OIL & GAS: Africa's Oil Beckons, But Risks Abound
Recent Western Cape Business News
It is boom time in Africa’s oil and gas business, but the players – especially those new to the continent’s often volatile economic and regulatory environment – continue to need expert technical support.
Unprecedented growth in the upstream sector is likely to push African output to over seven million barrels a day by 2014, half of this coming from Angola. And while the existing oil giants on the continent – Algeria, Nigeria, Libya and Angola – will still dominate, there are promising prospects in east Africa and steady progress in southern Africa.
These relatively unexplored areas are attracting increasing attention, according to Danélle Fourie, senior environmental scientist in the Cape Town office of consulting engineers and scientists, SRK Consulting, and will draw new entrants.
“While most upstream oil and gas companies have high corporate standards for health, safety and environmental (HSE) issues, they are often ill prepared for the volatile African regulatory environment,” said Fourie. “Widespread environmental degradation, significant socio-economic concerns, poor infrastructure and services, political instability and variation in the sophistication of regulatory systems and enforcement, are just some of the factors that must be considered by companies wishing to enter the African market.”
The time needed to conduct environmental impact assessment processes, the sensitivities of local communities and increasing awareness among stakeholders, can all lead to unexpected delays in approval processes, she said, which is not good for project planning and funding.
“Our involvement in Africa has provided us with an invaluable appreciation of the unique challenges posed by conducting business on the continent,” said Fourie.
“When undertaking projects on the continent, oil and gas prospectors need to be aware of local sensitivities around hydrocarbon exploration and production, such as seismic noise impacts on marine fauna, the management of mud, cuttings and produced water discharge, and socio-economic impacts, such as on the fishing industry,” she points out.
“It is vital that companies, or their consultants, remain abreast of relevant standards and regulations as well as local legal frameworks, which can differ significantly in their requirements and complexity between the different countries on the African continent,” she said.
“By taking an integrated and flexible approach to environmental and socio-economic issues, and having access to the appropriate resources and local knowledge, environmental approval processes should run efficiently. Compliance with host country regulations, the operator’s corporate standards and international best practice, will also be achieved.”
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