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African Business 2020 edition

  • Text
  • Agenda
  • Business
  • Invest
  • Union
  • Industry
  • Sustainable
  • Development
  • Regions
  • Trends
  • Sectors
  • Afcfta
  • Trade
  • Investment
  • Africa
  • Global
  • Continent
  • Projects
  • Economic
  • Infrastructure
  • Countries
A unique guide to business and investment in Africa. Global Africa Network is proud to launch this inaugural edition of African Business 2020 at a time of energetic planning for a prosperous future for the continent. The African Union’s Agenda 2063 is much more than a document about a hoped-for future, it contains concrete goals and deliverables. The Programme for Infrastructure Development in Africa (PIDA) and the development finance institution, the African Development Bank (AfDB) are already rolling out valuable projects that are changing the reality on the ground in vital areas of the African economy. Perhaps the most significant event of recent times is the signing by African leaders of the African Continental Free Trade Area agreement (AfCFTA) which will bring together all 55 member states of the African Union and cover a market of more than 1.2-billion people. African Business 2020 has articles on all of these recent trends, plus overviews of the key economic sectors and regional and country profiles. In 2019 Ethiopian Prime Minister Abiy Ahmed received the Nobel Peace Prize for peace-making efforts in his region. The economic dividends of peace are beginning to be felt. In 2020 South African President Cyril Ramaphosa assumed the mantle of AU Chairperson. He brings to the role considerable experience in conflict management, constitution-writing and seeking consensus. Global Africa Network is a proudly African company which has been producing region-specific business and investment guides since 2004, including South African Business and Nigerian Business, in addition to its online investment promotion platform www.globalafricanetwork.com

OVERVIEW Oil and gas

OVERVIEW Oil and gas Huge new gas finds could be transformative. Sector Insight Kenya is the world’s newest oil exporter. By 2030, Mozambique could be the world’s third-biggest producer of liquified natural gas (LNG). The year 2030 is also the year in which natural gas is predicted to supplant coal as the number two fuel globally. According to PwC Africa’s Africa oil & gas review 2019 (from which these predictions are taken), new oil and gas discoveries, improved prices and investor interest have collectively led to a range of positive developments in the sector: investment in infrastructure, better regulation and governance, the development of relevant skills and the deployment of advanced technology. The potential is vast for both oil and gas. The number of African countries where successful exploration has taken place continues to rise. It now stands at 28, with new reserves unearthed in Ghana, Niger, Mozambique, Uganda, Kenya, Senegal, Mauritania, South Africa and Tanzania. New finds in the oil and gas sector have significant downstream repercussions, fertiliser plants and refineries become viable for example. Africa’s proven reserves of oil were calculated in 2018 to be 125.3-billion bbl, which is about 7% of global reserves and the continent exported 7.1-million bbl/d which is about 10% of world activity. Africa has 209.6tcf of proven gas reserves (2018). Almost all of the continent’s gas is produced by three North African countries (Algeria, Egypt and Libya) and Nigeria and Angola. But that is set to change. Africa’s refineries produce 2.1-million barrels of oil per day but the continent consumes 4 mbpd. At least 30 countries have national oil companies (NOC) which aim to regulate and control the hydrocarbon sector. Foreign countries and companies often try to partner with these entities. The oil majors such as Shell, BP and Total have long been investors in the continent but since 2000, China’s interaction with Africa has increased. Sinopec, formerly the China Petrochemical Corporation, is the biggest such company in the world and is one of several Chinese entities involved in more than 20 African countries. Japanese company Mitsui & Co has invested heavily in coal and gas projects AFRICAN BUSINESS 2020 44

OVERVIEW in Mozambique. These investments are supported by the Japan Oil, Gas and Metals National Corporation (JOGMEC). Gas Massive finds off the coast of Mozambique will potentially change the economic trajectory of that country. Senegal and South Africa are among a number of other countries to have reported new discoveries. As the CEO of the South African Oil and Gas Alliance (SAOGA), Niall Kramer, told the inaugural Mozvest conference in 2019, “It’s happy hour for gas globally – maybe until 2023.” The conference brought together business figures from all over Africa to explore business relationships between South Africa and Mozambique. Kramer argued that a multinational collaboration can drive industrialisation, create jobs and improve economic growth. He pointed to the large scale of some investments in Mozambique (“ENI in Mozambique has reached FDI for -8-million on Coral FLNG,” he noted) and suggested that South Africa should transform into a gas-driven economy. From the Mozambiquan perspective, Lourenço Sambo, Director General of APIEX Moçambique, noted that megaprojects require extensive systems of complementary infrastructure and that the success of one industry spurs the growth of another. The country’s development corridors are designed to connect areas of trade and industry while tax incentives are playing a big role in attracting FDI. Standard Bank estimates that about 8-billion needs to be spent on converting Mozambique’s resources into LNG and Domgas in the period 2017-2025. The Rovuma Basin is the site of three large LNG projects. Complementary industries and service companies will have be set up around these sites and the size of some of these plants will mean that new towns will be created with populations needing schools, shops and services. Algeria has three transcontinental export gas pipelines, two to Spain and one to Italy. However, there are very few trans-border pipelines elsewhere in Africa. A natural gas pipeline is being constructed between Tanzania and Uganda which will bring in about -billion in foreign investment to 2025. Oil In 2017 African countries accounted for 13% of global crude oil trade. Nigeria is the continental giant and earned .6-billion in petroleum exports in 2018. Other oil exporters are Algeria, Angola, Egypt, Cameroon, Equatorial Guinea, Gabon and Chad. Chad’s oil exports were responsible for 89% of that country’s export earnings in 2018. Angola, once a giant in the field, has experienced steep declines in production volumes and the country’s offshore oil fields are nearing the end of their lives. The country has few other major industries although it is now looking to expand the natural gas sector. The decline in revenues has resulted in the country having to accept an IMF loan. Altogether there are now 21 African nations that have petroleum among their most important commodity exports. Senegal has found oil offshore and intends ramping up production. In September 2019, Kenya joined the group of oilexporting countries when it sent crude oil to the value of -million to China. Kenya’s oil reserves are estimated at 750-million barrels. Uganda has significant reserves. At least 14 countries were either planning to build new refineries in 2018, or upgrade existing facilities, according to Africa oil & gas review. ■ Online Resources Egypt General Petroleum Corporation: www.egpc.com International Association of Oil & Gas Producers: www.iogp.org Mozvest: www.mozvest.com Petroleum Technology Association of Nigeria: www.petan.org South African Oil & Gas Alliance: www.saoga.org.za South African Petroleum Industry Association: www.sapia.org.za 45 AFRICAN BUSINESS 2020

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