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

 The few exprocreating what should benefit the many

 Plunder by the present generation what should build a sustainable future

 Beliefonomics Theory & Outlooks

 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?

Huge surprises maybe hidden in

Countries that are underexplored?

 Bakassi Peninsula – Gulf of Guinea

 Nigeria - Niger Delta
 Ghana – offshore
 Sangomar Deep, Sangomar Offshore
and Rufisque Offshore
 late 2016/early 2017 Liberia –
ExxonMobil exploration
 Africa’s Oil & Gas Reserves & Production
 New discoveries of oil & gas resources doesn’t guarantee
Growth or development / sustainability
Proven
Country Reserved Production GDP %
Gas
Oil Oil Billion
(MMBBL) Gas (Tcf) (MBbls) (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 16 191,000 45 0.6 -0.2
 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

Sustain
production

Focal
Maximize point
Recovery

Diversify
Energy portfolio

Modified Ekeh, M.K

 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 : C n = Σ (Cen + Cec + Ce + Ces)

  enable success in the sustainability criterion, the sum of all the capitals cost
To
should be greater than or equal to constant for all time horizons, i.e. (C n +Cen + Ce +
Ces + Cec) t constant for any time, (t) provided that
 What Next for Harnessing Africa’s Resources
Sustainably?

Capturing the value of natural resources for

the society (Rent = profit taxes, Royalties,
minority Equity Stake & / Rate..

Discover of natural
Resources through
attractive Govt.
incentives & E&P A C
projects investments
Direct the savings investment
into building capacity stock in
the region, invest wealth
oversea & build domestic
capacity to invest locally.
B
Managing the physical process
of resources extraction, such as
Incentives to local owners,
building multi-functional
infrastructures & minimize
Sustainable environt’al damage
Pathway
Balance Btw consumption & the future
E D (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 & Investment in R&D

matured fields & develop local tech.

Full role in PSCs negotiation to NOCs Autonomy

allow more rent capture, tech.
transfer & human capital building

Board members should be on

merit with experience &
Capable talents
qualifications

Capability of top mgt. with Leadership integrity

Appropriate professional
Background & ethics
Conclusions

Thank You!