Oilfield Services Companies Represent Important Opportunities for Africa’s Energy Sector in 2022 (By NJ Ayuk)
Barkindo is right, and it is natural that in this meeting he highlights the fundamental role of the big and well-known companies over the supporting players.
JOHANNESBURG, South Africa, December 2, 2021 / APO Group / –
By NJ Ayuk, President of the African Energy Chamber (https://EnergyChamber.org/)
Oil and gas in Africa, especially in the Central African region, is just beginning to accelerate, OPEC Secretary General HE Mohammed Barkindo said at a meeting of major oil companies a few months ago, and the future is especially bright in sub-Saharan Africa.
“Since a significant part of the African population still lacks access to electricity and clean cooking solutions, the role of IOCs and national oil companies has been emphasized,” he said. “The time for oil and gas in Africa is just beginning, as hydrocarbons provide the best solution for Africa’s development and energy transition.” He concluded.
Barkindo is right, and it is natural that at this meeting he highlights the critical role of large and well-known companies over supporting players. But we must not overlook the contributions of another sector of the industry: oil service companies (OFS) that help keep oil and gas moving forward, and drive job creation and entrepreneurship in the process.
This message was emphasized over and over again during the CEMAC Business and Energy Forum in Congo Brazzaville, a member of OPEC and a major oil producer in Africa. I had the honor of being invited by HE Bruno Itoua, Minister of Petroleum of the Congo and HE Gabriel Mbaga Obiang Lima of Equatorial Guinea.
Hearing so many companies talk about their challenges and the good work they do serving the oil and gas industry reminded me of their importance to the industry and local economies. That is why a section of the Africa Energy Outlook 2022 of the African Energy Chamber is dedicated to the OFS market and opportunities in the short term and during the energy transition. Released this month, the report covers myriad topics of interest to stakeholders navigating the oil and gas environment in Africa, from discussions of free cash flow and the effects of COVID-19 to how conversion initiatives of Gas to power can provide economic opportunities while being the lynchpin. of an Afrocentric energy transition.
Oilfield services include activities such as engineering and procurement, well construction, drilling, seismic data, subsea vessels, and much more. In fact, because of all the products and services needed to support the oil and gas industry, OFS creates jobs around the world, including in Africa. As noted by GSDRC, an association of research institutes, think tanks, and consulting organizations, when oil companies purchase goods and services from suppliers and contractors in the country (often as a result of local content mandates), it triggers an effect multiplier. These companies employ people and purchase goods and services on their own account, which ultimately has a much greater impact than direct employment. Service activities tend to be labor intensive, which means that there are many jobs to fill and most of them require only basic skills. Some service companies are not technical at all – consider companies like Kussema Lda. The Mozambican company run by Dita Mpfumo Honwana supplies uniforms, cleaning and catering services for the natural resources sector. This is the same as Alfredo Jones’s Aldulco, Pablo Memba’s Equatorial Resources, Equatorial Guinea’s Bay Matrix or Patrocle Petridis team at SCLOG or many of SNPC‘s subsidiaries serving the oil and gas industry. Let’s not forget the big international service companies like Schlumberger, Baker Hughes, Halliburton, Oceaneering, Frank’s International, and many others. They provide many jobs to the local economy and drive growth.
All in all, jobs like these provide a springboard for additional training and even more employment.
And, as we all know, without more jobs, Africa’s future is in jeopardy. Currently, unemployment is not only increasing, it is also increasing at a record rate. The African Development Bank warned before the pandemic that at the current rate, 100 million young Africans will be unemployed by 2030. It’s easy to imagine how much worse things are now, and it’s no wonder they responded to a survey by Forbes Job. and Djembe. Communications said the jobs were more important than eradicating corruption, health and sanitation or political stability, among other issues.
Right now, the future is a bit hopeful. Oil has reached a new record high, the oil and gas industry is coming back to life, and energy projects in Africa, particularly those associated with the growing market for liquefied natural gas (LNG), are expected to boost employment. in OFS and in the industry in general. . I think it will be great if Cameroon, Gabon, Equatorial Guinea and Congo accelerate the implementation of their gas monetization plans. There has been too much talk and I think citizens were going to see the action through implementation. The job of the African Chamber of Energy is to support and be courageous enough to hold leaders accountable.
Despite how closely linked the OFS is to the oil and gas industry, it is no wonder that their fortunes are intertwined or that 2020 was not the best year in the history of the OFS. Revenues were about half what they were in 2014, when the OFS industry was valued at $ 80 billion.
Today, however, the forecast is optimistic, according to the 2022 Africa Energy Outlook, especially as the continent recovers from pandemic turmoil and countries like Mauritania / Senegal, Mozambique and Nigeria act on their LNG aspirations. . The world needs African LNG (global demand for LNG could rise 14% by 2025 from 2020, according to Bloomberg) and to reach its full potential, African LNG will need indigenous workers to fill jobs in all facets of OFS . Equatorial Guinea, Cameroon and Congo must act quickly and resist the temptation to feel comfortable or they will be left behind. We need to leave the Big Ego and move. Getting rid of BEAC forex regulations against job cuts and energy will be a start and send the right signals to utility companies.
There is hope, particularly promising is the EPCI segment, which includes engineering, procurement, construction and installation. The 2022 Africa Energy Outlook predicts that EPCI “will grow significantly thanks to LNG project construction awards.” In fact, by 2025, annual revenue should reach $ 43 billion.
These include Coral South Floating LNG (FLNG) in Mozambique and NLNGSevenPlus in Nigeria.
Mozambique’s first offshore project, Coral South FLNG, uses a floating LNG plant with a capacity of 3.4 million tonnes connected to six subsea wells. All of its production is already committed to BP. NLNGSevenPlus, Train 7 of the LNG project developed by Nigeria National Petroleum Corporation (NNPC) and joint venture partners Royal Dutch Shell, ENI and Total, will add considerable capacity to Nigeria’s LNG production and make it even more competitive in the global market.
In addition to these and other LNG projects, including Mozambique LNG, which is temporarily on hold as a result of nearby insurrections, onshore oil projects in Uganda are also bolstering the EPCI segment. Maintenance services are also on the rise as onshore projects in Algeria and Libya come back online.
If there is a soft market for OFS in Africa, it is drilling. That’s largely due to two factors: oil price volatility and the rise of gas projects, which are less drilling-intensive.
Overall, however, OFS is benefiting from the return to post-pandemic activity. As the market continues to recover and evolve, we are likely to see OFS restructuring for long-term growth, becoming more sustainable, and diversifying to find additional opportunities in alternative energy.
That means they will create jobs for Africans in the years to come.