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01 May 2019
The development of African businesses is not new, but the appetite for the African market is growing, and businesses are rapidly adding to their oil and gas portfolios by acquiring or discovering wells across Africa. For Small and Mid-Cap E&P companies, now is the time to consider an African venture. Whether they’re an operator or non-operator - there’s a wealth of opportunity for expansion.
Larger companies have dominated the headlines recently and are taking a significant position in the African E&P landscape – including, over the last few months, Total’s ‘significant’ discovery of new oil reserves in South Africa, ENI’s large gas discovery offshore Egypt and the recent competitive interest in Anadarko assets.
Independent companies are very active too, playing a pivotal role in the exploration life cycle and opening up new frontier areas for exploration such as Canadian Africa Energy in South Africa with Total and Impact Oil & Gas in Namibia while others expand operations in proven oil provinces such as Tullow in Ghana.
The challenge of managing new business in Africa
Whether starting out in Africa, adding to your existing African assets or moving your African operations into another part of the country, expanding your business in this continent presents many challenges to your operations and finance management. Companies needing to plan for a move into the African E&P market should consider the following:
- Financial regulations and policy
It is crucial to know what financial regulations and policies exist for each African territory you move into. Each area will have its own rules, including complex tax requirements– having knowledge of these, and ensuring that your own regulations match with them, is imperative before you move into an area to start drilling and extracting.
- Supporting multi-language
Certain African areas will have a high density of speakers that have English as a second language, preferring instead to speak French or Portuguese. There are also high concentrations of African-born languages like Xhosa, Oromo, Amharic, and Somali. You’ll need to make certain that your systems support multi-languages, to keep things running smoothly across all your operations.
- Currency changes
Exchange inconsistencies can sometimes hamper your bottom line, ensure that your finance systems can adapt to deal in multi-currency.
- Moving from hardcopy to automation
You might end up acquiring a well from a company that keeps hardcopy books rather than using an online finance management tool. This could mean lots of time-consuming data input for your team and little or no reporting. You might have to bring your finance operations up to speed by implementing a new Financial Management System (such as that provided by the Infor SunSystems platform).
- Third party systems – suppliers and their own infrastructures
The suppliers and investors that you use in different territories will have their own systems and ways of working that you’ll either need to adapt to or ensure that your systems can integrate with.
- Understanding digital transformation
“What is important for success in this sector is that organisations recognise the value of technology and the digital transformation and how that could be leveraged to reduce costs and operate much more effectively,” (Chris Bredenhann, Africa Oil and Gas Advisory Leader, at PwC, in Forbes.)
The African oil and gas innovation landscape is undergoing change, as more companies embrace technology to give their business consistent digital operations cross-continent. To ensure minimal disruption and rapid implementation, you’ll need to choose a solution that works for everyone.
- Responding to the changing needs of an African market
To get the very best out of your operations management you should employ finance and IT solutions from businesses that offer in-country experience. Having someone on the ground to respond quickly to any changes in your operational needs - or offer support when something goes wrong - is essential.
Progressive TSL’s African expertise
Progressive TSL already has a wealth of experience in providing consultancy and solutions for oil and gas operators looking to move into African territories.
Our African clients include:
- Seplat Petroleum
- Oriental Energy Resources
- Maurel & Prom
- Genel Energy
- Sound Energy
- Impact Oil and Gas
- SDX Energy
- African New Age
- Svenska Petroleum Exploration
These companies combined have assets in Nigeria, Cameroon, Algeria, Chad, Gabon, Tanzania, Egypt, Morocco, Somaliland, Namibia, Senegal, Guinea-Bissau, Ivory Coast and South Africa.
During these projects, we have developed a range of fast track solutions tailored to specifically address local challenges, whilst ensuring effective control, visibility and reporting wherever their head offices may be, whether in the UK and Europe or in a different African territory.
Our HQ is in London, but we also have an office in Lagos to provide hands-on implementation and support for our African clients. Because of our location, we have first-hand knowledge of the nuances of the African oil and gas sector and what it takes to survive and thrive as a business there.
To this end, we will review, design, and implement best practice systems and processes that are hard-wired to meet the regulations, tax arrangements and working practices of new countries - all our solutions are multi-language and multi-currency.
"We were really impressed with Progressive TSL. Their professionalism, knowledge and experience of oil & gas shone through from the first meeting. This understanding of our industry enabled Progressive TSL to provide recommendations and resolutions to challenges so that we really got the most out of our Finance Systems."
ROBERT WILDE, CFO, IMPACT OIL AND GAS
For operations and finance oil and gas solutions that are tailor-made to work for you and your African oil and gas ventures, contact us.