Distinguished Delegates
Ladies and Gentlemen,
It is a pleasure to join you this afternoon and an honour to deliver the keynote address at this important event, and I bring you warm regards from the government and people of Ghana.
The relationship between Africa and the United States goes back a long way, and in West Africa in particular, the founding of Liberia marked an important point in the relations between the US and the West African sub-region. Over the years, in areas such as trade, diplomacy, education, defense, and many others, this relationship has evolved and continues to respond to the many exigencies of the 21st century; Power Africa being the latest US initiative.
It is therefore a delight to be a part of the conversation today that explores the way forward for West Africa and the US on how best we can leverage on each other to partake in the prosperity and opportunities that the oil and gas industry brings.
Ladies and gentlemen, the African continent is blessed with abundant natural resources including oil and gas. Nearly half of the countries in West Africa are producing oil and gas, making the sub-region an important hub of this critical sector. These include Nigeria, Ghana, Gabon, Guinea, Cote d’Ivoire, Niger, Gambia, and Senegal.
Perhaps the irony of this is that a lot of the countries in the West African region do not have the capacity to exploit these resources by themselves and have had to rely on foreign companies over the years. In Ghana, for instance, our first oil field (the Saltpond field) was discovered by an American company called Signal-Amoco Consortium in the 1970s and several years later, two American Companies (Kosmos Energy and Anardarko) and their partners discovered Ghana’s most prolific oil field (Jubilee Field) and subsequently the TEN Field in a separate Contract Area. In Nigeria, Shell began drilling in 1956, leading to the country’s first discovery two years later.,
Distinguished Ladies and gentlemen, US companies remain strategic partners in oil and gas exploration in West Africa, with huge investments. Several million barrels of oil and million standard cubic feet of gas are produced on daily basis in West Africa and Africa as a whole owing to the efforts of these foreign partners, including Chevron, ExxonMobil, Hess and others. It is therefore important to look at ways in which both sides – those in whose territories these precious resources sit, and those with the finances and the technology to exploit them – can derive mutual benefits from their collaboration in order to benefit the citizens of those countries and the shareholders of the oil companies. To do this, we must examine in turn how each side could benefit from our contractual arrangements.
Ladies and gentlemen, the unfortunate reality in several West African countries particularly in the resource-rich areas is the fact that, the standard of living of the people is normally not commensurate with the wealth of resources being extracted, leading to social and political agitation in several instances.
In most countries including Ghana, there are established programmes and plans to have E&P companies give back to society through Corporate Social Responsibility (CSR) programmes and direct employment of indigenes to improve on their economic conditions.
E&P companies are also expected to train and transfer knowledge to indigenes and offer significant contracts to local firms to render services pertaining to petroleum operations. This must be beyond peripheral areas such as security, transport, and catering, and look at areas that are core to the oil and gas industry. These are all mechanisms of empowering indigenes economically as the E&P companies grow in their operations and finances. These come under local content and localization.
Of course, this does not relieve central governments of their responsibility to ensure efficient, fair, and stable resource revenue sharing among its citizens. Clear objectives should be established for use of the revenue coming from oil and gas and must be strictly adhered to. It is only through these measures that all can benefit from the oil and gas resources. In Ghana, for instance, the Petroleum Revenue Management Act determines how revenue from petroleum should be disbursed. The Act does not only prescribe the use of petroleum revenues for development of other sectors of the economy but also insists on the reservation of such revenues for future generations.
Again, in the area of skills training, it is important for governments to make the necessary investments particularly in the youth to ensure that they possess the necessary skills to meet the demands of the highly specialized labour force that the oil companies require to ensure smooth operations. Africa has a young, dynamic and energetic population, and Technical, Vocational Education and Training (TVET) is a huge driver in industrialization, economic empowerment and job creation.
Distinguished ladies and gentlemen, Africa is cognizant of the advocacy for energy transition and clean energy utilization. But I believe that this conversation must be had within a careful context, which is the reality of the current stage of Africa’s development and growth trajectory. This, in my view, implies that Africa must not shy away from pursuing an agenda of exploration. Many in Africa, including the African Energy Chamber, recommend a multi-pronged approach to addressing energy poverty – one that harnesses both renewable energy sources and fossil fuel. I think this is a call in the right direction.
The fact remains that gas, especially Africa’s Liquefied Natural Gas (LNG), is the cleanest of fossil fuel, and harnessing it to power generators can make a huge impact on the drive to accelerate universal coverage. Currently, about 600 million people are without access to electricity in Africa. Without a clear and purposeful drive towards cheaper electricity through gas exploration, the figure will rise to 800 million by 2030, whilst the continent sits on what shall effectively become stranded assets. We cannot starve in the midst of plenty. This is clearly an unacceptable situation.
Africa sits on vast oil and gas reserves. In countries like Senegal, Nigeria, Cameroon, and Ghana, gas will be a game-changer in providing cheaper access to power and ultimately driving industrialization. This in turn creates employment and business opportunities both in the upstream and downstream petroleum sector. It also sustains the huge investments that have been made by these countries in the skills training of their citizens to respond to the specific exigencies of this specialized industry.
In my view, therefore, oil and gas exploration in Africa cannot be taken off the energy menu because the continent’s circumstances, needs, and priorities are vastly different from those of industrialized countries as we are at a different stage of our growth process.
Of course, this is not to denigrate renewable resources and clean energy by any stretch of the imagination, or to downplay its importance, because we remain committed to our SDG 7 goal. But to seek to push Africa into a renewable energy corner with the same speed and zeal as in industrialized countries, instead of allowing her to grow her renewable mix at its own rate whilst using her natural resources to power her economy and eliminate energy poverty could be counter-productive and further widen the economic gap between the North and the South.
Oil and gas exploration remains a key component of our economic mix in the short-to-medium term and Africa needs more, not less exploration, for which reason we are open for business and will continue to push for investments in our region. First, I believe West African countries should be ready to make available adequate and quality data on oil blocks to improve and shorten the length of time between exploration and discovery. This is particularly important in attracting investment into the sector in the sense that, the oil companies have reduced workloads in conducting exploratory activities which saves them a lot of cost.
Second, for any investor to have the confidence to head to a particular destination, there should be the confidence that there is a robust and supportive legal, fiscal and regulatory framework in place to ensure that its assets and interests will not be threatened. This means the country must be stable, its legal systems must be robust enough to deliver justice in the event of a dispute, and that its regulatory and fiscal regimes are competitive transparent and predictable.
Further, we must also find ways to align petroleum activities with the current trends in modern technology. It should be possible for foreign companies to assess data from Africa in their offices through Virtual Data Rooms. These approaches will not only reduce cost but also save time and improve efficiencies in the oil and gas industry.
Ladies and Gentlemen, I cannot conclude my keynote address without stressing the importance and the need for energy infrastructure interconnectivity within the West African Sub-region. On this note, I would like to bring to your attention that the ECOWAS Commission is leading a study on the extension of the West African Gas Pipeline along the cost to Morocco with laterals to interconnect all countries along the route as well as in-land countries.
I call on West African oil-producing countries to continue to engage each other and share not only our best practices but also valuable lessons on how we can, through the power of oil, improve the lives of our people. I am confident that West African and US companies will continue to have the conversation to explore further our deep and warm relationship. Together, there is so much we can do as we face the future and attempt to respond to the realities of its opportunities and challenges. I trust that we will all have fruitful deliberations.
Thank you for your time and attention.
