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Tag: Opinion Piece

  • Stop Sitting on Blocks: Participate in the AEW 2023 African Farmout Forum

    Stop Sitting on Blocks: Participate in the AEW 2023 African Farmout Forum

    By: N.J.Ayuk

    Africa’s oil and gas wealth will go to waste unless countries and companies stop sitting on blocks and invest in the production of future energy supplies

    Africa represents one of the final frontiers for hydrocarbon exploration worldwide. At a time when demand for oil and gas is skyrocketing globally and African nations are making great strides towards industrializing their economies, developing untapped oil and gas resources will be instrumental. Yet, the continent continues to see a trend whereby companies acquire blocks and hold onto the asset until someone else makes the investment and carries it to success.

    While this may have worked decades ago, this is not the way to invest in Africa. Holding onto assets without making the financial commitment will not alleviate energy poverty: it simply brings to light ineffective partners and uncommitted companies. The industry is changing, and independents, major E&P firms and investors need to commit or get out and let others take the reins.

    With over 600 million people currently without access to electricity and over 900 million without access to clean cooking solutions, Africa requires a collaborative approach to bringing new supplies on the market. Efforts to industrialize have brought to attention current trends of block inactivity, unexploited acreage and potential markets.

    Governments want to see movement, to see investment, and to see companies fulfilling their financial and exploration commitments. The time is over where companies take an asset without taking the exploration risk. For Africa to unlock the full potential of its resources, companies with intentions to commit need to be connected to blocks, and this is where the African Farmout Forum steps in.

    During this year’s edition of the African Energy Week (AEW) conference and Exhibition – scheduled for October 16-20 in Cape Town – an African Farmout Forum will connect new investors to blocks, foster partnerships to stimulate exploration and kickstart a new era of oil and gas development on the back of block acquisition.

    The African Farmout Forum is spearheaded by financial services company Moyes & Co; global acquisition and divestment advisor Envoi; and oil and gas deal listing platform FarmoutAngel, alongside the African Energy Chamber (AEC), and represents a not-to-be-missed event for global upstream players.

    For E&P firms, the African Farmout Forum presents a strategic opportunity to tap into untapped acreage in Africa. The forum hosts policymakers and governments from across the entire African continent, with major plays on show including Angola, the Democratic Republic of the Congo (DRC), Sierra Leone, Kenya and many more.

    National delegations will provide presentations on upcoming licensing rounds, current merger & acquisition activity and future projections for ongoing exploration initiatives. Meanwhile, for countries with unexploited hydrocarbon potential, the forum allows for direct discussions with independents and major players, fostering engagement that allows for new deals to be signed.

    The continent’s proven oil and gas resources currently measure 125 billion barrels of oil and 620 trillion cubic feet (tcf) of gas. However, many markets are yet to reveal the full extent of their hydrocarbon deposits. Nigeria, for example, with proven gas reserves of 200 tcf, likely holds more than 600 tcf in recoverable resources while South Africa likely holds up to 209 tcf of onshore gas. Additionally, countries such as the DRC, Zimbabwe, Sierra Leone, Sudan, Kenya and many more have not fully identified resource quantities, paving the way for fresh discoveries and developments.

    At the same time, many proven oil-rich basins have blocks that are currently not being developed. Companies are either being slow to invest or countries are being relaxed with procedures and timing. If Africa is going to alleviate its energy crisis, spurring long-term economic growth and industrialization on the back of oil and gas, these blocks need to be developed in an urgent manner.

    The African Farmout Forum will introduce companies with oil blocks, permits or licenses to investors and publicly traded companies through interactive executive management presentations. The forum will feature live presentations from company executives and industry experts, with opportunities to engage in Q&A sessions with presenters. This enables collaboration and direct negotiation, eliminating barriers such as lack of clarity. Additionally, the forum offers the chance for stakeholders to schedule one-on-one meetings with company management, further enhancing opportunities for engagement.

    “For small and independent companies seeking liquidity, and large companies looking for a balance of individual and institutional investment, the forum offers attendees the ability to engage with a large number of investors from across the globe. Africa needs to stop this trend of sitting on untapped blocks. If the continent wants to make any progress to industrialize and make energy poverty history, independents, major energy firms, state-owned companies and governments need to proactively develop both on- and offshore acreage,” stated NJ Ayuk, Executive Chairman of the AEC.

    The African Farmout Forum provides companies from across the private and public sectors the unique opportunity to meet, connect and sign deals. Spearheaded by industry experts and featuring numerous upstream market presentations, the forum introduces investors to untapped acreage. Join the African Farmout Forum today and be part of the next wave of upstream success in Africa.

    AEW is the AEC’s annual conference, exhibition and networking event. AEW 2023 will unite African energy policymakers and stakeholders with global investors to discuss and maximize opportunities within the continent’s entire energy industry. For more information about AEW 2023, visit https://aecweek.com.

     
  • BRICS: CONSIDERATIONS AND IMPLICATIONS OF A SINGLE BRICS CURRENCY

    BRICS: CONSIDERATIONS AND IMPLICATIONS OF A SINGLE BRICS CURRENCY

    By Franco Macchiavelli

    Market Analyst at Admirals and Certified European Financial Advisor (EFA) (Nr 35591)

    5 September 2023

    The 15th BRICS Summit, hosted by South Africa in Johannesburg from 22 to 24 August, culminated in the widely anticipated announcement of a soon-to-be expanded BRICS bloc, with the admission of six new member countries to this economic grouping as from January 2024.

    In the build-up to this year’s BRICS Summit there has also been some speculation that the grouping might discuss the issuance of a joint currency to compete with the dollar as the reserve currency with world hegemony.

    However, this issue was not addressed during the event. South Africa’s representative stated that such an approach was never considered, and India’s foreign minister also dismissed the possibility.

    Data from the IMF’s 2023 World Economic Outlook shows that together, these five economies – Brazil, Russia, India, China, and South Africa – account for roughly 40 per cent of the world’s population and 20 per cent of global trade flows. Despite the logic behind the idea to introduce a new currency in place of the dollar, the truth is that this would be rather complicated to implement – at least in the short to medium term.

    If the idea were to come to fruition, there would be two main approaches:

    1. Create a new central bank that would issue a single currency to replace the national currencies of each of the five countries (Brazil’s real, Russia’s rouble, India’s rupee, China’s yuan and South Africa’s rand). However, this would require these countries to give up their monetary sovereignty, which would limit their ability to manage the value of their own currency according to their economic needs. To understand this better, if Brazil wanted to depreciate its currency to improve its exports, but the other countries did not agree, Brazil would not be able to make this decision unilaterally. Therefore, we are talking about an important risk in the management of each country and the different factors that affect its growth and economic and monetary management.
    2. 2. A different scenario would be to adopt the currency of one of the member countries as the BRICS’ own currency, such as China’s yuan. However, this would also present major challenges, as the remaining countries would again lose their monetary sovereignty, this time to China, which could limit their ability to make independent economic decisions. If for example China wanted to implement a rate cut to boost domestic economic growth, the remaining BRICS nations would be affected collaterally without having been able to influence China’s decision, also affecting the other economies that might not be experiencing the same characteristics and conditions as China.

    In short, both paths are complicated to pursue and present significant obstacles for member countries.

    What is certain, however, is that these countries aim to reduce their dependence on the dollar in the future. Currently, when the BRICS sell their products to the rest of the world, they receive payments in dollars and accumulate these dollar-denominated reserves. However, fluctuations in the value of the dollar over the years have posed a significant depreciation risk for these countries.

    Most of the BRICS have been accumulating dollar reserves for years, and with the effect of inflation, these have been affected because they have mostly not imported goods, but accumulated reserves.

    What would happen if instead of accumulating dollar reserves, they accumulated reserves in another currency through trade among the members themselves?

    This brings to mind the recent case of trade between Russia and India:

    India has been buying oil from Russia at a significant discount to the price in the West. However, these purchases have been paid for in rupees. So, if we talk in terms of trade, Russia sells oil to India and receives payment in rupees, but collaterally faces a significant currency risk, i.e., that rupees depreciate over time even more than the dollar.

    Moreover, rupees are only accepted in India and do not have the global hegemony to buy any asset across the world, which complicates the management of its international reserves, unlike the dollar, which is accepted globally in the purchase and sale of any good, asset or service.

    Ultimately, despite the search for alternatives to the dollar, replacing it with a new currency poses considerable challenges for the BRICS, and makes it unlikely to manifest itself in the near future due to the complexity of its implementation.

    Naturally the addition of six additional nations – Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates will multiply the complexities significantly.

    It will be interesting to see what impact the BRICS expansion will have on the global economy and geo-politics but for now the dollar will continue to be the dominant trading currency.

    Disclaimer: The views expressed in this article reflect those of the writer and does not represent the official view of the Eco-Enviro News Africa,magazine.