. Be it expats wanting to work in Africa or locals, all of them will have access to these jobs. We need to be more transparent with opportunities in the oil and gas industry.
We are also coming out with a contracts portal which will include all contracts on offer in Africa’s oil and gas industry. Whether bidders are in Port Harcourt, Nairobi or Dakar, they don’t have to be well connected or be insiders to compete. They can use their talent and hard work to really benefit from this industry.
What is the level of digitalisation and the preparedness to embrace digital transformation across frontier exploration areas in Africa?
Digitalisation is the only way forward. Regions that have embraced digitalisation, big data and AI quickly are doing better now when it comes to recovery, production and exploration. They are doing better in making sure you have cheap, fast exploration to reduce the possibilities of having a dry well and improve prospects during an upstream campaign. Suriname and Guyana are places we can look at as being most similar to some of the frontier exploration areas in Africa. They have some of the newest big discoveries, in which they deployed some of the most robust technologies out there, and look at the results. Africa can do the same. Technology has been pushing developments in Mozambique and Senegal, but it has largely been left in the hands of IOCs to do this. This needs to be embraced within national and local companies. How do you do that? You do an investment upfront, then turn to the IOCs to share technology. When they make their annual work programmes, there has to be a part that involves sharing technology with national oil companies.
Many of the old white males that championed the industry are retiring and young people need to be brought into the industry. However, young people are not looking at working at Exxon or Chevron, but rather for Amazon or Google. If you don’t do something, you will lose talent. This is a chance for Africa to succeed by bringing in young Africans, who are already more technology driven and who will be able to shape the oil industry of the future. The industry of old is gone – it is not going to be oil and gas, but the energy industry.
Is this crisis an opportunity for countries like Uganda to further fine tune future agreements between the government and IOCs?
Absolutely. This is time to make the foreign market work for you and get back to the drawing board. You are competing no longer with just Nigeria and Angola, but with Nigeria, Suriname and Guyana. First we need to cut the red tape, and create fiscal terms that can deal with the market realities of today. We also need to incentivise exploration and look at tax rates. We are facing a global energy transition with funding cut for exploration for fossil fuels. There is a lot of competition for oil and gas exploration dollars.
If you can’t give hedge funds, private equity firms and IOCs the kind of fiscal terms that will encourage them to invest, it becomes difficult to attract investment. On the other hand, we have to improve our way of doing business. We have to look at transparency, mismanagement and ESG [environmental, social and governance] issues and create an enabling environment where everyone can come and do business. Now we need to look at creating fiscal terms that are driven by gas, as we need to use gas to transform Africa’s economy.
As African oil and gas countries struggle with Covid-19’s devastating impact on demand, two international groups seem to be celebrating it.
Earlier this month, the Organisation for Economic Co-operation and Development (OECD) and the International Energy Agency (IEA) described the low oil prices caused by the pandemic as a “golden opportunity” for governments to phase-out fossil fuel support and usher in an era of renewable energy sources.
“Subsidising fossil fuels is an inefficient use of public money and serves to worsen greenhouse emissions and air pollution,” OECD Secretary-General Angel Gurría said in a joint OECD-IEA statement. “While our foremost concern today must be to support economies and societies through the Covid-19 crisis, we should seize this opportunity to reform subsidies and use public funds in a way that best benefits people and the planet.”
I would argue that the OECD and IEA don’t necessarily know what’s best for the people who live on this planet. Pressuring governments to stop supporting fossil fuels certainly would not be good for the African oil and gas companies or entrepreneurs striving to build a better future. And it could be downright harmful to communities looking at gas-to-power initiatives to bring them reliable electricity.
Too often, the discussion about climate change — and the call to leave fossil fuels in the ground— is largely a western narrative. It does not factor in the needs of low-income Africans who could reap the many benefits of a strategic approach to oil and gas operations in Africa: reduced energy poverty, job creation, and entrepreneurship opportunities, to name a few.
Ironically, a policy that would jeopardize Africans’ ability to realize those benefits is being recommended at the same time protesters across America are calling for equity in some of the same areas. Although police violence against people of color is at the center of the protests — a response to the horrific death of a black man, George Floyd, after a white police officer knelt on his neck for nearly nine minutes — the protests also point to social and economic disparities between the races in America.
While I don’t want to exploit the death of George Floyd, I do see parallels between the racial disparities in America and the struggles of Africans whose lives could be improved through oil and gas. I always see a common pattern of ignoring black and African voices.
Too often in America, the value of black lives was not given proper consideration until George Floyd’s death forced the topic to the forefront and rightly so. And on the global stage, OECD and IEA are dismissing the voices of many Africans who want and need the continent’s oil and gas industry to thrive. I would advise these organizations not to ignore the needs of poor people in African countries.
As it stands, African energy entrepreneurs, the African energy sector, and Africans who care about energy poverty are basically saying, “I can’t breathe.”
It’s time to get the knees off their necks.
The Dangers of Energy Poverty
Consider the impact of energy poverty. Approximately 840 million Africans, mostly in sub-Saharan countries, have no access to electricity. Hundreds of millions have unreliable or limited power at best.
Even during “normal times,” energy poverty is dangerous. The household air pollution created by burning biomass, including wood and animal waste, to cook and heat homes has been blamed for as many as 4 million deaths per year. How will this play out during the pandemic? For women forced to leave their homes to obtain and prepare food, sheltering in place is nearly impossible. What about those who need to be hospitalized? Only 28 percent of sub-Saharan Africa’s health care facilities have reliable power. Physicians and nurses can’t even count on the lights being on, let alone the ability to treat patients with equipment that requires electricity — or store blood, medications, or vaccines. All of this puts African lives at risk.
That’s what makes gas-to-power initiatives so critically important: It only makes sense for African countries to use their vast natural gas reserves for power generation. And we’re already making progress on that front. Today, about 13 African countries use natural gas produced domestically or brought in from other African countries, and there’s every reason to believe this trend will grow.
In Cameroon, for example, Victoria Oil and Gas PLC already provides domestic gas for power generation, and its subsidiary, Gaz du Cameroun (GDC), has agreed to provide the government gas for a new power station with the potential to accommodate growing demand.
And in Mozambique, the Temane power plant, also known as Mozambique Gas-to-Power, is being developed now, and plans are underway to develop a second plant. Both will rely on Mozambique’s Rovuma basis for feedstock.
I have heard calls, including some from the OECD, for the development of sustainable energy solutions to meet Africa’s power needs. Great — let’s go for it. I’m all for renewable energy solutions, but Africans should not be forced to make either-or-decisions in this area. Energy poverty is a serious concern, and it’s wrong to make it more difficult for African countries to use a readily available natural resource to address it.
Investment — Not Aid
One of the benefits of oil and gas operations in Africa is they provide opportunities for both indigenous companies and for foreign ones. And as foreign companies comply with local content laws, they invest in the communities where they work. Africa needs those investments, particularly training and education programs that empower people to make better lives for themselves.
I want to be clear: Africa does not need social programs, even educational programs, that come in the form of aid packages. What’s more, offering Africa aid packages to compensate for a halt or slow-down of oil and gas operations will not do Africans any good. I tried to make that point recently during a friendly debate with Prof. Patrick Bond, a very bright man and a distinguished professor at the University of the Western Cape School of Government. He argued that Africa should keep all of its petroleum resources in the ground to minimize greenhouse gas emissions and prevent further climate change. Developed nations, the professor continued, should compensate Africa for that sacrifice, and Africa could use that money to develop other opportunities. No. This is not the time for Africa to be calling for more aid. Africa has been receiving aid for nearly six decades, and what good has it done? We still don’t have enough jobs.
Investment creates opportunities, meaning Africans aren’t receiving, they’re doing. They’re learning, working, building, growing, deciding. We, as Africans, must be responsible. Our young people should be empowered to build an Africa we all can be proud of. Relying on the same old policies of the past, relying on aid, simply isn’t going to get us there.
The truth is, no matter how you feel about the American Shale Revolution, Africans can learn from it. One of the reasons it succeeded is because you had small businesses willing to take a chance on new technology. They worked hard, and in the end, they boosted production. America became the largest crude oil producer in the world. Those companies made something extraordinary happen, and so can African businesses. We need more entrepreneurs willing to seize opportunities and, in some cases, make mistakes. That’s how we grow and learn. We need government leaders to do their part by creating a welcoming environment for foreign investors and establishing local content policies that result in opportunities for business partnerships, quality jobs, and learning opportunities for Africans.
Africa is capable of building a better future, of ending energy poverty, strengthening our economy, and improving the lives of everyday Africans. If we’re smart about it, and we work together with purpose, our oil and gas resources can help us get there.
And that’s why this is a horrible time for OECD, IEA, or any other outside organizations, to interfere with our natural resources.
Don’t Stand in Our Way
I understand and respect the OECD and IEA’s commitment to preventing climate change. But when you describe the chance to harm a major African economic sector as a great opportunity, there’s something wrong.
When you put independent African oil and gas companies at risk, you’re saying your objectives are more important than African livelihoods and aspirations.
American institutions are coming under fire for failing to recognize that black lives matter and to work alongside African-American communities to create positive change.
I encourage the OECD and IEA to take a different approach.
This is an opportunity for all of us to join forces, to take a team approach to growing Africa’s renewable energy sector, and to do it without dismissing Africa’s right to capitalize on its own natural resources.
Up until now, everyone has heard about renewable energy and its positive impact on the environment. But, are you really aware of the impact these renewable energy sources can bring upon your monthly bills, home and this entire planet/
Renewable energy is certainly been termed as the key to a sustainable future for mankind and experts around the world are pushing for it in the best manner possible. NJ Ayuk, one of the most recognized energy experts from South Africa, also echoes the same notion.
As per NJ Ayuk guardian, the following facts can be seen as the major reason why we all must take these renewable energy sources seriously.
Its a world known fact that fossil fuels like coal and petroleum are literally loading up our ecosystem with more and more greenhouse gases. Now, this is something that is leading to various catastrophic effects on this planet like rising in sea levels, soaring temperatures, and melting of the ice caps.
NJ Ayuk centurial law group believes that this is the sole reason why opting for these renewable sources of energy is a better idea. Besides being cleaner, these sources provide us with sustainable energy sources for our future generations.
As per a recent report released by a famous UK journal, more than 40 thousand people succumb to death due to air pollution in the country. On the other side, it has also been reported than more than 250 hospitals are been located in areas where the pollution levels are way higher than what WHO has quoted as ‘dangerous’.
NJ Ayuk wife says that this is where governments and the authorities around must take this as an alarming situation for humanity and take concrete steps to stop any further damage.
While fossil fuel sources like coal is been termed as finite, cleaner energy sources are available in abundance on this planet. Right like the name suggests, these renewable sources of energy can top up the tank of energy production till eternity.
NJ Ayuk further says that countries like Germany and Costa Rica have already taken big steps in the same context and if we talk about Germany itself, almost half of its energy production is based on renewable sources.
Costa Rica, on the other side, has recently gone on a ‘ 300 days on renewable energy supply’ spree with the entire country. Well, this certainly shows that there is some big hope we can live through in the coming years in regards to the utilisation of these renewable energy sources.
This could very well be the only way we can imagine a better future for our coming generation ina healthy and safe environment.
While recent years have seen renewed interest from German companies to do business with Africa, the continent currently accounts for only about 2% of their overseas business. We talk to NJ Ayuk, CEO of Centurion Law Group and a speaker at the upcoming Germany-Africa Business Forum, about how Germany can take greater advantage of the continent’s opportunities.
The natural resources and commodities sectors – which many African economies rely on – have suffered a lot in recent times. For this reason African countries are now looking at diversifying their economies away from oil and mining. I believe German companies – who are strong in areas such as renewable energy, construction, healthcare, chemicals and agricultural machinery – can play an important role in this diversification drive. Companies are also beginning to pay attention to the high demand from Africa for German exports. There is a strong push for ‘made in Germany, sold in Africa’.
Although a variety of industries – from cocoa to fintech – has benefitted from German investment, the country has not been as aggressive in the continent compared to China, India or France. Despite annual trade with Africa of about US$60bn, Europe’s biggest economy has lagged behind others that have done more to seize opportunities. I believe there remains a really big opportunity for German businesses to make respectable returns by bringing their expertise and knowledge to the continent.
In addition, the bulk of German investment in Africa to date has focused on countries such as South Africa, Nigeria and Algeria. They should also explore the opportunities in other countries.
Most Germans are relatively risk averse. Uncertainty is a lethal disease for German investors. Some German companies have shied away from the continent due to issues such as political stability and a lack of an enabling environment to do business. While these are valid concerns, they should also understand that many African countries have made great strides regarding these challenges.
There is also a perception that Africa has no infrastructure, when in fact over the last few years German companies themselves have played a prominent role in developing the continent’s infrastructure. For instance, German architectural and engineering firms have been responsible for South Africa’s World Cup stadiums; in Gabon, a German engineering firm is currently working on a complex road project linking Port-Gentil with Omboué; and they’ve also been involved in the construction of the Mongomeyen airport in Equatorial Guinea.
Although Germany is a significant importer of hydrocarbons from Africa, historically it hasn’t played a big role in upstream oil and gas exploration and production. However, where I do see significant opportunities is in the midstream and downstream petroleum industry. Germany has a strong chemicals industry, with unmatched skills in this area. For example, investors can use Africa’s natural gas to produce fertiliser – both for the export market as well as for African farmers to boost the local agricultural industry. There is also potential for gas-fired power plants to help reduce the continent’s severe electricity deficit.
Power generation and distribution is becoming an increasingly important industry, with Siemens and wind power company Nordex already leading the way in this regard. Just like the internet, Africans see power as a right, and they are ready to pay for it. Africa cannot run its industries on generators.
For an Africa that serves its people and provides them with jobs and opportunities, we need to be better at empowering the next generations, embracing our diversity...
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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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Through his speaking engagements on the international stage, NJ's presence is in the most important boardrooms.
As a seasoned lawyer and business advisor, NJ has negotiated Africa's biggest energy deals and been a mentor to dozens of entrepeneurs and start-ups.
Through leadership and frequent publications, provides insights and thought-provoking ideas into what will make Africa and its citizens the leaders of the 21st century.
Through his speaking engagements on the international stage, NJ's presence is in the most important boardrooms.
As a seasoned lawyer and business advisor, NJ has negotiated Africa's biggest energy deals and been a mentor to dozens of entrepeneurs and start-ups.
Through leadership and frequent publications, provides insights and thought-provoking ideas into what will make Africa and its citizens the leaders of the 21st century.
Learn more v
NJ Ayuk's work has international coverage.
"NJ Ayuk, The 38-Year-Old Attourney Who Runs One Of Africa's Most Successful Law Conglomerates"
