Expert advice for oil and gas operators and governments at Africa E&P Summit

patrchThe African oil and gas industry is currently in a "purple patch". (Image Source: freeimage4life/Flickr)Analysts and consultants speaking at last week's Africa E&P Summit, which was held in London, offered honest advice for operators and governments seeking success in Africa's emerging and established oil and gas markets

Al Stanton, oil and gas equity analyst and MD, RBC Capital Markets said that at present the industry is in a “purple patch” with the oil price high and costs still low.

"You’ve got to grasp it," Mr Stanton said in regard to making the most of opportunities remain cheaper, such lower CAPEX and OPEX costs.

“I don’t want to hear about leads, I want to hear about prospects,” he told delegates. “Only drill what you can afford to drill - be realistic and reasonable [and] have lots of hats ... We need the whole rabbit - some will only pull out the head and the ears.”

“The market generally underestimates the time for appraisal work,” he said, citing the Lokichar Basin in Kenya as an example. “People do worry about the development risk - this drags down the value curve.”

Mr Stanton urged operators to create a diverse portfolio: “You need an inventory where you can put something on the backburner and put some things forward.”

John Austin, director, AustIA, meanwhile, spoke about bridging the gap between governments and IOCs, saying IOCs need to be better at engaging with host governments.

In regard to consultants, he preferred to use the term "knowledge transfer" rather than fostering a culture of telling countries what to do when they already have good experience, as well as local knowledge.

To be a “good project in a good country”, Mr Austin said that clear petroleum contracts are essential. He added that while IOCs and governments may want some different things out of oil and gas projects, both want long-term sustainability.

He cited African countries at varying stages of petroleum development which may be in need of consultancy work to bridge the gap between IOCs and government - such as Angola, especially after the change of leadership in government and at Sonangol. Other countries he cited included Congo, Gabon, Cameroon, Cote d’Ivoire. Ghana, Mauritania, Mozambique, Senegal and Tanzania, as well as all non-producers.

“Bridging the gap is important, forget it at your peril,” Mr Austin advised in conclusion.

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