In this new oil market supercycle, African operators turn to local content for help
Apr 01, 2022 by Energy ConnectsEconomic recovery, geopolitics and the overall global energy demand and supply have impacted the price of both crude oil and natural gas in the last couple of months. A reality that has gotten genuine industry players working, especially within Africa. On the continent, oil players are ramping up activity first for their domestic markets, and of course to supply international markets that are in dire need of some respite in the face of the uncertainty and chaos caused by the Russian invasion of Ukraine.
In this context, agitation and worry will not solve the problems, only strategic business decisions will. It is no news that several oil and gas asset owners in Africa are eager to get their fields to production after three to four years of stagnating performances. But while there is hydrocarbon to be produced and current prices are certainly attractive, the equation will be incomplete without the deployment of the right assets in the hands of the right team.
Every day and possibly every hour, a meeting is being held across African energy capitals. In Lagos, Luanda, or Brazzaville, the focus is on investments, project execution, and asset purchase/lease. But how many of these negotiations will transition into profitable and executable ventures? This is not the time to take a chance on new market entrants, but the time to move forward with experienced and verified stakeholders who know what’s at stake and can act quickly.
In Nigeria, credible intel has it that the management of West Africa Exploration & Production (WAEP) and General Hydrocarbon Limited (GHL) have formally engaged the Century Group for the development and production of their assets, all in the same week. The former has a substantial interest in OML 71/72 where lies the Kalaekule field, while the latter is the lead stakeholder in OML 120 where it is planning the redevelopment of the Oyo field.
In selecting Century Group, both companies have concretely chosen to use the in-country assets of arguably the only Nigerian wholly-owned company providing FPSO solutions at the moment. The company has indeed a proven track record of safe operational framework and of over 30 percent cost savings even in the heart of the COVID 19 lockdown. When historic times call for urgent solutions, it turns out that local content is the most strategic, prudent, and cost-efficient decision for new hydrocarbons producers like WAEP and GHL.
Over the past decade, several Nigerian energy companies have undoubtedly proven that they are energy infrastructure experts and have boosted indigenous capacity and participation. But none has really compared to the Century Group who is now well-positioned to support upcoming projects in the country.
And this is just the beginning. More African names like UTM Offshore Limited or PFL Engineering Limited can now be trusted as capable partners to shape the future of the Nigerian energy industry post exit of IOCs. In the same vein, the sale of crucial energy infrastructure should be based first on the criteria of capacity to operate sustainably rather than solely on finance.
Nigeria has a huge budget deficit (NGN 6.25tn, or approximately 3.39 percent of its GDP) and is heavily reliant on foreign debt financing. For an economy that heavily relies on oil, the current reality is a great opportunity to support recovery and help the country meet its fiscal and infrastructural obligations to the citizenry through direct earnings.
Let the fields come alive and most of all, let the country’s most competent ones lead the charge.
More Thought Leadership

National Oil Companies in the GCC can absorb the cost of the energy transition for now
Mar 26, 2023
Addressing the invisible: Tackling Scope 3 emissions in your value chain
Mar 23, 2023
Holistic reinvention key to success in 2023 in the face of major challenges
Mar 20, 2023
Saudi Vision 2030: Oil and gas sector expected to take a lead
Feb 27, 2023
Journey to Net Zero – what does 2023 look like for ESG and Energy Transition
Feb 21, 2023
Ethical leadership on sustainability and productive development
Feb 13, 2023
India Energy Week provides a roadmap for a sustainable future
Feb 08, 2023
Domestic Energy security cannot be bought at the expense of others
Feb 06, 2023
Priorities and enablers for India to realise net zero by 2070 targets
Feb 06, 2023