The First Of 2011 And Related Issues - Africa’s premier report on the oil, gas and energy landscape.

The First Of 2011 And Related Issues

By Dayo Ojo

A number of oil and gas firsts will be recorded in 2011.  The lucky countries and operators will celebrate such accomplishments.  As they do, they will inadvertently raise questions which will define how enduring the successes will be.

Ghana ranks high on the list of countries with firsts in 2011 as it gets set to quickly follow commencement of oil production from the Jubilee field with loading first commercial cargo. Once that is accomplished, issues such as revenue management and economic empowerment of the stakeholders will become the focus of discourse. And quietly, Ghana will gradually unfold the character of its reputation as an oil producing nation. The world is waiting eagerly to see how Ghana will deal with post—oil economic management. Questions will arise whether oil is a blessing or a curse to Ghana. How will Ghana allocate oil resources? Will it stick to agreed plan? Comparisons will be made whether Ghana will fritter resources like Nigeria or go the way of Brazil which has devoted a significant portion of its energy production to powering an industrial base while at the same time ensuring consistent reinvestment in exploration.

Fifty years on, despite billions of petroleum dollars, Nigeria has continued to crawl like a toddler, unashamed that a 50- year old who does not walk or run is an irredeemable cripple! We expect that the widely publicized deprivation of lives in the Niger Delta, coupled with the attendant violence is more than enough lesson for Ghanaian authorities. The good news is that incurable optimists are convinced that the draft (almighty) Petroleum Industry Bill (PIB) is Nigeria’s answer to policy inconsistency and epileptic implementation of policy in the oil and gas sector.

Few things remaining equal (and unfortunately several things don’t remain equal around here), Uganda is also expected to celebrate first oil and first gas before 2017.  From Cameroon, we expect first gas from the Logbagba gas project while in Egypt we anticipate re-commencement of gas export to Israel.  In Nigeria, a few International Oil Companies (IOCs) and indigenous operators are expected to bring gas projects on stream in support of the goal to improve electricity supply from gas.

Whether it is a new crude stream, a gas plant, new discovery, farm in or mini bid round, it is all good news for the state economies as long as jobs are being sustained, new ones created and there is further investment in the sector. What is worrisome is that while all the accomplishments are being celebrated, little or no attention is paid to the soft but critical issues around the business, that is, the issue of the sustenance of the license to operate by the operators. Whether it is in Ghana, Uganda, Cameroon, Egypt or Nigeria, there is need to pay more focussed attention to what ought to be done if oil and gas companies are to retain their licences to operate. Are new entrants to oil and gas production more vulnerable to operational crises or stakeholder issues than experienced ones? That is a moot point. However, the game is changing. Unlike 50 years ago when Nigeria commenced production, the media is everywhere today. Stakeholders are everywhere and they are more aware. The internet is everywhere. And to add insult to injury, Wikileaks is here! Even without Wikileaks, the accountability phenomenon has taken over. And what does all of this portend? It is that to survive today is far more demanding than it was ten years ago.

While the goes on in Nigeria as to the desirability or otherwise of the Corporate Social Responsibility Bill which is currently in the National Assembly, there is no argument whatsoever about the fact that it is no longer enough for business to pay taxes, fair and equitable wages and walk away.

For businesses to retain their licences to operate there should be a transparent commitment to participating actively in the lives of the communities and contributing more than marginally to improving the quality of life in those communities. A number of companies across the continent are developing gas projects but the curious issue is how many of such companies are devoting time, resources, and personnel to researching or improving on known emergency response procedures? Will the new projects raise new concerns about emergency response readiness? Are there new issues emerging that require equally new strategies and tactics? Is it time to review available regional capability to deal with emergencies? All of these issues must be exhaustively debated if the future licences to operate are to be guaranteed.

Beyond emergency response capacity and capability, there is the critical issue of how the projects, companies and countries tackle the issue of the environment and the socio-economic aspirations of the citizenry. The increase in the number of Nigerian gas projects and the news of the registration of four of those projects under the United Nations Framework Convention on Climate Change (UNFCCC) Clean Development Mechanism (CDM) is welcome. However, registration for CDM and the attendant financial reward is not enough. Equally necessary, is a new phase of engagement and economic empowerment for the stakeholders especially locals who are resident in communities in which the facilities are located.

The bottom line is that oil and gas companies must redraw the stakeholder map and engagement plan in order to regain the trust of society. It is no longer enough to have a good plan. There must be professional handling of the day to day management of issue and crises. If issues do not arise because of what the companies have failed to do, issues will arise because of the increased awareness and knowledge.

Adedayo Ojo is Lead Consultant/CEO of Caritas Communications Limited, a specialist reputation strategy and corporate communication consultancy based in Lagos. Caritas is the West Africa affiliate of Regester Larkin, a pioneer reputation strategy and management consultancy with offices in London, Washington and United Arab Emirates.

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