The Covid-19 pandemic triggered a crisis or rather a real collapse in the oil barrel price, down from approximately sixty US dollars just before the coronavirus spread to the current twenty dollars – with downward peaks before the end of April 2020, still significantly lower than the current twenty dollar average.
The origin of the price collapse is obvious, i.e. the closure of the purchasing countries’ economies and the major crisis in the car market, in particular, with the lockdown of all public and private mobility.
Moreover, for many producing countries, twenty dollars a barrel is a price well below break-even points and sometimes below the mere production cost.
Fifty-sixty US dollars a barrel is less than the cost of oil extraction in the Arctic, for example, and less than what is necessary to break even European and Brazilian biofuel production, but also US and Canadian shale oil. In Great Britain the oil barrel cost is 52.50 US dollars, while in Saudi Arabia the cost for producing an oil barrel is still 10 US dollars approximately.
Saudi Arabia, however, also needs much higher prices, at least from eighty US dollars per barrel upwards, to rebalance its public budget and seriously invest in production diversification, not to even mention the social stability of this country and, in other ways, that of the Russian Federation.
World demand has therefore plummeted, with a reduction of 29 million barrels per day from the over 100 ones a year ago.
This also means that storage capacity has reached the saturation point, with countries selling directly at sea, with a view to avoiding the high and unpredictable costs of overproduction and, by now, even at direct agreement low prices.
According to some specialized analysts, oil production will fall by at least 9.3 million barrels per year, until the time in which the coronavirus epidemic stops significantly. But this is a very optimistic forecast.
As is already seen, the most predictable effects of collapse in oil prices will most likely be the bankruptcy of small and medium-sized oil companies in the United States and Canada, where the banks had also strongly supported these companies with debt.
The economic, financial and social repercussions on these countries’ productive systems will be immediate and hard to manage.
Some extraction of US and Canadian “zombie” companies has continued, in view of cashing immediate liquidity, but, obviously, this cannot last very long.
It is hard to speak about public support for oil companies, considering their international corporate structure and, above all, because of the large mass of liquidity that would be greatly needed and would inevitably be drawn from other budget items, which are more socially necessary and with a strong psychological and hence electoral impact.
Nevertheless, the whole economy of producing and of typically consuming countries – which, for various wrong or short-term choices, have never established their own “OPEC” – will be severely affected by the vertical fall in oil prices, even though the US IAEA supported and legitimized the cut in production last April. The initial sign of an inevitable agreement between producers and consumers in the future, also at financial and investment level.
Furthermore, some producing countries have considerable financial funds to stand up to the fall in the oil barrel price, probably even until the end of the pandemic, but this is certainly not the case with other producers.
Saudi Arabia, the UAEs and Kuwait can last relatively long, albeit stopping their plans for economic expansion and diversification in the short term. Just think here of the Saudi Vision 2030 plan.
Iraq, Iran and Venezuela – with Iraq which is currently one of Italy’s largest exporters – will certainly have to withstand periods of extreme social crisis and even political legitimacy.
In Africa, Nigeria and Libya will face further political and social crises of unpredictable severity – in addition to internal wars by proxy, as in Libya.
China itself, the current largest oil buyer, has stopped as many as 10 oil shipments by sea from Saudi Arabia.
The tax break-even point reveals the complex internal dynamics and trends of manufacturers: Saudi Arabia is at 91 US dollars; Oman at 82; Abu Dhabi at 61; Qatar at 65; Bahrain at 95. Iraq is currently at 60 US dollars, but it should be noted that Iran is now at 195 US dollars, Algeria at 109 and Libya at 100- to the extent to which Libyan oil exports can work after General Haftar’s closure of oil wells- while Nigeria is at 144 US dollars and Angola has only acost + tax per barrel of 55 US dollars.
Currently Russia has a strong need for a tax per barrel of at least 42 US dollars, while Mexico 49 and Kazakhstan 58 US dollars.
In order to survive, the US, Canadian and Norwegian oil companies need an oil barrel cost of 48, 60 and only 27 US dollars, respectively, to simply break even.
Russia will probably be able to survive(“for ten years”, as it says, but probably exaggerating) a pandemic crisis, which has also hit its own population hard, by using its Strategic Fund, which is currently worth 124 billion US dollars.
Every year of crisis, however, is likely to cost Russia 40-50 billion US dollars.
Not to mention jobs, which could be reduced by over a million in Russia.
Saudi Arabia, too, is very liquid, and predicts a loss of over 45 billion US dollars at the end of the pandemic.
If Saudi Arabia makes another deal with Russia and manages to raise the oil barrel price to 40 US dollars, it is supposed to reduce losses to 40 billion US dollars annually.
Iraq, the second largest Middle Eastern exporter, covers 90% of its public spending with oil revenues.
In Iran and Iraq, the closing down of private companies has caused the almost total closure of oil production since last March.
Moreover, Iraq has no sovereign funds. Mexico has already started to implement “austerity” measures, although it has stated there will be no closures or staff cuts in the public sector.
The Nigerian GDP will certainly go below zero. Nigeria was the economy recording the greatest development rate in Africa, but since May it has had 50 million barrels unsold.
The unemployment rate will rise from 25% to well over 25 million people, but Nigeria has a very small Sovereign Fund that owns 2 billion US dollars.
There are very large differences among producing countries. There are countries with a financial power potentially able to further stand up to the collapse of oil prices and countries with an internal social and economic situation on the verge of collapse, as well as other economies floundering in a very severe crisis.
Just think of the Lebanon, which had already defaulted before the fall in oil prices. Obviously neither Saudi Arabia nor Iran will help it any longer.
This means that the producing countries with a more “liquid” financial situation can start buying oil assets – not at a very low cost – from their fellow OPEC competitors or even outside that OPEC protectionist framework, while the countries without long or short liquidity, will quickly be economically colonized by the strongest ones and this would make their economic autonomy irrelevant. Especially if they are, like Iraq, truly oil dependent countries.
The GDP for the current year, however, is expected to slightly decrease in Kuwait (-1%) while Algeria and Iraq are expected to immediately fall to a -5%, which could be fatal not only for their economy but also for their social stability.
Libya, just to remind us of a key country for our security, as well as for oil, will record an expected fall in GDP of almost -58%.
It is easy to understand what will happen and how much impact it will have on Italy.
The International Monetary Fund has also predicted a quick rebound in prices beyond the oil break-even point for the whole oil area between Africa and the Middle East as early as 2021, but the forecast seems to be completely unfounded, given the multi-year length of the buyers’ crisis and hence the inevitable fall in producers’ prices.
Even if the coronavirus crisis were to end in a month, which is highly unlikely, the economic outlook would not change radically even for 2021.
The fact is that, according to all the most reliable projections, the GDP of non-producing countries will fall even faster than that of oil-producing countries.
Certainly there is the temporary relief and redress of public accounts in the Middle East and North Africa (MENA) non-producing countries, which is estimated at around 3-4% of their GDP, but these are countries like Morocco and Jordan having little economic weight in their respective geo-economic regions.
There is also another factor to consider: the producing countries’ crisis adds to the much longer-standing crisis in the African countries exporting not oil, but food products.
I am here referring to Jordan, Mauritania and Morocco – which is still a leading country in the world production of citrus fruits, with companies cooperating with the United States – and to the wine-producing Tunisia.
The FAO sugar index has fallen to -14.6% – more than ever over the last 13 years.
The FAO index for vegetable oil is -5.2%. The dairy prices are currently falling by 3.6% and meat prices by 2.7%. Wheat prices, however, are expected to remain stable, although storage, and hence the future final cost, will increase from now on.
Certainly the “rich” producing countries, i.e. those with greater liquidity reserves, have already begun to inject liquidity and implement tax rebates.
Saudi Arabia has tripled VAT from 5 to 15%. It has also issued 7 billion US dollars of public debt securities that will fall due in 5, 10 and 40 years respectively, with a 5% planned restriction of public spending, and as many as 13.3 billion US dollars in support of small and medium-sized enterprises, with the nationalisation of 14,000 jobs in the most technologically advanced sectors.
Just to give an example of the most capitalized oil exporting country.
It is not even said that soon the Saudi and Emirates’ sovereign funds do not want to acquire – at selling-off prices – even the U.S. and Canadian shale oil industries undergoing an evident crisis.
Both in countries in crisis and in those with greater financial resources investment will be well diversified in the health or in the large infrastructure sectors. Investment will be made also in research and in the expansion of the oil sector, which will certainly start working again – as and probably more than before – at the end of the pandemic.
There will probably be an economic and financial rebalancing between the United States and Saudi Arabia, which have similar interests, both in the purchase of shale oil companies in crisis, obviously, but also in a closer direct financial relationship, considering that Saudi Arabia still holds 177 billion US dollars of North American public debt securities.
A record amount which could increase rapidly.
Obviously, in the darkest phase of the crisis, the objective of the financially sound OPEC countries will be diversification from oil to more technologically advanced and expanding sectors, such as health and pharmacology, particularly abroad, but again without neglecting the oil sector.
While maintaining the same – or almost the same – current investment in the oil sector, which cannot but take off again in the short to long term.
For the other less financially sound countries, it will be about implementing great political reforms, which may at least stabilize the countries floundering in severe economic crisis, or having their oil assets quickly sold by the richest Arab countries, which will thus have a much greater power of pressure vis-à-vis consumer countries when the oil recovery starts.
Trans-Caspian Gas Pipeline – An ‘apple of discord’ between Azerbaijan and Russia?
A broad range of strategic, economic and cultural ties between Azerbaijan and Russia create an illusion of quite stable bilateral relations between the states. Nevertheless, considering the recent geopolitical developments in the South Caucasus after the Second Karabakh war and the growing role of Azerbaijan as both producer and transit hub for natural resources, one can assume that there is a prospect of growing uncertainties that may or already generate tensions. These tensions can be observed in the context of energy diplomacy, used as a strategic tool by both states to gain access to, and consolidate within external markets. This article summarizes the potential and existential rivalry perspectives between Azerbaijan and Russia in terms of integration to the EU energy market via their gas pipelines, particularly cleavages over the Trans-Caspian Gas Pipeline.
European Energy Union: Tendencies in the gas market
The concept of the ‘energy union’ has been developed during the presidency of Jean-Claude Juncker and extends to five dimensions. The following two dimensions are relevant in the context of relations with external markets: 1. Security, solidarity and trust; and 2. Energy efficiency. The former promotes cooperation between EU member states implying energy security and diversification of the energy sources. The latter, on the other hand, emphasizes the need to reduce dependency on imports and stimulate local growth in energy sectors. Both strategies consider a long-term perspective aimed at creating an independent and self-sufficient energy market within the framework of environmental standards. To determine whether these strategies managed to diversify and simultaneously ensure independence from external actors in the European gas market, let us recall the statistical data of imports and local gas production in the EU over the last years.
Tendencies in the EU energy market over the last couple of years, particularly in the sector of gas, reveal its high dependence on imports from abroad. Although the net gas imports fell by 7 per cent in 2020 amounting to 81 bcm, the overall EU production of gas fell by almost 23 per cent (16 bcm). According to the Quarterly Report of the Union, the local gas production in the first quarter of 2021 reached the second-lowest production rate over the last decade, falling by 11 per cent respectively. In this regard, the European internal energy market needs a sustainable supply of natural gas resources, mostly, for residential heating needs. Currently, about 44% of extra EU net gas imports are piped via Russian pipelines, 12% through Algeria, and 1,2% through TAP pipeline. Although import indicators suggest that Russia holds the dominant position in supplying the EU energy needs, the ever-growing gas supplies from Azerbaijan cause concerns on the part of Russian stakeholders. Accordingly, in 2020, Gazprom’s supplies to the Turkish market decreased by 72% compared to March 2019, the Russian RBK reports. Could the further steps of the official Baku on the European energy front challenge positions of the Russian energy giant Gazprom? To answer this question, it is necessary to briefly present the already launched and planned projects in which Azerbaijan is directly involved.
Azerbaijan’s ‘energy diplomacy’ and Russia’s counterstrategy
In 2020 South Gas Corridor (SGC) project officially started operating, connecting three sub-pipeline routes: South Caucasus Pipeline Expansion (SCPX), the Trans-Anatolian Pipeline (TANAP) and the Trans Adriatic Pipeline (TAP). The project aims to ensure commercial gas delivery from Shah Deniz field to Turkey, continuing to European markets and finally landing in Southern Italy (Melendugno). The initiative was supported by numerous financial institutions and stakeholders from Asia and Europe such as the Asian Development Bank (ADB) and the European Investment Bank (EIB). According to the estimates, the current gas supply via the corridor is amounting to 10 billion bcm.
At the 7th Ministerial Meeting of the SGC Advisory Council, the president of Azerbaijan Ilham Aliyev noted the necessity of strengthening bilateral as well as multilateral energy relations and mentioned the Memorandum of understanding between Azerbaijan and Turkmenistan: “[…] That will also be very helpful for future energy cooperation in the Caspian Sea and beyond”. President Aliyev has also emphasized that Azerbaijan already has become a reliable transit of energy resources from the eastern shores of the Caspian Sea. In this regard, the recent intensification of talks upon the realization of the Trans-Caspian Gas pipeline project is not surprising.
Within the framework of the Trans-Caspian gas pipeline project, natural gas will be delivered from the port of Turkmenbashi via the pipeline to the Sangachal terminal through the Caspian Sea with an annual capacity of 32 billion bcm. However, despite numerous attempts to bring the issue to the agenda both by the Western partners (EU and the United States) and Azerbaijan, there have been no significant steps towards the implementation of the project. The reason for the constant extension of negotiations over the last two decades may be both the reliability of the capabilities of the Turkmen natural gas resource pool, and external intervention in the negotiation process and attempts to discredit it by Russia and Iran.
Firstly, the credibility of the Turkmen gas supply capacity is quite questionable. After the Central Asia-China gas pipeline opened in December 2009, Turkmenistan has gradually become the biggest gas supplier to the Chinese energy market in Central Asia. Currently, Turkmenistan covers nearly 60% of China’s pipeline gas imports, whereas over 90% of Turkmenistan’s overall exports are gas exports to the Chinese energy market. Therefore the sufficiency of Turkmenistan’s gas reserves for the Trans-Caspian pipeline is still a matter of discussion. The official Ashgabat in the meantime refrains from specifying details on its capabilities.
Another challenge is posed by the joint attempts of Russia and Iran, circumvented by the pipelines, to prevent the realization of the initiative, to protect their local energy markets. Additionally, the Kremlin needs to eliminate any potential external supplier of natural pipeline gas to the EU, to sustain the status quo. Turkmenistan has already become the biggest gas supply hub in Central Asia and the prospect of its expansion towards Europe poses a strategic challenge to Russia.
“Along with the new Iranian gas pipeline, the Chinese export route gave Turkmenistan strong leverage that strengthened its ability to bargain with Russia. However, these export routes do not hurt Russian interests that much, since Moscow’s main objective at the moment is to keep Turkmen gas away from the lucrative European energy market”. (Vasánczki 2011).
Both Russia and Iran refer to environmental damage the pipeline could cause in the Caspian Sea, and recall the so-called Tehran Convention (the Framework Convention for the Protection of the Marine Environment of the Caspian Sea). However, the experience with the SGC and other pipeline projects in the region suggest no environmental crisis to be expected. On the other hand, there are allegations regarding the long-disputed Legal Status of the Caspian Sea. Moscow and Tehran are aligned in their concerns about the extraction and transportation of energy resources and believe that such issues should be resolved within the framework of five Caspian states.
According to Marco Marsili, the Russian energy strategy is inclined in a “Grand Strategy” aimed at re-establishing a sphere of influence in the area previously controlled by the USSR. As he further notes in his article: “If the Trans-Caspian Gas Pipeline comes to fruition, then it will also further enhance Azerbaijan’s status as both a producer and transit hub. Additionally, the pipeline will diminish Moscow’s influence in the region and circumvent both Russia and Iran. This is why Moscow is heavily opposing the project.”
When it comes to the European front Russian strategy faces various burdens. On the eve of the opening of the Nord Stream 2 gas pipeline, Russian-European relations are in a state of long-term crisis. The persecution and assassinations of political dissidents, the imprisonment of the head of the opposition movement Alexei Navalny, support for the authoritarian regimes of Lukashenko and Assad, as well as multiple attempts to interfere in elections within the EU, reduce the level of trust between the Kremlin and the West on energy security too. Furthermore, gas supply issues between Russia and Ukraine in 2006 and 2009 that caused the European energy crisis, exacerbated the situation and gave a signal to the EU to diversify its gas supplies.
Nord Stream 2 is a controversial 9.5 billion euros worth gas pipeline that will annually supply the EU with 55 bcm. According to sceptics, the new pipeline not only endangers the energy security of the EU, putting it in a dependent position from Gazprom but also causes dissatisfaction in Eastern European countries (in particular Ukraine). Germany and the US have already issued a joint statement in July to support Ukraine, European energy security and climate protection. Azerbaijan, in turn, is ready to provide the diversification tool needed and security of natural gas delivery to the European market without polarizing the European community on geopolitical issues.
Opportunities for Azerbaijan in the new era in South Caucasus geopolitics
After the second Nagorno-Karabakh war between Azerbaijan and Armenia, the power constellations in South Caucasus have drastically changed in almost 44 days. Azerbaijan has restored its territorial integrity and opened up new opportunities for economic growth, and increased mobility via the development of transport hubs and infrastructure rehabilitation projects. At the same time, Russia has deployed its peacekeeping contingent in the region, ‘formally’ securing its status as a regional power. Despite this, Azerbaijan, after almost three decades being focused on resolution of devastating conflict, can now set new forign policy priorities to provide energy security and strengthen its cooperation with the EU.
With the EU Strategy on Central Asia adopted in May 2019 and the intensification of negotiations between the Central Asian countries with the EU and with the Western hemisphere as a whole, there is a need for such projects as the Trans-Caspian Gas Pipeline. In these circumstances, Azerbaijan can play the role of a mediator both in the negotiation process and directly participate in the implementation of the project. Taking this into account, Russia fears the loss of its role as a hegemon both in its relations with Central Asia and within the South Caucasus. Also economically, it is in Russia’s interests to keep the monopoly in the hands of its state-owned companies to strengthen the leverage on the EU in cases of geopolitical collisions.
In any case, the growing competition on the EU energy market between the two former Soviet states could significantly diminish the sense of mutual reliability between them.
China’s Unorthodox Intervention in the Global Oil Market
Apparently, China has been the talk of the town for quite some time. While the entire yesteryear passed in a flurry of blame game over the pandemic, this year has been nothing short of a blessing for Xi’s regime. However, while China rapidly compensated for the drastic slump last year, the bustling economy has now cooled down – though a bit prematurely. Due to the expansive outbreak of the delta variant, China – like most countries around the world – now faces surging inflation and a crippling shortage of raw materials. However, while one might get a bolder vibe from China’s recent crackdown on industrial giants, the supposed ‘Second Cultural Revolution’ seems on a divergent path from the government’s latest aspirations for the domestic industry.
China seems to be on a path to harness growth that appears to be slowing down as the global economy battles uncertainty. However, while many expected China to take orthodox measures to prolong growth, hardly anyone expected a drastic change of strategy: intervening in a close-knitted global market like never before.
China recently posted its most robust trade surplus in history, with a record rise in exports jumping 25.6% from last year to stand at $294.3; $10 billion more than any previous month. However, while the glowing figures imply sturdiness, the underlying fragility of the Chinese economy is not disguised. In the past few months, China’s production engine has taken a toll as surging energy costs have inhibited production capacity. The factory-gate inflation stands at a 13-year-high which has forced factories to cut output. Amid declining domestic demand due to covid restrictions, manufacturing surveys show that China’s export orders are eroding as supply bottlenecks coupled with energy costs have weighed heavily on the production function. To counter the problem, China recently supplied its reserves into the domestic market; undercutting the surging global price tag dictated by the petroleum giants.
Last Thursday, China’s National Food and Strategic Reserves Administrator made a press release, confirming that the world’s second-largest economy tapped into its crude reserves – estimated at 220 million barrels – to “ease the pressure of rising raw material prices.” While China is known to intervene in commodity markets by using its strategic reserves, for example, Copper, Aluminium, or even grains.
Recently, China tapped into its national reserves to intervene in the global commodity market of industrial metals for the first time since 2010. The intervention was situated as a release to normalize surging metal prices and retain domestic manufacturers’ margins. However, it is a novelty that a national agency confirmed an active supply of petroleum buffer via an official press conference. And while no additional details were offered, it is presumed by global strategists that the press release referred to the 20-30 million barrels allegedly poured into the domestic industry around mid-July: when Xi’s government offered to supply crude to the OPEC.
Furthermore, China’s Stockpile Agency claimed that through open auctions, China’s reserve crude was intended to “better stabilize the domestic demand and supply.” It was apparent that as China ventured through a supply crunch when Brent Crude – Global Crude Index/Benchmark – breached the $76 bpd mark, the country instead resorted to utilizing its own stockpile instead of relying on expensive imported petroleum. Thus, it shapes a clear picture of how China managed to clock a phenomenal trade surplus despite not importing its usual crude quota.
While it is common knowledge that economies like the US and Europe maintain strategic petroleum reserves, the buffers held by China were utilized to actively manipulate the price in a ‘normalized’ oil market instead of their designated usage in supply crunches or wars. The situation today is anything but critical for the oil market to warrant such an intervention. As OPEC+ has boosted its output by 400,000 bpd starting August, output has bloomed beyond its peak since the price war back in April 2020. While the oil market is still well below the output capacity, mutually curbed by the OPEC+ alliance, the demand is still shaky and an equilibrium seems set. Yet, when we observe China – the world’s largest oil importer – we extricate reason that despite a growing economy, China continues to experience massive shortages: primarily in terms of oil, gas, coal, and electricity.
Furthermore, with the ensue of Hurricane Ida, massive US crude reserves have been wiped which has majorly impacted China as well. The US and China rarely stand on the same page on any front. However, even the White House recently asked OPEC to pump more crude into the market due to the rising gasoline prices in America. The same scenario is panning in China as energy shortages have led to surging costs while domestic demand is diminishing. The brunt is thus falling on the national exchequer: something China is not willing to haggle. While it is highly unorthodox of China to explicitly announce its intervention, many economists believe that it was a deliberate move on part of China’s communist brass to amplify the impact on the market. The plan seemingly worked as Brent fell by $1.36 to stand at $71.24 on Thursday.
If China’s commitment to normalize domestic energy prices is this significant, it is highly likely that another intervention could be pegged later in the fourth quarter. Primarily to counteract the contraction in export orders by cutting imports further to maintain a healthy trade surplus. In my opinion, it is clear that both the US and China are not willing to let Brent (and WTI) breach the $70-$75 bracket as key industries are at stake. However, while one takes a passive approach, the other is touted to go as far as pouring another 10-15 million barrels of crude by the end of 2021. Yet revered global commodity strategists believe that the downturn in prices is “short-lived” just like any other Chinese intervention in a variety of other commodity markets globally. And thus, experts believe that the pump is simply “not enough physical supply” to quite strike a permanent dent in an inherently flawed market mechanism.
Energy Forum Seeks To Analyze Africa’s Energy Potentials And Utilization
African Energy Week (AEW) 2021 in Cape Town, fully endorsed by the Government of South Africa, is committed to accelerating Africa’s energy growth with the aim of establishing a secure and sustainable energy future for every individual on the continent. Accordingly, AEW 2021 firmly believes in the role that oil and gas will continue to play in Africa and will emphasise the continent’s upstream market through a collaborative, International Oil Company (IOC) forum. Led by IOC executives, as well as government representatives from notable energy markets in Africa, the IOC forum aims to address the upstream challenges faced in Africa, providing solutions and strategies to drive exploration and make Africa more competitive for investment.
With the discovery of sizeable oil and gas reserves across the continent in recent years, regional and international explorers are turning an eye to the world’s final frontier market – Africa. Nigeria’s 200 trillion cubic feet (tcf) of gas reserves and 37.2 billion barrels of oil (bbl); Mozambique’s 11 tcf of gas; Senegal’s 450 billion cubic meters of gas; Libya’s 48 billion bbl and 53.1 tcf; and Egypt’s 77.2 tcf of gas have all made Africa the ideal destination for hydrocarbon exploration. What’s more, with many African countries making significant steps to enhance their regulatory environments, implementing legislation to create an enabling environment for investment, the continent has become a highly competitive market for exploration and production. Nigeria’s recently implemented Petroleum Industry Bill, Gabon’s new Hydrocarbon Code, and Angola’s inclusive petroleum regulation, to name a few, have all ensured a competitive and highly attractive market.
With the world’s six oil ‘supermajors’ – BP, Chevron, Eni, ExxonMobil, Royal Dutch Shell and TotalEnergies – all actively present in mature and emerging markets across Africa, the continent has become an upstream hotspot. AEW 2021 aims to accelerate this trend, promoting new upstream opportunities and ensuring both National Oil Companies (NOC) and IOCs drive the continent into a new era of energy and economic success. Accordingly, Africa’s premier energy event will host an upstream-dedicated IOC forum in Cape Town, led by IOC executives and government representatives. The IOC forum aims to address key challenges in Africa’s upstream market, whereby the diverse speaker panel will offer up solutions to expand exploration and production, while ensuring the continent remains competitive for investment in a post-COVID-19, energy transition era.
In addition to the discussion on upstream activities, the forum aims to highlight the role of IOCs in enhancing capacity building, whereby emphasis will be placed on IOC-NOC collaboration. IOCs have a critical role to play in Africa, not only regarding resource development, but human capital and local business development. In order for the continent to become truly sustainable and competitive, NOCs require support from IOCs. Accordingly, the forum aims to identify strategies to enhance cooperation and partnerships, with IOCs taking the lead in Africa’s energy development.
“AEW 2021 in Cape Town will offer a real discussion on Africa. Oil and gas are critical in Africa’s development and the African Energy Chamber (AEC) will not succumb to the misguided narrative that Africa should abandon its potential. The IOCs in Africa have demonstrated the continent’s potential, and by sharing strategies to enhance growth, address challenges, and accelerate upstream activities, they will be key drivers in Africa’s energy future. The IOC forum will not only offer a description of African reserves, but will provide clear, attainable solutions to exploitation, exploration and production with the aim of using energy to enact stronger economic growth. By coming to Cape Town, attending the IOC forum, and interacting with African ministers from across the continent, you will be able to be a part of Africa’s energy transformation,” stated NJ Ayuk, Executive Chairman of the AEC.
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