Oil
Sahara Group canvasses more investment in Africa’s E&P business
Modupe ASUDO
OIL and Gas businesses in Africa need to intensify exploration efforts to guarantee reserve replacement and enhanced capacity to meet growing demand and global competition, Olajumoke Ajayi, Managing Director, Asharami Energy (A Sahara Group Upstream Company), has told participants at the Oil and Gas Council’s Africa Assembly in Paris.
Ajayi noted that Africa’s large volumes of undiscovered oil and gas make the continent a veritable frontier for investment, adding that operators need to adopt new technology, explore alternative cost saving measures, ensure sustainable community relations, and build diverse multidisciplinary teams to ensure successful exploration projects.
In her presentation, “Renewing Players Commitment to Exploration and the Importance of Community Engagement in Capital Intensive Projects”, Ajayi cited the downturn in global oil prices and the corresponding negative effect on investor funds and returns as factors that have made a good number of Exploration and Production (E&P) companies in Africa cut down on investments, delay Final Investment Decision (FID) or totally stop embarking on new capital projects.
Managing Director, Asharami Energy (A Sahara Group Upstream Company), Olajumoke Ajayi, Director, EMEA, Oil and Gas Council, Pippa Brown and Head, Commercial and Business Development, Asharami Energy, Mariah Luciano-Gabriel at the Oil and Gas Council’s Africa Assembly in Paris
“Consequently, producing companies continue to pump oil from operated mature fields thereby depleting existing reserves with non-corresponding efforts for reserve replacement via new exploration discoveries. The big question remains whether or not E&P players should commit to exploration and how players can justify this commitment in the face of lower oil prices,” she stated.
According to Ajayi, the compelling case for the relevance of hydrocarbons in the future, in addition to huge investments on new technology, responsible and intentional community engagement will play a significant role in creating a stable and conducive environment for exploration and production. “Sahara Group’s exploration success story is being driven by a combination of technology, innovation and community management expertise. At Sahara, we are intentionally committed to creating a sustainable balance between our projects and host communities to ensure the creation of shared value for all stakeholders.”
Going by the PwC Oil and Gas Review 2018, proven oil reserves in Africa have stayed at the same level of 7.5% of global reserves. The report also notes that exploration activity continued to decline in 2017. “The consequences of modest recovery in exploration spending and a continued decline in new discoveries are unavoidable and imminent. The International Energy Agency and various players in the oil industry have warned of demand exceeding supply as oil demand continues to grow and investment in projects is deferred,” the report stated. The report adds that Africa’s oil and gas consumption is predicted to increase by 45%, increasing its global share 5.1% by 2050.
Ajayi said strategic community engagements eliminate community interference in operations of capital projects that may lead to significant downtime; ensure that the host community understands its role as a project stakeholder and treats projects as commonwealth source for the people; reduce security breach as community representatives serves as infrastructure surveillance outfit; and promoting easy negotiations for Freedom To Operate (FTO) and Global Memorandum of Understanding (GMOU).
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.
Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”
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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.
Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.
We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.
“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.
On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.
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