Unlocking the potential of Africa’s national oil companies - CNBC Africa

Unlocking the potential of Africa’s national oil companies

East Africa

by Elayne Wangalwa 0

A clear mandate and governmental support is paramount in successfully unlocking the potential of national oil companies (NOCs).

According to a study conducted by KPMG, with oil and gas exploration activity in Africa at its highest level and the continent remaining largely unexplored, NOCs need sufficient resources and backing to achieve mandates.

During an interview with CNBC Africa Mark Essex, ‎director of extractive industries at KPMG Kenya said, “What this report highlights ‘Unlocking the potential of Africa’s national oil companies’ is the important of having a strategy first and the importance of recognising that different roles do require different amounts of money for one thing but there is also human resource elements to it, to the whole planning and strategic allocation and direction for a national company given a new remit in the upstream sector.”

(READ MORE: Future of the oil & gas boom of East Africa)

Currently, Africa supplies about 12 per cent of the world’s oil and boasts untapped reserves estimated at 8 per cent of the world’s proven reserves.

In East Africa, the recent discoveries of oil and gas are set to transform economies. The discoveries in Uganda, Kenya, South Sudan, Ethiopia, Tanzania and Mozambique have emerged as some of the most prolific oil and gas exploration regions in the world over the last 10 years.

However, East African countries not only lack infrastructure and technical expertise, they also lack distinctive oil and gas policies and legislation of the sector is uncertain.

(READ MORE: East Africa's first public owned oil and gas company)

“Becoming an upstream operator is very demanding in terms of financial commitments and involves organisational changes to the form and functions that NOCs have traditionally had in Africa,” Essex said.

“Many of these NOCs have to undergo major restructuring though in the long-term increased national involvement in the extraction, production and exportation activities of their petroleum sector can promise benefits for the country.”

Currently, many African governments are giving their NOCs ambitious mandates to ensure greater national participation in their upstream petroleum sector.

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