The 6th African Petroleum Congress & Exhibition was held in Abuja from 15 – 17 March 2016. The event was an excellent opportunity for the African Petroleum Producers Association (APPA) and participants in the African petroleum industry to take stock of the sector.
The theme of the conference was "positioning African petroleum for global development and value addition". Government representatives, academics, consultants to the industry and oil company representatives all contributed to the conversation and what was striking was how many stakeholders referred to the same issues. The principal themes that emerged were:
Partnership between host governments and oil companies: There was a general recognition that the dynamics of the partnership had changed and that current circumstances had the potential to strain this relationship. Governments now needed to work harder to compete for IOCs' limited capital. The benefits of approaching such relationships with flexibility (rather than defining them solely by contractual commitments) were discussed.
Fiscal terms are not host governments' only policy tool: Remedying ineffective bureaucracy, controlling corruption and encouraging transparency were all highlighted as ways to enhance a petroleum regime's investment proposition.
Petroleum as a source of energy and facilitator of domestic growth: Given the conference's location, Nigeria was often used as an instructive example by speakers. There was a sense of frustration that Nigeria's focus often seemed to be on international markets rather than on adding value locally. The lack of a domestic petrochemical and refining industry and the failure to utilize flared gas were highlighted as examples of this trend. Encouragingly some Nigerian companies were focused on addressing these issues. Asharami Energy reported on its integrated upstream and downstream strategy: developing Nigerian gas supplies for local power plants.
Protecting against future oil price shocks: Some speakers asked whether governments were sufficiently well-prepared for the oil price shock and whether sovereign wealth funds should be established to smooth out the problems caused by the commodity cycle.
The plunging oil prices of the past 18 months have been deeply felt by members of APPA and it was inevitable that current market conditions featured heavily in most discussions. Nonetheless, many were optimistic about the industry's resilience and that market conditions would produce opportunities as well as challenges. Two notable success stories related to the Lagos Deep Offshore Logistics Base (LADOL) and the TEN project in Ghana.
LADOL was a great example of the advantages of utilising local content. It is the largest rig maintenance and repair facility in Nigeria and has enhanced Nigeria's standing as a hub for West Africa. The USD 600 million free zone was developed solely with private finance and is the single largest 100% private capacity development in Nigeria's history.
Tullow Oil reported on the decisive early actions it had taken to position the company for future growth. It was also able to report on excellent progress with its USD 5 billion TEN development in Ghana, from which first oil is expected to flow in the next few months.