• Monday, July 22, 2024
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Oil and Gas: Experts at PwC review sector, highlight growth prospect


In the last three years, PricewaterhouseCoopers has been in the forefront of highlighting the potentials inherent in the African oil and gas sector through its yearly high-impact conferences. The last edition, which recently held in Tanzania, sought to provide answers to the current challenges in the sector while also stressing the future prospects of the sector on the continent. Modestus Anaesoronye reports.

The last edition of the PwC Africa Oil and Gas Leadership conference, which held in Accra Ghana in 2013, threw up a lot of questions and posers ahead of the 2014 edition. This year’s conference which was held against the backdrop of declining oil prices, brought together over 150 industry leaders from across the continent and beyond and had “Driving sustainability and growth in Africa’s Oil and Gas Industry” as its theme.

The conference, according to Uyi Akpata, PwC Africa Oil and Gas industry leader and country senior partner for PwC Nigeria, was borne out of a genuine need to develop a sustainable forum for industry leaders to discuss and analyse developments in the very dynamic oil and gas sector and this the firm believes will help stakeholders project possible challenges and how to tackle it, especially as it concerns the African continent.

Specifically, it featured presentations and discussions on various aspects of the industry with PwC providing useful insights based on its constant monitoring of trends in the sector and participants sharing their views and experiences towards the evolution of a more successful oil and gas industry in Africa.

In his presentation which was based on PwC’s 2014 Global CEO Survey as well as the oil and gas Industry Review Survey, Akpata revealed that despite the volatility in oil prices, Energy CEOs on the continent are confident of revenue growth over the next three years with majority seeing new joint ventures & strategic alliances as the best opportunity to grow their business in the next 12 months. He however noted that there are key issues posing a threat to growth in the industry.

These issues include lack of adequate infrastructure, increasing tax burden, undue government interference, availability of requisite skills and talents, supply chain disruptions and high or volatile energy costs.

Participants at the conference agreed that if these challenges are overcome, Africa will be better positioned to reap the benefits of its oil & gas resources which if put to proper use in developing her economy will surely put her at par with other leading economies. This will also translate into better living standard for the people, since the effect of any tilt in the economic value chain in which the energy sector maintains a strategic position will trickle down to other sectors.

A major discussion at the conference was the recent emergence of the East Africa region as a hotspot for oil and gas business following a string of vast discoveries of both oil and gas reserves which has attracted foreign companies seeking new gas sources to supply energy-hungry Asian markets.

In his keynote address, Derek Hudson whose organisation, BG East Africa Group operates the third largest gas reserve in the world sitting in East Africa enumerated the significant opportunities in the East African gas space.

He said that oil discoveries onshore in Uganda and Kenya, coupled with world-class gas discoveries offshore in Tanzania and Mozambique have turned these East African countries into major players in the energy sector and that investors were optimistic about the potential for growth in the sector. Hudson also emphasized the need for the various Governments to partner with private companies to develop these reserves for the benefit of the region.

These sentiments were shared by a panel moderated by PwC Tanzania’s Nelson Msuya on Challenges for the development of offshore gas in new areas which had as panelists, Wayne Rodrigs of Mozambique’s Anardako, Oivind Karlsen of Statoil Tanzania , Oldivanda Bacar and Amad Valy, a director with Mozambique’s National Oil Company, ENH. They opined that to maximize the offshore gas potentials on the continent, Governments have to as a matter of urgency, provide enabling legislation and the right regulatory framework; provide appropriate enablers to attract investment and also balance their community expectations following these new discoveries through public enlightenment of their people.

The conference also discussed the ever present challenge of funding as a fundamental problem inhibiting the growth of the sector. This was the focus of another panel moderated by PwC’s Capital Markets Leader, Clifford Tompsett .The discussion centered on the experience of indigenous players in financing the acquisition of divested assets by International Oil Companies and it resolved that the local financial institutions were becoming increasingly involved in the funding of activities in the industry.

They also noted that the foreign financiers continue to show great interest in investing in the industry given the huge potential for profit and encouraged indigenous operators to explore other sources of funding such as equity and listing in the market following recent successes of some operators in this area.

Malcom Preston, PwC Global Sustainability leader gave an insightful presentation on Measuring and Managing Total Impact (TIMM). TIMM, a flexible framework developed by the firm, enables businesses develop a better understanding of how to create sustainable value for their shareholders while generating value for the wider communities they affect.

Malcom emphasised that it was important for oil companies to adopt TIMM as it enables them achieve a better understanding of the social, fiscal, environmental and economic impacts of their activities, while still, of course, making a profit. The framework gives management the ability to compare strategies and investment choices, using quantified data, and evaluate the total impact of each decision and choice they make.

Chijioke Okorie, general manager in charge of Monitoring at the Nigerian Content Development Monitoring Board, spoke on the local content initiative in Nigeria. He enumerated the successes of the implementation of local content initiative in the country, stating that Engineering fabrications in the oil and gas industry is now done 90 percent in-country, while manufacturing of all the field development facilities has 50 percent of the tonnage done in Nigeria.

He added that the Nigerian content policy has brought about in-country value addition with activities of the industry geared towards creating value, employment and getting Nigerians to participate in the oil and gas value chain to promote the development and use of local resources.