Africa: A Final Frontier for Oil & Gas
This article is part of a series of roundups from the Africa Oil & Power 2017 panels. See the video highlights from the panel here.
Africa is largely considered one of the world’s greatest under-explored regions for the oil and gas industry, despite proving time and again that the continent offers bold explorers real opportunities to make mega finds. The crash of crude oil prices in 2014 has further dampened the zeal for exploration projects in Africa, with many planned explorations shelved. Our panel of industry experts at Africa Oil & Power 2017 delved into some of the most challenging questions surrounding exploration in this environment, addressing Africa’s true potential, how to adapt to a lower-for-longer price environment and what governments can and should be doing to spur investment.
Panelists included Simon Tamfu, Chief Executive Officer of ST E&P Advising; Tracey K. Henderson, Vice President of Exploration, Business Execution and Geophysics for Kosmos Energy; Frank Ene, President and COO of RoyalGate Energy; Jerreh Barrow, Commissioner for Petroleum of The Gambia; Robin Sutherland, GM New Ventures Africa for Tullow Oil; Andrew Woodrow, Business Development Manager for Africa of Maersk Drilling; as well as moderator Adaku Ufere, Energy Practice Leader for Centurion Law Group.
The question of how to fund exploration programs in a $50 per barrel was a focus of the conversation, with minor independents saying exploration at that level is largely impossible without partnerships, and Henderson saying companies should structure operations so that they can always operate in a $50 per barrel world.
Panelists noted Africa often takes longer than other regions for a project to go from discovery to development, and issues like a lack of infrastructure, instability, insecurity and poor government regulations are often the cause.
“We don’t think it needs to take so long as it does in any other areas to get form discovery to development,” said Sutherland. “You’ve got to have the will to do it quickly and not let small obstacles get in the way.”
Still, all of the explorers at the table cautioned governments to be cooperative, especially in low price environments, and recognize that the countries and regions with the best contract terms will likely see exploration efforts first. Tamfu suggested governments should take an even more radical approach to spurring investment: getting rid of singing bonuses altogether and offering seismic data to explorers for free.
Barrow, the only government official represented on the table, reminded the private investors that governments are similar to companies — they also have shareholders they must prioritize — their citizens.