Daniel Silke gave an energetic and broad-reaching talk on trends for Africa at Africa Oil Week.

Daniel Silke, a  futurist and former member of the South African parliament, gave a lively keynote address on trends which could impact the continents hydrocarbons industry at Africa Oil Week yesterday

He outlined the trends which oil and gas operators across the continent will need to take into account for strategic decision-making, including economic shifts, the cost and uncertainty of domestic political violence, militia activity, low rates of exploration, the continuing economic growth of China, and a young, increasingly urbanised population. Mr Silke also issued warnings to the delegates, such as rising interest rates in the US which could have an impact on loans taken out by African countries and operators in US dollars. He said that Africa is "heavily indebted" and this places "restrictions on doing business".

Other challenges for Africa which Mr Silke flagged up included the need to improve regulatory framework, overcoming corruption, and poor physical infrastructure.

"In 2016, FDI is down but capital investment is up so its a mixed picture," said Mr Silke.

Despite issues surrounding debt, political violence and militia activity, Mr Silke said that Africa looks "relatively stable" in comparison to the uncertainty created in Europe by Britains vote to leave the European Union, and the combined unpredictability of Donald Trumps presidency and Kim Kong Uns regime in North Korea.

"There is a move from reliance on commodities to a service-oriented economy," Mr Silke told the conference. He said that while there was "moderate growth" for commodities-led economies, other African countries, such as Ethiopia, Kenya and Tanzania were showing signs of growth in the service sector. While commodity growth is down, Mr Silke said that Africa could be a leader in the export of aluminium, cobalt, manganese and nickel to countries which need these materials for manufacturing, particularly in the electronics sector.

In line with one of the strong themes of the conference, Mr Silke said that trade between African countries is important for economic growth. He cited the example of the European Union, where 69 per cent of all trade is done between member states and south-east Asia, where trade between countries in the region is at 50 per cent. In contrast, only 18-20 per cent of trade in Africa is within the continent.

"Africa needs to trade more with each other," Mr Silke said.

Multiple speakers at the conference have talked about the increased presence of Chinese investment into Africa and Mr Silke said this is set to continue, particularly in regard to providing capital expenditure for projects: "China remains committed to Africa - it is the largest job creator on the continent."

The issue of providing access to electricity for more African households and businesses, another strong theme of Africa Oil Week, was raised by Mr Silke.

"We cannot talk about the future without talking about power," Mr Silke said. "In Africa, 620mn people have no power, this is the core issue. Power constraints will hamper growth."

"[Access to power] is where the [hydrocarbons] sector should be looking to the future - those people need to live."

Governments and operators also need to be mindful of the "shift away from oil" as a fuel for power generation, according to Mr Silke, with Africa "moving toward gas, renewables and hydro going forward".

"The industry needs to take advantage of these changing trends ... Natural gas is the great opportunity into the future."

Investment in infrastructure will also help develop the oil and gas industry in Africa with Mr Silke saying that this will cost an estimated US$721bn between 2013 and 2035. In regard to the young population across the continent, he said that bringing young talent into industries is "an essential challenge for all of us".

The event will be held in Durban. (kfw1018/Pixabay)

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David Mahlobo, South Africas new energy minister, addresses Africa Oil Week.

The 24th Africa Oil Week opened in Cape Town today with a strong focus on moving away from exports and instead utilising African oil and gas for access to energy and downstream projects, such as petrochemicals and refining

In his keynote address, the new South African energy minister, David Mahlobo paid tribute to Oliver Tambo to coincide with the 100th anniversary of his birth, for his contribution to South African democracy and subsequent economic development, before emphasising the importance of discussing "the common future of Africa [as part of the] African Union agenda" at the conference. In the southern Africa region, he cited gas exploration in Namibia and coalbed methane in Botswana Zimbabwe as examples of integrated economies in the continent. 

"Africa needs to take steps to ensure the continent grows with sustainable development," he said. "Access to energy is needed to propel economies in the next 50 years - energy transforms lives and economies."

Mr Mahlobo said African countries need to move away from being net importers of oil and gas and "further embrace energy security and supply". He said that there are currently nine African refinery projects with capacity of 1.65mn bpd planned, including Nigeria with plans for capacity of 650,000 bpd once current projects are completed.

In regard to South Africa, he said that the country will soon be producing hydrocarbons and while there were some economic benefits to the low oil price, the recent increases in Brent crude prices need to translate into development and jobs. While struggles over energy resources have been a source of conflict in Africa, Mr Mahlobo was upbeat about the prospect of South African hydrocarbons being used to produce energy with "affordable tariffs and subsidies for needy households". He added that environmental sustainability to mitigate the effects of climate change as part of South Africas integrated energy plan was important.

He told the conference that "a diversified energy mix" and a "pragmatic approach were important" to meet clean energy targets, with gas playing an increased role in South Africa. Mr Mahlobo said gas should be used to "improve efficiencies" in industries were "sub-optimal fuels" are being used.

Austin Avuru, CEO, Seplat Petroleum Development Company, echoed Mr Mahlobos sentiments about AU cooperation, saying that energy should be used as an enabler for the African economic plan, particularly in terms of improving access to energy. He pointed out the disparity between Africas significant energy production and low consumption and power outages, even in areas with electricity.

"Energy consumption should be proportional to economic development," Mr Avuru told the conference. "Bragging rights should be about consumption, not production."

He criticised African countries for rushing to take out loans to build long export pipelines and other infrastructure for exporting instead of focusing on using oil and gas for domestic consumption. Once countries start producing oil and gas, "we start repaying debts for infrastructure".

Mr Avuru cited the example of Nigeria where oil and gas make up 80 per cent of government revenue but just 10-14 per cent of GDP, describing it as "a disconnect ... a rental economy".

"But things are changing, not just in Nigeria, but across Africa," he said. "In Nigeria today, gas consumption is increasing."

It is projected that by 2020, Nigerians will be consuming gas at a rate of 3tcf/day with a fivefold increase in electricity consumption projected in the same timeframe. Mr Avuru said that if Nigeria becomes a net exporter of hydrocarbons, the downstream sector can be further developed with plans for refining capacity of 1.2mn bpd by 2020, an even bolder projection than the 650,000 bpd cited by Mr Mahlobo. He added that Egypt, Ghana, Cote dIvoire and Tanzania are all taking a similar path towards energy security using local hydrocarbons.

He concluded his address by recommending privatisation of refineries to create a domestic market and full deregulation of the downstream sector.