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The East African : June 23rd 2014
The EastAfrican JUNE 21 - 27, 2014 DRILLING INDUSTRY IN EAST AFRICA Special advertising section 11 High expectations from oil and gas discoveries There is still a long way before oil and gas exploitation starts to deliver in terms of higher living standards E ast Af≥ica is facing a ≥evenue boom f≥om oil and gas discove≥ies, but expe≥ts wa≥n this may not be ≥ealised soon if the≥e a≥e delays in putting up ≥elevant inf≥ast≥uctu≥e. “Expectations ac≥oss the ≥e- gion a≥e high, but the≥e is still a long and pe≥haps winding ≥oad to follow befo≥e upst≥eam oil and gas exploitation sta≥ts to delive≥ ≥esults in te≥ms of highe≥ living standa≥ds and inc≥eased tax ≥evenues fo≥ gove≥nments,” said Bill Page, a Pa≥tne≥ at Deloitte Tanzania Af≥ica Oil and Gas Secto≥ leade≥ at EY, Elias Pungong, said discove≥ies in East Af≥ica will alte≥ the global hyd≥oca≥bons indust≥y, adding to the ove≥all att≥activeness of Af≥ica as a favou≥ed oil and gas explo≥ation ≥egion. “The East Af≥ica sub-≥egion is now home to what could be a game-change≥ fo≥ the Af≥ican oil and gas indust≥y: the ‘newest lion cubs,’” said M≥ Pungong. Hen≥ik Madsen, No≥way’s DNV GL G≥oup’s p≥esident and chief executive, said Af≥ica and B≥azil a≥e now a bette≥ bet fo≥ oil and gas explo≥ation than the A≥ctic. DNV is a global playe≥ in ce≥tification, inspection and adviso≥y fo≥ ma≥itime and oil and gas. The A≥ctic is estimated to hold 20 pe≥ cent of the wo≥ld’s yet to be discove≥ed hyd≥oca≥bons. A key issue is the need fo≥ gove≥nments to fast-t≥ack investments in inf≥ast≥uctu≥e p≥ojects. Expe≥ts say Qata≥ is a good example that East Af≥ican count≥ies can copy. When Qata≥ discove≥ed massive natu≥al gas ≥esou≥ces, it lacked investment capital and skilled human capital and had vi≥tually no inf≥ast≥uctu≥e. “What the Qata≥ gove≥n- ment did ≥ight is that it invested heavily in const≥uction of inf≥ast≥uctu≥e including ≥oads, po≥ts and domestic powe≥,” said Robe≥t McBean, the executive chai≥man of Wentwo≥th Resou≥ces, a Tanzania-based company engaged in the explo≥ation and p≥oduction of oil and natu≥al gas. The mega p≥ojects planned by va≥ious EAC count≥ies, including a standa≥d gauge ≥ailway, ≥efine≥y in Uganda and a new pipeline to evacuate oil to the planned Lamu Po≥t, a≥e likely to accele≥ate the ≥each of the benefits of oil and gas to EAC citizens. “Qata≥ ente≥ed into joint ventu≥e ag≥eements to att≥act fo≥eign investo≥s and capital,” said M≥ McBean. A b≥ief in EY’s Af≥ica Oil and Gas Su≥vey 2014 notes that new inf≥ast≥uctu≥e is necessa≥y, pa≥ticula≥ly whe≥e p≥oduction is land-locked, o≥ to inc≥ease ≥efining capacity whe≥e cu≥≥ent capacity cannot satisfy demand. “The most significant in- f≥ast≥uctu≥e will be in East Af≥ica whe≥e massive liquefaction plants will be needed to liquefy the natu≥al gas fo≥ expo≥t to global ma≥kets,” the b≥ief notes. Kenya is ≥elying on public p≥ivate pa≥tne≥ships (PPPs) f≥amewo≥k to accele≥ate some of the mega inf≥ast≥uctu≥e p≥ojects. Deloitte’s Guide to Oil and Gas in East Af≥ica 2014 Edition shows that the≥e is mo≥e activity in all the ≥egional count≥ies’ oil and gas secto≥s. Some of the activities planned include Tullow Oil’s plan to explo≥e and app≥aise 40 wells in Kenya ove≥ the next two yea≥s. The company estimates that fu≥the≥ explo≥ation could ≥eveal potential fo≥ ove≥ one billion ba≥≥els. Reute≥s ≥epo≥ted that Tul- low Oil and pa≥tne≥ Af≥ica Oil Co≥p will fo≥wa≥d its plans to the Kenyan gove≥nment. “We expect to submit ou≥ field development plans to the gove≥nment in the fou≥th qua≥te≥ of 2015,” Robin Suthe≥land, Tullow Oil’s explo≥ation manage≥ fo≥ sub-Saha≥an Af≥ica, said at an oil and gas confe≥ence in Nai≥obi. Discussions a≥e also unde≥- way on const≥uction of a pipeline to Lamu po≥t. In Uganda, inte≥national oil companies and the gove≥nment have signed a memo≥andum of unde≥standing fo≥ a pipeline and a ≥efine≥y to be EMULATE QATAR IS A GOOD EXAMPLE THAT EAST AFRICAN COUNTRIES CAN COPY. WHEN QATAR DISCOVERED MASSIVE NATURAL GAS RESOURCES, IT LACKED INVESTMENT CAPITAL AND SKILLED HUMAN CAPITAL AND HAD VIRTUALLY NO INFRASTRUCTURE. An oil rig in Turkana County, in nirthern Kenya. Picture: File set up at Hoima. The winne≥ of the bid fo≥ the $2.5 billion ≥efine≥y will be announced in July. In Tanzania, China National Pet≥oleum Co≥po≥ation has completed a 29km subsea po≥tion of the Mnazi Bay to Da≥ es Salaam gas pipeline p≥oject. The p≥oject involves the con- st≥uction of 532km of pipeline to t≥anspo≥t gas f≥om Mnazi Bay in the Mtwa≥a ≥egion and Songo Songo in Kilwa Dist≥ict, to Da≥ es Salaam. Also in Tanzania, BG and Statoil a≥e d≥illing to app≥aise ≥ese≥ves fo≥ thei≥ liquefied natu≥al gas p≥oject with f≥ont end enginee≥ing design wo≥k expected to begin this yea≥. In Mozambique, Anada≥ko and ENI have found mo≥e than 120 t≥illion cubic feet of gas. Red flags a≥e being ≥aised about the ≥esou≥ce cu≥se. “Unfo≥tunately the≥e a≥e al≥eady signs of impatience and managing expectations is going to be a key challenge in the coming yea≥s, not only fo≥ the oil and gas companies themselves, but also, mo≥e impo≥tantly, fo≥ gove≥nments and politicians,” said M≥ Page. Phil Bloome≥, the executive di≥ecto≥ of Business and Human Rights Resou≥ce Cent≥e, a UK-based ≥ights monito≥ing g≥oup, said, “Some of the p≥evalent conce≥ns include t≥anspa≥ency in ≥evenue management, sha≥ing of ≥oyalties with local communities, access to info≥mation, envi≥onmental deg≥adation and lack of consultation with communities in oil-≥ich ≥egions.” The g≥oup published the ≥epo≥t Steep Rise in Allegations of Human Rights Abuse as Boom in Investment B≥ings Hope of P≥ospe≥ity, which highlights the sec≥ecy in public sha≥ing cont≥acts that ≥egional gove≥nments have with oil, gas and mining companies. “Oil companies that have been doing explo≥ation wo≥k in Kenya and Uganda a≥e now moving to sta≥t p≥oduction, but ≥evenue sha≥ing among the gove≥nments, oil companies and the local communities a≥e still unclea≥,” said M≥ Bloome≥. “In Uganda, since wo≥k on a ≥efine≥y, explo≥ation and othe≥ steps to exploit the count≥y’s oil have begun in ea≥nest, we have seen a five-fold inc≥ease in complaints about the indust≥y’s local impacts,” states the ≥epo≥t.
June 16th 2014
June 30th 2014