NJ Ayuk is the Executive Chairman of the African Energy Chamber and CEO of Centurion Law Group. A leading authority in the African energy sector, he is a strong advocate for African entrepreneurship and the indigenous energy sector. As a leader and a mentor, NJ is on a mission to help African entrepreneurs achieve success and support the emerging African talent in advancing their careers. He is the author of the book ‘Billions at Play‘, which looks at the future of energy in Africa.
Digital Journal spoke with Ayuk about his work to make sure that the oil and gas business has a positive impact on the African societies and drives sustainable local growth, and how the sector is adapting to the coronavirus pandemic.
Digital Journal: What has been the impact of the coronavirus on the oil and energy market?
NJ Ayuk: The coronavirus has had massive impacts on the growth of the oil industry in particular, with the price war also a major contributor, we have seen a destruction in oil demand and the global economy is under great pressure.
DJ: What are the longer-term impacts of the coronavirus likely to be on Africa’s oil producing countries?
Ayuk: In 2020, Africa’s oil producing countries had set ambitious goal for their development, however, as a result of the pandemic, a lot of these plans have showered in pace.
We are seeing Afrcan oil-producing and reliant countries being among the hardest hit by the Covid-19 pandemic and declining oil price – particularly through postponements of investments and delays on projects and domino effects on national budgets. The long-term impacts mean that the time and resources that could have been spent on development, now needs to be spend on negotiations and revisits to project approaches and strategies.
DJ: Can lessons be drawn from survival of the 2014 crash in relation to 2020’s oil price crisis?
Ayuk: There is even more strength now than there was before. We survived the oil price crisis of 2014, and we will survive this one two. The progressive economic diversification the continent has witnessed in recent years will also contribute to minimize the impact of this situation. Yes, final investment decisions might be slightly delayed until the situation stabilizes, but they will come in due time.
DJ: How is the coronavirus impacting on intra-Africa cooperation in the energy sector and economic growth?
Ayuk: The energy sector is a generous contributor to economic growth and development. Without energy, a lot of our industries stand to suffer a hard loss to their plans – even more so in Africa where energy poverty is still very much a reality.
The coronavirus is continuing to spread rapidly and in managing this, many African countries have implemented lockdowns as a means to control the spread. This means a lot of industries cannot operate fully or at all. This can be said for oil, gas and power developments on the continent, where we have seen oil companies cut CAPEX, governments revise budgets, refineries suspending activities and major projects suffering setbacks.
DJ: What the low oil price means for projects that were planned to be completed in the near term?
Ayuk: The effect of low prices has been nothing short of devastating. This could mean African governments are set to see decline in revenues and exploration projects might be put on hold resulting in thousands of local jobs at risk and in uncertainty.
Cuts in exploration spending and cancellation of drilling plans could potentially mean years of delay in new discoveries, reserves replacement and new fields being brought on stream.
DJ: How should Africa be developing policies that will help to position the continent as a global contender?
Ayuk: In taking its place in the global industry, a lot needs to change in Africa. In particular, we need to create enabling environments with attractive fiscal terms. This will be the gateway to unlocking the types of investors we need to develop our industries. I would encourage governments to play the game, look ahead and make decisions for the future. While we may be rich in resources, we still need the partnerships of international oil companies, we can learn a great deal from collaborating with them in pushing our agenda forward.
