AEW 2022 Upstream Panel Explores the Role and Cooperation of NOCs and Independents in Africa

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Following a presentation by AEW 2022 intelligence partner, Rystad Energy, a panel discussion took place that explored the path towards mutually beneficial agreements between national oil companies and independents in Africa.

On the second day of the continent’s premier event for the oil and gas sector, African Energy Week (AEW) 2022, a market-focused panel discussion under the theme, ‘National Oil Companies (NOC) and Independents: The path towards mutually beneficial agreements,’ explored the approach taken by national and independent oil companies to take an ever more central role in asset development as international oil companies (IOC) divest from African hydrocarbon developments.

Moderated by Rystad Energy’s Head of Business Development – Africa, Bimbola Kolawole, speakers included Paul McDade, CEO, Afentra; Robin Sutherland, Co-founder, Baobab Energy Africa; Sandisiwe Ncemane, Acting CEO, PetroSA; Scott Macmillan, Managing Director, Invictus Energy; Ann Norman, General Manager, Saqara Energy; and Nosa Omorodion, Director, National Directorates and Independents, Nigeria and West Africa at Schlumberger.

Representing the final frontier for hydrocarbon exploration, IOC divestment from African oil and gas assets could bring new challenges to making energy poverty history, however, as IOCs restructure their portfolios and diversify from oil and gas, Africa’s NOCs and independents have taken on a more proactive role. In this regard, the panel discussed the capacity of these companies to develop frontier assets.

Speaking on the role independents play, Macmillan stated that, “We have been active in Zimbabwe for the last four and a half years and have an easier time on the funding route given that it is a frontier jurisdiction. We have seen a change in the markets where, since the 2014 downturn, funding exploration has been difficult. Potential majors are not really focused on these assets as we are. We have been able to raise about $44 million for this opportunity. The way we are looking at monetizing our resources is not for export but to the regional and domestic market. This will keep industrialization while growing the industrial base in Zimbabwe and the wider region. If we discover a large resource, we have a lot of monetization opportunities.”

Expanding on this, Sutherland stated that, “We can’t treat Africa as one homogenous space. There are countries that are extremely well developed and others that are not. There are a lot of countries where the industry is a lot less developed but they have resources that need developing. We have a long history of working in Africa. We bring skills to the table, to work with NOCs and local partners, to make a strong team capable of maximizing resources that are being left behind.”

In pursuit of resource maximization, public-private sector partnerships have emerged as ideal models to drive new exploration and production. Following on from what Macmillan described, McDade addressed how private sector capacity and public sector assets can find development synergies, stating that, “We found Afentra 18 months ago and saw two things happen: a natural industrial transition and the energy transition. The industrial transition will happen and there have been independents moving. It is a big space and Africa needs more independents, both national and international. We have access to equity and capital and can bring that and regenerate those assets in Africa. We have just signed some deals in Angola. Angola sees the industrial transition and needs investors for shallow and onshore. The funding is there for the right team and the right projects.”

Expanding on this, Ncemane provided insight into PetroSA’s agenda, stating that, “We are looking at mutually beneficial partnership and collaboration,” adding that, “We have a long-term strategy linked towards us creating value through indigenous gas. This is key for us to unlock the integrated gas economy. In the short to medium term, we are unlocking value from existing partnerships in the region. Our subsidiary igas is a shareholder in the ROMPCO pipeline and we have increased our stake in this investment. We are diversifying our contribution and the localization associated.”

Meanwhile, with African countries having prioritized local content and capacity building for decades, the speakers explored whether or not the continent is ready to take the reins of its own energy industry. In line with this, Omorodion shared the opportunities for independents in Nigeria, stating that, “Oil and gas activities, commercial discoveries were first found in Nigeria 66 years ago. Over the years, competence and capacity has grown. During this period, while the NOCs have focused on structuring stability, there has been a big opportunity for independents to get into this space. It is a natural evolution that assets are not as attractive for IOCs and as they transition to deepwater, there has been a recognition that independents and NOCs are ready to take on the challenges. I see an acceleration of capacity because of IOC divestment. It has been a big challenge but I don’t see them as disadvantaged but rather as a natural evolution. It is exciting and profitable and you will have more nimble and focused alignment on production.”

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