Energy Coalitions: The AOP 2018 Theme

Africa Oil & Power’s theme for 2018 concentrates on the best way to drive Africa’s energy sectors forward — through energy coalitions, from regional cooperation at the government level and private companies coordinating on development and financing deals to how the private and public sectors can collaborate together.

Learn more about the Cape Town AOP 2018 event and register here. View all our upcoming events on this page. Read about last year’s Catalysts for Change theme here and take a look at the 2017 conference.

The need to build energy coalitions is certainly not new. Indeed, industry experts and analysts have been clamoring for a united global front, intra-African cooperation and private sector efficiencies for years. But the sustained low oil price environment has forced a conversation on possible collaborations, and, throughout the industry, new and improved energy coalitions are forming. Perhaps for the first time in modern history, this new emphasis on coalition-building has the ability to transform the energy sector from the inside out. The main theme for AOP 2018 is Energy Coalitions.

There is perhaps no greater visual of such a coalition than the Organization of the Petroleum Exporting Countries collaborating with 11 non-member countries on the game-changing oil production cuts that brought stability to the market. With OPEC’s desperate need for energy partners to return market stability, many African countries found an international voice. Two new countries, Gabon and Equatorial Guinea, have joined OPEC as members since the crash. Others, including South Sudan and Sudan, are key collaborators in the oil price cuts. And African countries are also advancing in the Gas Exporting Countries Forum, with Equatorial Guinea hosting the first African forum in 2019.

“There is perhaps no greater visual of such a coalition than the Organization of the Petroleum Exporting Countries collaborating with 11 non-member countries on the game-changing oil production cuts that brought stability to the market.”

At AOP 2018, we will focus our attention on what coalitions we see emerging and how the African oil and power sectors can grow in this environment. Will Africa’s growing role in OPEC and GECF outlast the low oil prices? How can OPEC and African organizations, such as African Petroleum Producers’ Organization, coordinate on future market needs? What are the implications for African countries which are newly joining the energy economy, including Kenya, Mozambique and Senegal?

The continent is also seeing regional cooperation taking off in an unprecedented way, with countries making a concerted effort to coordinate on trade, knowledge-transfers and energy-sharing projects. In the last year, Equatorial Guinea has inked LNG sales and infrastructure agreements with both Burkina Faso and Ghana; South Sudan and neighboring Uganda are coordinating on power projects, Uganda and Tanzania are moving forward with the longest, heated oil pipeline in the world; and initiatives like LNG2Africa are driving Africa’s downstream energy infrastructure forward. How have governments’ strategies been changed by the low oil price environment, and can we expect this spirit of cooperation to continue? Are governments working with the private sector differently to bring projects to fruition?

“How have governments’ strategies been changed by the low oil price environment, and can we expect this spirit of cooperation to continue?”

And these energy coalitions are not limited to associations and governments, with the private sector moving full-steam ahead in collaborative efforts. A Wood Mackenzie report predicts that better supply-chain collaboration on major assets between oil and gas operators, EPC firms and oilfield services firms could net $90 billion to $240 billion in savings over the next five years — representing a 20 percent total cost reduction for the oil and gas industry. How can the upstream sector better collaborate with service providers and vice versa? How can the oil and gas industry reimagine the supply chain through a lens of building coalitions? How can building these coalitions drag down costs and help move major projects forward?

Certainly, the financial sector is eager to see more cooperation on major projects, after banks and private equity firms alike were burned in the oil price crash and left with staggering and even at times debilitating levels of uncollected, bad debts. Private banks, development institutions and private equity firms are now eager to see a diverse range of partners and an equally diverse set of funding to better mitigate risk in the sector. How can coalitions get projects to FID and to commissioning? What types of partnerships are most beneficial in securing financing, especially for major projects like Ophir Energy’s Fortuna FLNG and BP and Kosmos Energy’s Tortue LNG project in offshore Senegal?

“Better supply-chain collaboration on major assets between oil and gas operators, EPC firms and oilfield services firms could net $90 billion to $240 billion in savings over the next five years.”

Even the development of Africa’s energy mix is dependent on successful energy coalitions, as renewables and hydrocarbons vie for the top spot in powering Africa. Renewables are expected to play an ever-increasing role in lighting Africa, with the International Renewables Energy Agency predicting renewables will make up 22 percent of Africa’s power by 2030 (up from 5 percent in 2013). Still, collaborations with the hydrocarbons industry will be invaluable to move even renewables forward, with LNG and gas-to-power expected to solve intermittency and cost problems. How will coalitions being built between companies in the renewable and hydrocarbons sector move the power sector forward? What role will gas-to-power play in lighting Africa?

Though infamously difficult to predict, oil prices are expected to hover in the $60 per barrel range for 2018. While it is certainly an improvement over the lows of $28 per barrel experienced in 2018, the industry is still most certainly adapting to a “lower-for-longer” mentality, focused on driving down costs and operating efficiently. Governments and industry players are eager for stability in the market, and willing to play together to get it. This new mentality is expected to continue to spur new partnerships and collaborative efforts. AOP 2018 will not only address these questions at the third annual conference in Cape Town, but it will also be the place in Africa to re-imagine old alliances and forge new relationships.

Join us for Africa’s Elite Energy Event, Africa Oil & Power 2018, at the Cape Town International Convention Centre on September 12-14, 2018. Learn more…

 

Join the conversation on Capital Raising and the Gas Industry at the AOP Investor Forum in London, May 10, 2018