Epeus attended the Africa Assembly event in Paris from 6th to 7th of June 2018. These were our key highlights:
• Exploration activity is still lower than expected. Exploration capital went from $80 billion to $30 billion in the last couple of years. In Africa only 22 exploration wells were drilled in 2017.
• Gas (LNG) to power is going to be the primary focus. From 2020, IFC will stop investing in Upstream Oil projects, it will only focus on gas.
• Africa would like to attract back private equity (PE) firms. However, PE investors are still reluctant until all investment risks are properly identified. More focus shall be given to project risks
• In fact, all the PE speakers stated that another main obstacle for Africa, apart from Political instability is, Delay of projects.
• The host governments and NOCs would like to see more local content; i.e. investing in human capital.
• Independent operators still struggle to differentiate themselves. They appear to have similar strategies and presentations. This is also what we noticed a couple of weeks ago at the Africa E&P Summit in London.
At Epeus, we do think the project risk management is the most important element of any investment in this industry. We know by experience that without a clear risk identification and mitigation plan, failure is guaranteed. What next? Independent operators, will be more appealing to project financiers and investors if they consider project risk management as their top priority. Identifying all potential risks won’t be only necessary to make the investors more certain about their money, but this will be also viewed as more genuine, transparent, and effective way to attract interest. Until a robust risk management approach is in place, the bridge between operators and investors will not be crossed easily. Not only in Africa but globally.
We need to change the behaviour. That’s the reason we exist.
Please let us know your thoughts!