David Steven Jacoby

How West African National Oil Companies Can Raise Their Equity Stake in Upcoming Projects from 15% to 50%

shutterstock_80954569Ghana National Petroleum has 15% ownership of the Deepwater Tano Contract Area. The other 85% of the ownership went to Tullow (47%), Kosmos Energy (17%), Anadarko Petroleum (17%), Sabre Oil & Gas Holdings Ltd, a wholly owned subsidiary of Petro SA (4%) (percentages are approximate).

In contrast, Sonangal holds 41% of the Mafumeira Sul project in Angola (Chevron holds 39%, Total holds 10 percent, and ENI holds 10%), and NNPC holds 40% of the Escravos project in Nigeria (Chevron holds 60%).

How can Chad, Côte d’Ivoire, Liberia, Mauritania, Cameroon, Niger, Gabon, Namibia, Sierra Leone, and Equatorial Guinea get a higher percentage ownership of projects in their own backyard? Low equity figures imply that partners are contributing 85% of the value, and by extension that the locals are only remunerated for their natural resource.

These countries can change the game by increasing their local supply chain competence upward toward a target of 50% of the value of the projects – more than the Nigerian and Angolan equity in the aforementioned deals, and just under the minimum target that Nigeria has set for the ensemble of sub-industries in its oil and gas sector (the minimum local content is 54%, on average).

The key to earning more equity is to accelerate the development of local capabilities that are: 1) critical to project execution; 2) that can be incrementally more profitable than the average oil and gas supply industry; and 3) that can meet oil companies’ qualification criteria within a relatively short investment timeframe.

Generally speaking, they can achieve most of these objectives by developing the following six industries:

  • Pressure vessel fabrication
  • Pipe fabricating and installation
  • Compressor manufacture, assembly, and maintenance
  • Well and drilling services
  • Pump and valve assembly and light manufacturing
  • Water treatment equipment and services

Boston Strategies International offers hands-on capabilities to help establish the needed capabilities in oilfield applications of each of these industries. Click here to ask us for our relevant qualifications in:

  • Formation of alliances with leading technology partners
  • Design and construction of facilities
  • Training and development of  local labor force
  • Management and supervision of operations

Note: Image courtesy of AHFRO.

Archives

Share This