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Earth Finds

Stability Is Key For Supermajor Investment In Africa

Although it may appear that much of the exploration activity in Africa is driven by smaller independents, the supermajors still have a significant role to play. In recognition of the importance of the market these supermajors were all well represented by senior executives at this year’s Africa Oil Week.

The key message they delivered was that they were ready to invest further in the region but were looking for investment opportunities that could offer them assurance in terms of fiscal and political stability.

Searching for stable fiscal regimes

When it comes to success in Africa, Pam Darwin, vice president Africa Exxon Mobil admits that there is no silver bullet, but one thing that is crucial going forwards is access to capital. “Our industry must continue to strive to meet energy demand for reducing environmental impact,” she said. “To do that we face competition for capital. All our efforts take capital and the competition is greater than ever.”

The key she explains is stable and attractive fiscal regimes; where these are present investments are occurring. “There's a clear message from the United States where investment in the shale industry or the shale revolution as they call it has increased dramatically since 2005,” she adds.

“As a consequence, US liquid production has more than doubled over ten years, generating billions of dollars. In contrast, over the last ten years, African liquid production has steadily decreased. In order to tap Africa's immense reserves, commercial terms must be in place to draw those investments.

“Investment also needs to focus on making communities strong, this is really important for us as a company. We fund programmes and training, education, and women's empowerment along with health issues such as malaria. We've invested nearly $4 billion since 2000 in these kinds of programmes, over a billion just in education, and 120 million in women's economic empowerment.”

BP growing on a rich heritage

According to Jasper Peijs, exploration vice president Africa, BP, Africa has been very important to BP and perhaps BP is important to Africa as well. He explains that BP’s current activity and presence is right across the continent of Africa. “We have a strong multi decade positions in Angola, Egypt and Algeria, where we are currently producing 400,000 barrels a day.”

When it comes to a positive environment for investment, Peijs points to Angola as a case in point. “I'm happy to recognise the positive changes the Angolan Government has made,” he says. “They are now incentivising investment again and we as BP have taken notice.

We've extended the licencing for block 15 and 18 and created a joint venture to develop gas fields. But Angola is not alone, you see lots of positive changes across the continent and that is why our investment in Africa is growing. Since 2016, we have delivered seven major projects and eight scheduled to come online by the end of the year.

These are in Algeria, Angola, and Egypt, and the next tranche of major projects have already been sanctioned with the final investment decisions expected soon, one of which is Greater Tortue Ahmeyim in Mauritania and Senegal.”

So why is BP focusing so strongly in Africa? “First, is that Africa provides opportunity for growth,” Peijs adds. “Demand for energy in Africa is well ahead of the world average, populations are growing, economies are advancing, the production of energy is growing even more strongly. Looking ahead the forecast for energy production in Africa is likely to grow by around 60% by 2040, almost twice the global rate.

“The second reason companies invest in Africa is that it provides opportunities for competitive partnerships. Since the oil price crash in 2014, our industry has become much more efficient, much more disciplined, more selective on invested capital. We are all competing on a global scale but in Africa we have found several countries providing conditions for investments.

“And then thirdly, is that Africa provides opportunities for long term; as well as having a growing energy consumption and production, economic development is driving up levels of skills and capabilities across the continents. These are human resources coming together. So, the great untapped potential of Africa in every sense.”

Building on success in Angola

One man new to the challenges of the continent is Mike Sangster, MD Total E&P Nigeria, who has recently taken over the leadership of Total exploration and production in Nigeria. “There are four main technologies that we need to be strong in to succeed – deepwater, LNG, petrochemicals, and lubricants.

Here in Africa, we are very much present with three of those four technologies with deepwater and energy as well as retailer and lubricants on the downstream side. We are the leading integrated major in Africa, we are present in 43 countries across the continent, all the way across the value chain from the upstream, the midstream and downstream

“Almost 20% of our production last year came from it came from Africa, and 16% of our reserves are still in Africa. We are currently investing more than one third of our exploration budget in Africa. We operate 11 FPSOs across the continent. The downstream also is going to come in Africa. We have almost four and a half thousand service stations across all the different countries, and about 18% of market share.”

One of the recent projects that Total sanctioned was the Kaombo Project in Angola, which features two FPSOs each with a capacity of 115,000 barrels a day, one of which started producing in the middle of last year, and the second one began earlier this year. “We are producing close to capacity of 230,000 barrels a day, so it is a major achievement for the company in the country.

“In Angola there are a new wave of developments coming along as well, supported by attractive fiscal terms. In Angola recently we have seen some good initiatives from the government for the industry. And you can see that industry is responding by investing in low-cost, short-cycle projects such as subsea tie backs to existing facilities, and infill drilling.”

Unlocking Africa’s potential

So, what does it take to unlock Africans countries’ economic potential? Colette Hirstius, vice president exploration Middle East & Africa, Shell explains that the industry faces unique challenges and opportunities. “These are often driven by geology, the maturity of the industries and in the case of customer facing businesses, the size and structure of the market,” she explains. “Some of these challenges include the lack of infrastructure, security issues, unstable fiscal and regulatory environments and limited access to energy.”

The answer to this is a long-term vision for each country, and long-term partnerships between the industry and government built on trust and commitment.

“These will be critical elements for success,” she adds. “Shell believes strongly in partnerships and that everyone has their role to play, the role of government is all about creating an enabling environment that encourages the industry to invest. This includes developing and communicating a clear energy strategy.

As well as creating strong, effective, and predictable, regulatory and fiscal regimes along with respecting the sanctity of governance and contracts and providing a secure operating environment. And lastly, embedding transparent and clean business practices. For industry to deliver its part by conducting activities in a sustainable manner, which means being safe and environmentally and socially responsible.

“Companies should build local capabilities and capacity, develop local value chains to maximise competitive opportunities for local economies and, of course, promote innovation and technology. Shell strongly believes that building local capacity and capability is key for helping Africa to achieve its full potential. And it's one of our clear focus areas.”

  • Published in Africa
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Why African Mobile Networks Must Invest In 4G

Even with the 5G era already upon us, investment in 4G/LTE networks is still vitally important for operators in sub-Saharan Africa and must remain a core focus of network construction for the immediate future. This is according to David Chen, Vice-President, Huawei Southern Africa.

"Currently, the mobile broadband penetration rate in Africa is only 47%, while 4G penetration rate is merely 10%," Chen said.

"Insufficient coverage causes LTE users to fall back to the 2G or 3G networks, resulting in significant decline in user experience. It also leads to congestion on the 2G and 3G networks and makes it difficult to release spectrum used by 2G and 3G."

Chen said that LTE and 5G complement each other and are evolving in parallel. In the next few years, 5G will mainly be used in more industrial communications.

LTE will remain the primary choice for global mobile communications through 2025. It will form the basic layer of national networks, especially when it comes to the mobile broadband access.

"It will take a long time for 5G to provide nationwide continuous coverage. Before that, enhanced LTE networks can guarantee optimal user experience for 5G users, including services such as VR, AR, and cloud gaming," said Chen.

He said that it is important for operators to invest in 4G to secure future growth, as it is estimated that there will be an additional 80 million LTE users in sub-Saharan Africa by 2025.

Driven by this growth, LTE traffic in sub-Saharan Africa will increase by a factor of 8.8. By 2025, about 80% of all data traffic in the region will be over an LTE network.

LTE will also be the main source of future revenue for operators.

"According to GSMA Intelligence, 2G and 3G users in sub-Saharan Africa will gradually migrate to 4G," said Chen. "By 2025, the proportion of 2G users will drop from 46% to 12%."

Part of the reason for the migration to 4G is because the ecosystem is mature.

"The price of feature phones supporting VoLTE in the sub-Saharan Africa market has been as low as $25," Chen said.

Since 5G equipment is already available, there is an opportunity for operators to build out their 4G networks while ensuring that they can evolve to 5G in future.

Chen offered the following tips to operators to ensure they are ready for 5G:

* All future equipment installations should be 5G ready, allowing easy upgrades to 5G through software updates.

* Software should support multi-standard spectrum sharing to improve spectrum efficiency, and to allow the smooth migration of 2G and 3G users.

* Networks must support 4G and 5G coordination, in terms of spectrum, operation and maintenance. This will ensure that users have a consistent experience as we enter the 5G era.

* The value of existing ICT infrastructure, such as base station sites, must be maximised to avoid overlapping services and wasted resources. This would mean boosting the capacity and coverage of every station for optimum efficiency.

* Carriers should explore the business case for all possible 5G innovations when building 4G networks, and not just embrace 5G for its own sake. This will mean building business models around IoT, video, live broadcast, augmented reality, and virtual reality.

* It is important that operators build partnerships with providers that can support the ongoing spectrum evolution with fast site upgrades and large-capacity solutions. The idea is to maximise the value of 4G networks, and smoothly evolve to 5G without unnecessary infrastructure investment.

Safaricom, Huawei Receive Most Innovative Service Award At AfricaCom

Safaricom and Huawei have jointly received the prestigious Most Innovative Service “the Business of Tomorrow” award at AfricaCom 2019 in Cape Town.

Overdraft service, known as “Fuliza”. This service enables users with insufficient funds in their M-PESA accounts to borrow money to complete their M-PESA transactions. The service was officially launched in January 2019 and has been gaining popularity in Kenya where Safaricom has over 23.6 million M-PESA users. Kenyans transacted over KES 6.2 Billion (USD 62M) in Fuliza's first month after its launch.

Michael Joseph, CEO, Safaricom said “M-PESA continues to play a leading role in deepening financial inclusion in the country. Fuliza enriches our mobile financial services portfolio further fulfilling our promise to always provide our customers with relevant products and services that meet them at their point of need. We are glad to partner with Huawei in bringing this commitment to life.”

Fuliza is empowered by the Huawei Mobile Money Finance Overdraft Platform which allows design, development and deployment of innovate finance products. This platform was created to enable credit overdraft facilities in multiple payment scenarios in a highly secure and stable way.

Over the years, Huawei has been working with Safaricom in improving its mobile financial services and developing new products, especially for loans and savings which can bring many benefits to individuals but also to SMEs to help grow their businesses.

David Chen, Director of Marketing & Solution Sales for Huawei Southern Africa Region said: “Financial services requires security and stability. These two elements are in the DNA of all Huawei’s ICT solutions.

We have focused on building a world-class application programming interface (API) to enable the local ICT ecosystem to tap into M-PESA to serve the needs of our client for business success and nurture the digital economy from a macro perspective.”

AfricaCom is Africa’s biggest telecoms and technology event which takes place annually in Cape Town, South Africa. This year, during this 3-day event Huawei has showcased its end-to-end 5G ability, facilitating the industry’s digital transformation through innovative tools, platforms and solutions and explored new opportunities that are emerging for the industry from these new technologies.

Greenlight Planet Partners With Telecom Operators In Sub-Saharan Africa

Greenlight Planet, the market leader in the rapidly expanding pay-as-you-go (PAYG) solar industry has successfully partnered with major telecom operators in Africa. Recognizing the natural synergy between the telecom and pay-as-you-go solar industries, the company is pursuing a strong telecom-focused strategy that aims to have a far-reaching impact on more than 600 million unelectrified consumers across the African continent.

The company has collaborated with more than fifteen telecom operators, banks and payment gateways to make Sun King products more affordable and accessible for rural individuals, increasing long-term value for a common consumer base. Full-fledged sales and distribution partnerships have been launched with three leading telecom operators, Vodacom (Tanzania), Orange (Burkina Faso) and Telma (Madagascar), to enable sales of solar-powered energy solutions through each operator's subscriber base and mobile money channels.

In addition, Greenlight Planet has integrated its innovative PAYG technology platform with leading mobile money providers across sub-Saharan Africa, enabling consumers to make continuous installment payments in a secure and simple way. Greenlight Planet establishes unique operating models with each telecom partner to best serve and work with each service provider's strategic goals, local business model and competitive landscape.

Dhaval Radia, Senior Vice President at Greenlight Planet, says “The time is right for telecoms to look beyond their traditional revenue earning models and explore innovative partnerships that can lead to a sustained increase in ARPU and customer retention. By expanding to rural consumer segments with value-added services such as PAYG solar products for daily energy and infotainment, telecom operators can help deliver higher value to their customer base.”

Recent collaborations between PAYG solar companies and telecom operators have demonstrated that PAYG solar customers are amongst the most active profiles of mobile money users in sub-Saharan Africa, many opening their first mobile money account specifically to purchase a PAYG solar home system.

Ninety-eight percent of Greenlight Planet’s PAYG customers make roughly 60 mobile money payments between $2 and $5 each over a period of twelve to twenty-four months to complete their installment payment plans for a PAYG solar device. The company has processed nearly 40 million mobile money payments from customers in Africa in the last three years.

With more than 100 million mobile money subscribers, and nearly 600 million people that lack reliable access to electricity on the African continent, opportunities for the telecom and distributed energy sectors to join forces remain tremendous. Since inception, Greenlight Planet has installed nearly six million solar products, benefitting over 24 million individuals, across Sub-Saharan Africa through its direct distribution channels in Kenya, Nigeria, Tanzania, and Uganda and through more than 200 strategic alliances in 32 countries across the African continent. The company will showcase its flagship Sun King range of solar-powered products at the upcoming AfricaCom conference from 12th to 15th November 2019 in Cape Town.

  • Published in Energy
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