Earth Finds

Earth Finds

Fate Of Russia's Impact In Africa Reliant On Continent's Ability To Make Better Deals

Russia's return to Africa has been the subject of wide media coverage, governmental concerns and civil society reactions in recent weeks, especially as Sochi gears up to host the first ever Russia-Africa Summit next week.

Most commentators have come from Europe and North America to voice concerns over Russia's dodgy arm deals in Africa, political meddling with unstable African regimes, and its overall challenging of the status quo on the continent. The problem is, when these comments are not outright hypocritical, they are missing a key point: competition is good for business, which is just what Africa needs right now.

First, Russia's presence in the continent cannot be summarized into sensationalism. It is complex and needs to be put back into context. Its modern relations with African governments and institutions started building up in post-independence Africa, time when the Soviet Union offered key diplomatic and military support to young African nations in need of it.

This assistance was multi-form and much needed for countries seeking fast development following harsh independence wars and conflicts. "The Soviet Union provided significant economic assistance, including infrastructure, agricultural development, security cooperation, and health sector cooperation," wrote Paul Stronski of the Carnegie's Russia and Eurasia Program this week.

Consequently, Putin's vision for Africa is resuming and building up on a cooperation that started in the second half of the 20th century and was only put on hold by the collapse of the Soviet Union in 1991.

In short, while arriving late to the party, Russia is no stranger to the African playground. Beyond military cooperation, its state-owned natural resources companies have already made inroads into the continent and could be a game-changer for many African countries in need of investment and electricity.

Key Russia energy companies such as Gazprom, Lukoil, Rostec and Rosatom are already present in Algeria, Angola, Egypt, Nigeria, Cameroon, Equatorial Guinea or Uganda, while mining and minerals ones such as Nordgold or Rusal are developing world-class mines in Guinea and Zimbabwe.

On a global stage, Russia's involvement in OPEC has also sent strong signals that it is committed to market stability and global energy cooperation, which ultimately benefit African producers.

"Russia's influence is increasing through strategic investments in natural resources, and such investments are welcomed by African governments and companies. They bring in key Russian capital and know-how to the continent which is seeking to diversify its investors basket and attract much needed investment into its energy industry," said Nj Ayuk, Executive Chairman at the African Energy Chamber and CEO of the Centurion Law Group.

"The African Energy Chamber is supporting such efforts and has seen a definite uptick in Russian companies' interests for the continent. We predict a lot of deals to be signed during and after the Sochi Summit for Russian energy companies to develop African resources and do business in Africa. This will be especially beneficial as Africa develops gas-based economies," he added.

Amongst the most recent agreements are for instance the MoU between Atlas Oranto Petroleum and Rosneft in 2018, under which the pan-African E&P company agreed to explore the joint-development of its assets across Africa with the Russian state-owned giant. Another one is the signing of several agreements between Russia and Mozambique this summer, involving again state-owned Rosneft but also Nordgold. In Central Africa, Gazprom is also lifting gas from Cameroon's the FLNG Hilli Episeyo, the world's first converted FLNG vessel.

As such investments and activity picks up, the real game changer will be Africa's ability to make deals that work for its people and its economies. Deal-making is what will shape the future of Russia-Africa relations and will tell whether Russia's renewed influence in the continent is good or bad for its people. Rightly so, the ability and capacity of African governments to make better deals with investors is becoming central to the global business narrative on Africa.

In his much anticipated book coming up this month and already best-seller on Amazon, "Billions At Play: The Future of African Energy and Doing Deals", Nj Ayuk dedicates an entire chapter to the critical art of deal-making. "For Africa to truly realize all of the benefits oil and gas operations have to offer, we need to see good deal-making across the board," he writes. "Clearly, good deal-making has far-reaching implications for African people, communities and business."

Contracts negotiations is in fact the key element missing from the current debate on Russia's increasing influence in Africa. There is no doubt Africa is welcoming Russia's interest for doing business on the continent, not only because it comes without the conditionality of actors such as the IMF and the World Bank, but also because Africa needs critical energy investment and a giant oil producer like Russia has good technology and know-how to export.

The only thing is, sub-Saharan Africa has seen several regulatory developments in the near future, with a particular focus on local content regulations across energy markets. Jobs creation, domestic capacity building and the growth of a strong base of local energy companies is high up on the African agenda. If African governments are able to negotiate contracts that deliver on these expectations and Russian companies are committed to see the continent grow, then the future is bright for Russia in Africa.

At the end of the day, it is all about how African governments and institutions will negotiate future contracts with Russian companies. As Nj Ayuk writes in Billions At Play, "governments must give investors a chance to generate income from the resources they are interested in and recoup their investments. At the same time, governments need to look at creating value for their country and its people. It's a balancing act. It's challenging, but it's doable."

Whether Sochi will result in that balancing act remains to be seen, but the challenge is given and Africa is up for it.

Fate Of Russia's Impact In Africa Reliant On Continent's Ability To Make Better Deals

Russia's return to Africa has been the subject of wide media coverage, governmental concerns and civil society reactions in recent weeks, especially as Sochi gears up to host the first ever Russia-Africa Summit next week.

Most commentators have come from Europe and North America to voice concerns over Russia's dodgy arm deals in Africa, political meddling with unstable African regimes, and its overall challenging of the status quo on the continent. The problem is, when these comments are not outright hypocritical, they are missing a key point: competition is good for business, which is just what Africa needs right now.

First, Russia's presence in the continent cannot be summarized into sensationalism. It is complex and needs to be put back into context. Its modern relations with African governments and institutions started building up in post-independence Africa, time when the Soviet Union offered key diplomatic and military support to young African nations in need of it.

This assistance was multi-form and much needed for countries seeking fast development following harsh independence wars and conflicts. "The Soviet Union provided significant economic assistance, including infrastructure, agricultural development, security cooperation, and health sector cooperation," wrote Paul Stronski of the Carnegie's Russia and Eurasia Program this week.

Consequently, Putin's vision for Africa is resuming and building up on a cooperation that started in the second half of the 20th century and was only put on hold by the collapse of the Soviet Union in 1991.

In short, while arriving late to the party, Russia is no stranger to the African playground. Beyond military cooperation, its state-owned natural resources companies have already made inroads into the continent and could be a game-changer for many African countries in need of investment and electricity.

Key Russia energy companies such as Gazprom, Lukoil, Rostec and Rosatom are already present in Algeria, Angola, Egypt, Nigeria, Cameroon, Equatorial Guinea or Uganda, while mining and minerals ones such as Nordgold or Rusal are developing world-class mines in Guinea and Zimbabwe.

On a global stage, Russia's involvement in OPEC has also sent strong signals that it is committed to market stability and global energy cooperation, which ultimately benefit African producers.

"Russia's influence is increasing through strategic investments in natural resources, and such investments are welcomed by African governments and companies. They bring in key Russian capital and know-how to the continent which is seeking to diversify its investors basket and attract much needed investment into its energy industry," said Nj Ayuk, Executive Chairman at the African Energy Chamber and CEO of the Centurion Law Group.

"The African Energy Chamber is supporting such efforts and has seen a definite uptick in Russian companies' interests for the continent. We predict a lot of deals to be signed during and after the Sochi Summit for Russian energy companies to develop African resources and do business in Africa. This will be especially beneficial as Africa develops gas-based economies," he added.

Amongst the most recent agreements are for instance the MoU between Atlas Oranto Petroleum and Rosneft in 2018, under which the pan-African E&P company agreed to explore the joint-development of its assets across Africa with the Russian state-owned giant. Another one is the signing of several agreements between Russia and Mozambique this summer, involving again state-owned Rosneft but also Nordgold. In Central Africa, Gazprom is also lifting gas from Cameroon's the FLNG Hilli Episeyo, the world's first converted FLNG vessel.

As such investments and activity picks up, the real game changer will be Africa's ability to make deals that work for its people and its economies. Deal-making is what will shape the future of Russia-Africa relations and will tell whether Russia's renewed influence in the continent is good or bad for its people. Rightly so, the ability and capacity of African governments to make better deals with investors is becoming central to the global business narrative on Africa.

In his much anticipated book coming up this month and already best-seller on Amazon, "Billions At Play: The Future of African Energy and Doing Deals", Nj Ayuk dedicates an entire chapter to the critical art of deal-making. "For Africa to truly realize all of the benefits oil and gas operations have to offer, we need to see good deal-making across the board," he writes. "Clearly, good deal-making has far-reaching implications for African people, communities and business."

Contracts negotiations is in fact the key element missing from the current debate on Russia's increasing influence in Africa. There is no doubt Africa is welcoming Russia's interest for doing business on the continent, not only because it comes without the conditionality of actors such as the IMF and the World Bank, but also because Africa needs critical energy investment and a giant oil producer like Russia has good technology and know-how to export.

The only thing is, sub-Saharan Africa has seen several regulatory developments in the near future, with a particular focus on local content regulations across energy markets. Jobs creation, domestic capacity building and the growth of a strong base of local energy companies is high up on the African agenda. If African governments are able to negotiate contracts that deliver on these expectations and Russian companies are committed to see the continent grow, then the future is bright for Russia in Africa.

At the end of the day, it is all about how African governments and institutions will negotiate future contracts with Russian companies. As Nj Ayuk writes in Billions At Play, "governments must give investors a chance to generate income from the resources they are interested in and recoup their investments. At the same time, governments need to look at creating value for their country and its people. It's a balancing act. It's challenging, but it's doable."

Whether Sochi will result in that balancing act remains to be seen, but the challenge is given and Africa is up for it.

Juba Committed To OPEC & Non-OPEC Declaration Of Cooperation

South Sudan’s Minister of Petroleum, Awow Daniel Chuang, has reaffirmed the country’s continued support of the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC Declaration of Cooperation.

In a bid to accelerate the stabilization of the global oil market, the Declaration of Cooperation, initially agreed December 2016 and subsequently extended, stipulates that OPEC-member states, together with 11 non-OPEC oil producing countries, have agreed to voluntary production adjustments of 1.8 million barrels per day (bpd) in the interests of producers, consumers, investors and the global economy at large.

“We are committed to upholding the OPEC and non-OPEC Declaration of Cooperation to show solidarity with our oil producing partners, friends and counterparts globally,” the Minister says.

South Sudan’s pre-conflict oil production was 330,000 bpd. Current resumption efforts target 250,000 bpd, an output figure that continues to support the global cuts and stabilize the market. The most recent oil discovery, in the Adar oilfield in Block 3, contains 37 million barrels of recoverable oil.

To further attract investment, the Minister will announce the details of its inaugural licensing round in Juba, in October. The Ministry intends to officially launch the round by the last quarter of 2019 or the first quarter of 2020.

  • Published in Africa
  • 0

Increased Production Sees Ghana Raise Its Hydrocarbon Profile

When you think of the top oil and gas nations in Africa, Ghana is not one that traditionally comes to mind, but it is one of the rising stars. In the past, Ghana has been one of the smaller oil and gas producers on the continent but that production is expected to grow rapidly over the next five years.

The organisation charged with developing the West African nations' hydrocarbon assets is the national oil company, Ghana National Petroleum Corporation (GNPC). The rise in Ghana's production is expected to come from the growth of existing offshore fields such as Twenboa-Enyenra-Ntomme (TEN) and Offshore Cape Three Points (OCTP).

First oil flowed from the Tullow operated TEN fields offshore Ghana to the FPSO Professor John Evans Atta Mills in August 2016. OCTP is an integrated deepwater project in Ghana split into two stages: the development of first oil, then gas deposits operated by Eni Ghana. OCTP is around 60km from Ghana's western coast and boasts approximately 40bn m3 of non-associated gas reserves and 500m barrels of oil.

Mohammed Amin Adam, Ghana's Deputy Minister of Energy in charge of petroleum, is confident that the country's energy sector is on the brink of something big. He says the country can expand oil production from 180,000–-200,000bl/d now to 500,000bl/d within six years, and is targeting up to 1mn bl/d beyond that. "If we want to sustain or increase production, we will have to be very aggressive in exploration," he said.

The average production for TEN field in 2017 was 56,000 b/d whilst production for the OCTP field is expected to peak this year at 45,000 b/d. In addition to the two established fields there are other developments that are moving ahead rapidly such as the Teak, Akasa and Mahogany East discoveries where test wells have indicated sizeable reserves.

Another major scheme is the Ghana 1000, a multi-phase greenfield gas-to-power project located near Takoradi in the western regions of Ghana. This will consist of approximately 1,300MW of combined cycle power generation technology once fully built and will support Ghana's burgeoning domestic natural gas industry by purchasing natural gas from the Sankofa gas field, part of the OCTP field. A subsea pipeline will link a Floating Storage and Regasification Unit (FSRU) to onshore facilities which will then supply the project. It's expected that the FSRU will start up sometime in 2020.
 

Ghana completed its first oil and gas licencing round earlier this year with two of the five blocks on offer being awarded. First Exploration and Petroleum Development, in partnership with Elandel Energy (Ghana) emerged as winners of block WB02 while Eni Ghana and Vitol Upstream Tano claimed block WB03. Block WB03 is located in the medium deep waters of the prolific Tano Basin, offshore Ghana. Following the success of this round, a second licensing round is being planned.

Sharing the talent

Throughout the oil and gas industry, collaboration is the name of the game and that is no different in Ghana. GNPC recently signed a memorandum of understanding (MoU) to share expertise with three of its neighbours, Sierra Leone, Gambia and Liberia. "We believe that we need to share experience from other countries as a way of improving what we do," chief executive of the GNPC, Dr Kofi Kodua Sarpong, said.

"Our organization has been there for nearly four decades and we have the expertise, we can export talent, so we are looking at all these opportunities. In fact, I can say that our brothers and sisters in other countries are knocking on our doors for advice and that is precisely what we want."

Ensuring local benefit from oil boom

The development of these assets means that it is important that Ghana, in common with many other African nations, ensures that local workers and industry benefit from increased oil and gas activity.

"There is a recognised need to develop local capacity in all aspects of the oil and gas value chain through education, skills and expertise development, transfer of technology and know-how and promote an active research and development regime through collaborative efforts locally and internationally," Dr Kofi Koduah Sarpong, said.

 In Ghana in recent years, attention has been focused on the need to have a portion of locally produced materials, personnel, financing, goods and services rendered to the oil and gas industry with measurable monetary impact.

"In tandem with this goal is the pursuit of local content participation, which refers to the level of Ghanaian equity ownership in the oil and gas industry," Sarpong added. "Ghanaian-owned businesses in the energy sector must be encouraged to increase their participation in this emerging and growing sector.

This, surely, will be a more sustainable way of realigning the sector to the needs of the country in terms of employment creation and economic growth whilst reducing the impact of capital flight on the economy."

Ghana's oil and gas industry continues to attract key global industry players on the back of sustained investor interest, due largely to the favourable investment climate and stable democracy. "The potential of the sector to be a driver for Ghana's desired economic growth is evident," Sarpong concluded.

"But I hold the view that true benefits of the oil and gas sector and ultimately economic growth can be obtained only when Ghanaians capture a respectable level of value from the sector.  For a country pushing for self-dependency; a Ghana beyond aid, this noble call is not misplaced, and the time to act is now."

Ghana at Africa Oil Week

Reflecting its growing importance, Ghana will be well represented at Africa Oil Week with a triumvirate of high-profile speakers in Benjamin Kwame Asante, director of petroleum at the Ministry of Energy, Egbert Isaac Faibille, petroleum commissioner at Ghana Petroleum Commission and the Hon John Peter Amewu, minister for energy.

  • Published in Africa
  • 0
Subscribe to this RSS feed

Kampala