Re-Engineering Africa’s Economy through Oil and Gas Resources Diversification: maximizing potentials for sustainable future development.

Engr. Modesty Kelechukwu Ekeh

MEng,CEng MEI SPE.

AOGC 2016 International Conference on Harnessing Africa’s Oil & Gas Resources Strategically.

Houston, Texas USA.

Outline

Introduction

History & Resources in Africa

The New Surge for Africa’s Oil & Gas: Hope or Hype?

Highlighted Challenges in the Oil & Gas Sector

Africa’s Hydrocarbon Resources Improvement Strategy

Re-Engineering Africa’s Economy through Oil & Gas Resources

What Next for Harnessing Africa’s Oil & Gas Resources Sustainably?

Recommended 5Nth – Hypothesis

Introduction

“The solutions of yesterday, can’t solve the problems of tomorrow”

History & Resources in Africa

History of Plunder Plunder means two things in respect to natural resources

Beliefonomics Theory & Outlooks

The few exprocreating what should benefit the many

Plunder by the present generation what should build a sustainable future

The most dismal element of the dismal science

Its outlook is based on upon conjecture, fantasy & false modesty

Qualifying themselves on the basics of “whom they know, not what they know”

Exhibit an abundance of attitude, but a dearth of facts

Why’s Africa’s oil & gas resources a concern?

Oil & gas is of critical importance to the African economy

12% of global energy supply depends on Africa

The global oil & gas industry needs Africa’s resources to accomplish it’s target of bring on stream nearly 50 million b/d of new capacity btw now & 2030.

The New Surge For Africa’s Oil & Gas

Africa’s Hydrocarbon Potentials

According to the World Bank, International Energy Agency (IEA) and Organization of the Petroleum Exporting Countries (OPEC); 20 out of 54 countries in Africa exports oil.

An estimated 100 billion barrels of oil remain offshore Africa, waiting to be discovered. Since 1980, Africa’s proven reserves of natural gas have grown over 140%.

The Sud province – north Africa

Assessed for undiscovered, technically recoverable oil & gas

USGS – estimated mean vol. of 7.31 billion barrels of oil, 13.42 trillion of cubic feet of natural gas & 353 million barrels of natural gas liquid .

Sources: U.S. Department of the interior,

U.S. Geological Survey’s World oil & gas Assessment

Appetites for Africa’s Resource

Africa’s Hydrocarbon Potentials

Sedimentary filled in the Southern Sudan

As at the time of the assessment, the province has 113 – oilfields, 18 – in Chad, &95 – in Sudan

Modified after Mohamed & others (2002), and Dou & others (2007)

Undiscovered Exploration Prospects?

Modified after Mohamed & others (2002), and Dou & others (2007)

How much Hope is left for the undiscovered?

Bakassi Peninsula – Gulf of Guinea Nigeria - Niger Delta Ghana – offshore Sangomar Deep, Sangomar Offshore

and Rufisque Offshore late 2016/early 2017 Liberia –

ExxonMobil exploration

Huge surprises maybe hidden in Countries that are underexplored?

Africa’s Oil & Gas Reserves & Production

CountryProven

Reserved Production GDP %

Oil (MMBBL) Gas (Tcf) Oil (MBbls)

Gas Billion (Tcf) 2015 Yr 2016 Yr 2017 Yr

Libya 48.4 1,505 360,000 2.4 2.2 2.6

Nigeria 37.1 5,118 2,327,000 1.36 2.57 3.1

Angola 12.7 309,800 1,840,000 4.8 4.9

Algeria 12.2 4505 1,885,000 3.15 3

Egypt 4.4 2,186 680,500 3.8 3.9

Rwanda 0 2.00 7 7 7.5

Tanzania 0 47,000 55.1 7.2 7.1 7.1

Mozambique 0 198,000 152 7.2 7.3 7.3

DRC 180 20 180 8 8.5 9

Ethiopia 430 5 9.5 10.5 8.5

South Africa 15 16191,000 45 0.6 -0.2

New discoveries of oil & gas resources doesn’t guarantee Growth or development / sustainability

Highlighted challenges & opportunities in the oil & gas sector

Limited Refining Capacity

Oli economy minimal linkages to other sector

Political interference, uncertainty & delays in passing laws, energy policies are blocking growth, development & investment.

Insecurity, oil bunkering & political instability

Poor physical infrastructure & corruption / ethics

Lack /retaining of skilled resources in the region

High set-up cost of projects & limited access to funding

No clear and attractive legislation / regulation framework

Taxation and local content requirement

Opportunities

New exploration blocks on offer through competitive bidding round – driven by govt. desire to promote E&P activity

Independent power Producers (IPPs) in areas with a shortage of power supply

Liquefied Natural Gas (LNG) plant engineering & construction for both export & import

Pipeline engineering & construction

Building refineries through partnership initiatives

Local content supplier & skill / knowledge development

Industrializing gas-based electricity generation

How about other gas monetization projects for local consumption, such as methanol, fertilizers - Agro development?

Is Africa Drowning in a pool of Oil boom? First Exploration well – 1938 Vs Development in Africa

Creating shared Prosperity & Community Development

Impoverished continents characterized by disease epidemic, ethic violence, economic stagnation

Strengthening local livelihoods and economic development can prevent history from repeating

Oil & gas Reserves Sustainable Strategy

Modified Ekeh, M.K 2013

Steps to Sustain Hydrocarbon High Expectation

Focal

pointMaximize

Recovery

Sustain

production

Diversify

Energy portfolio

Modified Ekeh, M.K 2013

Issues of Concern?

Further cuts in fuel

subsidies are

expected

The index adopted from information theory & measures the order (disorder) observed within a particular system. The Index is denoted as:

Where H is the Index of variant for a portfolio of i options, pi is the proportional reliance on the ith option & ln is the natural logarithm.

Strategies for Re-Engineering Africa’s Economy through Oil & Gas Resources

Africa has only registered mixed success in creating development and growth

workable-economic frameworks is needed

Resources is collective in nature and should be channeled to support all humanity

Sustainable benefits that contribute to the social and economic well being of citizens in our host countries

Saving / investment of excess revenue generated from oil and gas boom

clean up the rot in the regional oil and gas industry

Refocus resources towards an economic development agenda

Need For Sustainable Energy Development

Modified Modesty, M.K 2011

Sustainability Conditions for Future Development

Sustainable energy future should be evaluated based on four value- judgment related to: Economy, Environmental, Social and Energy Security

Economic Capital : Cen

Environmental Capital : Cec

Social Capital : Ce

Energy Security : Cs

Natural Capital : Cn = Σ (Cen + Cec + Ce + Ces)

To enable success in the sustainability criterion, the sum of all the capitals cost should be greater than or equal to constant for all time horizons, i.e. (Cn +Cen + Ce + Ces + Cec) t ≥ constant for any time, (t) provided that 𝑑𝐶𝑛𝑡

𝑑𝑡≥ 0,

𝑑𝐶𝑒𝑡

𝑑𝑡≥ 0,

𝑑𝐶𝑠𝑡

𝑑𝑡≥

0, 𝑎𝑛𝑑𝑑𝐶𝑛𝑡

𝑑𝑡≥ 0

What Next for Harnessing Africa’s Resources Sustainably?

Sustainable

Pathway

B

E

C

D

A

Discover of natural Resources through

attractive Govt. incentives & E&P

projects investments

Capturing the value of natural resources for the society (Rent = profit taxes, Royalties,

minority Equity Stake & / Rate..

Managing the physical process of resources extraction, such as

Incentives to local owners, building multi-functional

infrastructures & minimize environt’al damage

Direct the savings investment into building capacity stock in the region, invest wealth

oversea & build domestic capacity to invest locally.

Balance Btw consumption & the future (investments). Managing the volatility of resources process, the slow clock –

ticking of resource depletion

Recommended for platform for more Growth

To increase exploration for new reservoirs & matured fields & develop local tech.

Full role in PSCs negotiation to allow more rent capture, tech. transfer & human capital building

Board members should be on merit with experience & qualifications

Capability of top mgt. withAppropriate professionalBackground & ethics

Investment in R&D

NOCs Autonomy

Capable talents

Leadership integrity

Conclusions