Mahaman Laouan Gaya, secretary general of the African Petroleum Producers Organisation (APPO). PHOTO | COURTESY
The secretary general of the African Petroleum Producers Organisation Mahaman Laouan Gaya
spoke with Julius Barigaba about the continent’s oil potential and why
all countries with proven reserves need to join the group.
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What is the mandate of your organisation?
APPO
has been in operation since January 1987. It is a platform for African
oil-producing countries to share knowledge and skills.
It has 18 member countries that account for about 99 per cent of Africa’s oil production, and at least 13 per cent globally.
APPO
promotes joint initiatives across the value chain, including
infrastructure and policies, to enable member countries to obtain better
profits from oil.
Why are some African oil-producing countries not members?
This issue has been discussed extensively. We are seeking reforms to make APPO more appealing.
The framework for consultations and decisions of the new body have been reviewed, enlarged and improved.
As soon as it takes off, I am sure that there will be a rush for all African countries to join.
Africa needs unity and synergy in all sectors of its economy to boost growth.
Unlike
the Organisation of Petroleum Exporting Countries (Opec) whose member
countries come from Latin America, Africa and Asia, those of APPO come
from one continent, making it easier to collaborate.
Out of our 54 countries, some 50 are oil producers or are exploring for it, both of which show promising prospects.
A country with proven reserves in hydrocarbons (not necessarily in the production phase) can join APPO.
Some
countries give blanket concessions instead of production-sharing
agreements. Are you helping member countries with contract models?
Sometime ago, I worked in an African country as an international energy expert with the United Nations Development Programme.
I realised that the country did not have modern oil legislation and yet foreign companies were exploring for oil.
APPO has helped this country to develop petroleum laws and start a training programme for executives in the oil sector.
African countries need proper legal and contractual oil frameworks, and we are helping them with it.
For example, we have developed the Guide for the Promotion of Local Content in the Oil and Gas Industry in Africa.
We are aiming to see countries achieve a 30 per cent ownership of activities across the value chain by 2030.
Uganda discovered oil in 2006, but is yet to produce its first barrel. What is the problem here?
Two
things. First, the price of oil. As prices rise, countries want to go
into quick production. When they decline, countries tend to slow down on
production.
Then there is also the issue of countries
dealing with multinational oil companies from Western countries that are
not in a hurry to produce oil because they have reserves elsewhere.
Until
they have exhausted these reserves, they will take their time. That is
domination. This could be solved through co-operation.
Can Africa develop through its oil resources?
In
recent decades, Africa has been at the heart of all kinds of debates,
touching on the risk of its growing population and its immense
potential, to its incomparable natural wealth, which has the potential
to bring in more than $30 billion in revenue per year over the next two
decades.
Some estimates put the oil reserves of African countries at 100 billion barrels.
Africa
is rich in fossil energy resources like oil, gas, coal and uranium, as
well as renewable energy sources like hydraulic, solar, wind, biomass
and geothermal.
Additionally, Africa is inhabited by
nearly one billion peoples, 60 per cent of whom are young, while Europe,
America and Asia are increasingly ageing.
If Africa
cannot get off the ground with all these resources, I am not sure that
oil will be the one resource that will overcome the challenges of
underdevelopment. The causes of Africa’s stagnation are more elsewhere
than they are in oil.
So what needs to be done?
While
the prospect of huge revenues from our natural resources may seem
enticing, it also raises the issue of governance in this sector.
Often,
the decline in oil prices has recessive effects in almost all African
hydrocarbon-exporting countries, resulting into falling currencies, a
sharp drop in tax revenues, slowing investments and project
diversification, adjustment of the budget to a price twice as high, and
more modest expansionary effects in other net importing countries.
Only
a few countries have seized the opportunity to support their growth in a
slightly more diversified economy; added to this, is the lack of basic
infrastructure, the shortage of skilled labour, poor governance and
corruption.
If African oil-producing countries have
suffered and are still suffering from the fall in prices, it is because
they have always had an unhealthy dependence on oil production, their
savings are small or they have failed to diversify.
Oil
producing countries need to diversify their economies to increase their
resilience, otherwise they will struggle to raise revenues.
The
trouble is that when the oil prices rise again, the politicians shelve
or postpone their economic diversification speeches, until the next
crisis.
Three African oil producing countries have joined OPEC since 2016. What’s behind this?
A
number of African delegations attended the meeting of the Council of
Ministers and the Opec International Seminar in Vienna in June.
In
addition to the seven African member countries of Opec, namely Algeria,
Angola, Gabon, Equatorial Guinea, Libya, Nigeria and Congo-Brazzaville,
five others — Egypt, Uganda, Sudan, South Sudan and Chad — were present
as observers.
Today, almost all African countries are in the research and/or hydrocarbon exploitation phase.
The
oil- producing countries have a total production of close to 10 million
barrels a day, and the entire continent has abundant potential.
Thus,
a greater presence of African countries could consolidate Opec’s policy
and position on the world oil scene. They could influence the price of a
barrel of oil favourably.
What is the role of APPO vis-à-vis Opec?
We do not compete with Opec, to determine the price of oil. Our mandate is to promote co-operation among our members.
The
global energy and oil geopolitics is constantly changing, and we need
to reframe our organisation in this new context to generate real
benefits for Africa, and to ensure sustainable development.
Africa’s
oil potential is one of the largest in the world and with a better
framework for co-operation and integration, Africa can align with the
oil powers of today, to have a say in the global oil and energy
spectrum.
APPO is the ideal vehicle to drive this
change. Also, oil is a highly sensitive sector that calls for
co-ordinated and a strategic approach.
In isolation,
each African country cannot fight international oil capital. We need a
framework for economic and strategic intelligence. This is the role our
organisation intends to play.
What is the future of Africa’s oil industry?
North
America, the Middle East and the North Sea, once pioneers of oil
production, are today either in the phase of depletion or exploitation
of unconventional hydrocarbons — the so-called gas and oil shale.
In Africa, however, only four countries began modest exploitation in the 1960s.
Today, some 20 countries are oil producers and about 30 others are prospecting and doing research.
Offshore
and onshore basins, both off East Africa, the African part of the
Indian Ocean, West Africa, and the hinterland countries are little
explored and have good prospects.
They are mainly
located in Tunisia, Morocco, Mozambique, Kenya, Uganda, Tanzania,
Senegal, Sao Tome and Principe, Niger, Mali, Madagascar, and Comoros.
Africa has proven oil and gas reserves in abundance.
The
continent has more than 13 per cent of the world’s hydrocarbon
reserves, but Western statistics tend to underestimate and devalue the
potential of the continent. And better, over the past 15 years,
one-third of the world’s oil discoveries have been in Africa.
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