By Annie Babelle Odounlami
“African oil and gas producers don’t have obvious examples to follow within the continent. Not one of the African countries that depends on resource extraction has completed the process of diversifying its economy. We can only capitalize on oil and gas revenue if we want to increase our participation through the oil and gas value chain,” NJ Ayuk.
The Executive Chairman of the African Energy Chamber and CEO of Pan-African Corporate law Conglomerate Centurion Law Group, NJ Ayuk, emphasizes on the fact that, capitalizing on oil and gas revenue will go a long way to augment African countries’ participation through the oil and gas product life cycle.
He made the statement recently during an exclusive interview granted Evolve Media Holdings Ltd. To him, the African oil and gas manufacturers lack diligent examples to follow on the continent.
In his opinion, for oil and gas producing companies to mitigate the ever slumping economies that solely depend on oil and gas revenue, Ayuk averred some majority of the majors have been diligently diversifying their portfolio from mostly oil assets into a larger natural gas portfolio, which is seen as having a much more sustained growing demand in the future than oil.
Also, some engaged in shifting their portfolio towards investing in renewable power generation, mainly solar and wind power. Thus, Others changed their names to projects which represent a change in the corporate profile from “oil and gas company” to an “energy company”.
According to the Executive Chairman of the African Energy Chamber, there will be a rise in the demand of oil and gas on the continent because the “demand for oil and gas has grown every single year for the last century especially in Africa. Yet, the major challenge remains how companies will bounce back from this temporary storm with the coronavirus.
“Whatever happens in the next months in the oil and gas industry, that landscape has definitely caused us to implement different ways of functioning,” Ayuk decried.
Asked of what should be taken into account to re-boost on the financial aspects of these manufacturing companies and ensure a rise in demand with a goal to adjusting the prices of oil, Centurion Law Group boss maintained that, this can only be achieved through consolidation as survival of the fittest is the main rule at the moment because market participants do not mention it.
Africa therefore needs a strategic plan in order to stay in the game given the numerous setbacks experienced in the energy sector, heightened by the COVID-19 pandemic which has lure companies operating in the oil and gas sector to adopt precautionary measures.
Africa Shows Determination as Economic Growth, Projects Thwart
He maintained that, in spite of what is happening around the world at the moment, many African countries have shown proof of optimism and determination to build a brighter future for its people amid the downswing economic growth and projects on hold.
The pandemic has lured a good number of projects that could otherwise contribute generously to the economic growth on hold in the oil and gas sector to either be terminated or annulled. “In Africa, we have a good number of emerging oil and gas economies, some of which were to bring online some large scale world-class projects,” Ayuk asserted while recalling that the present economic atmosphere have either led to the cancellation, termination and suspension of these projects which remain uncertain while others simply had to declare a force maker.
Given the fact that the oil and gas industry is one of the largest contributors to economic growth within the continent, the shrinkage in the pace and cancellation of plans in the sector goes a long way to affect employment rate as companies put on safety measures to cinch work proceeds with ongoing projects.
He added, in the face of this unprecedented epoch, companies are having to reduce their staff, make resource reallocation and act in response to what is happening in the world. Inauspiciously, most of the jobs lost are directly related to the pandemic. And, the oil price war is an unavoidable reality Africa would like to avoid. However, the phenomenon is experienced even beyond the oil and gas industry. Hence, numerous industries are currently suffering loss of income due to the lockdowns. They have to lay-off most of their employees in order to have their businesses survive the crisis.
“The impact of country lockdowns and international travel restrictions is limiting companies’ ability to move essential personnel, subcontractors and equipment to and from operations site and is having governments rework their national budgets to match the current economic climate. We are also seeing a number of services companies decrease their investment portfolio in economies that were on their path to peak long term growth and governments having to restrategise their growth plans,”
He further recalled that energy poverty remains very rampant in Africa with over 260 million people living without proper access to reliable energy in Sub-Saharan Africa. Going by his words, “Africa will never achieve its full potential if it cannot power its industries, services or even households.” This is due to the fact that, the continent has to make its own decisions especially with respect to energy transition and the approaches each country take in implementing energy mixes.