Billions At Play’ Is A Comprehensive But Entertaining Look At Africa’s Oil & Gas Present And Future
Two decades of negotiating African oil and gas deals have given NJ Ayuk a grasp of the continent’s energy landscape that few can match.
The American-educated, African energy lawyer serves up generous doses of that insight in his second book, “Billions at Play: The Future of Africa Energy and Doing Deals.”
He also offers a road map for the continent doing a better job of using its vast energy resources to improve its peoples’ lives. One topic he addresses is how African countries can use their energy industries as springboards for diversifying and growing their over-all economies. Another is how they can negotiate better deals with international energy companies. Still another is how the continent’s countries can use marginal oil and gas fields to develop domestic energy industries that — once strong — will be able to compete not just on the continent, but globally.
In addition, Ayuk discusses why Africa’s fledgling natural gas industry can become an international powerhouse, how the continent can improve its notoriously unreliable, economy-sapping power industry, why American energy companies should stop curtailing their investments in Africa, and why the continent’s energy industry needs more women.
Hundreds of examples are one reason “Billions” is so valuable. Ayuk discusses energy projects that have failed to live up to expectations as well as successes that have bolstered countries’ economies and their people’s livelihoods. He also names and details the contributions of dozens of Africans who have helped the continent’s oil and gas industry become stronger.
The book’s underlying theme is that — in Ayuk’s words — “too often, our natural resources create wealth for foreign investors and a select group of African elites while everyday people fail to benefit.”
“Oil can work for everybody,” he says. “It can transition economies.” And he adds: “If African governments, businesses, and organizations manage Africa’s oil and gas revenues wisely, we can make meaningful changes across the continent.”
Ayuk offers copper-rich Chile as a blueprint for resource-dependent African countries wanting to diversify their economies so more of their people benefit. Two of the keys in Chile, he says, were deregulating the economy and using public funds to develop new industries, like timber and fisheries. In the past half century, he points out, diversification has led to copper’s share of Chile’s export revenue falling from 80 percent to 50 percent.
As for Africans needing to step up their energy-negotiations game, Ayuk notes that when he became an oil and gas lawyer years ago, “Africans were not part of any kind of deal-making structure: When negotiations involving foreign investors’ oil and gas exploration, production, and revenue-sharing took place, Africans were not at the table—or even in the room.”
Although African negotiators are at the table now, some are being outmaneuvered, he suggests. One reason is they are not preparing well enough for negotiations because they are failing to study every wrinkle in the contract proposals the other side is offering, he contends. At best, he says, unprepared negotiators are “squandering economic opportunities. But they also could be opening the door to agreements with the potential to harm their company or country, not to mention the environment or even local stability.”
He goes on to list steps that African negotiators can take to achieve oil and gas deals that please their clients, one of which is to remember that the best agreements benefit both sides. A mutually rewarding deal will reduce the chance that one side will become so resentful some day that it demands a renegotiation.
Ayuk is an enthusiastic supporter of African countries awarding marginal energy-field development rights to local companies. These are often fields that international companies obtained the rights to, then decided would fail to offer a good enough return. Letting local companies develop marginal fields gives them the experience they need to compete with the big boys, offers real-world training to their employees, and bolsters local energy equipment suppliers’ business, Ayuk says.
Nigeria has been a leader in local-company-focused marginal-field development, he says. Its initiatives have given “more than 30 locally based companies the opportunity to establish themselves and develop their capacities as upstream (oil-production) operators,” he reports.
Although Africa has been an oil-market force for decades, it has lagged on natural-gas development, Ayuk points out. This needs to change, he says. While more gas exports would boost the continent’s economy, the main reason he wants to see a gas-development boom is that gas would ease the continent’s power shortages until renewables inevitably take over.
“More than 620 million sub-Saharan Africans—or a full two-thirds of the population—live without access to any electricity at all,” Ayuk says, and blackouts often strike areas that do have power.
Africa has so much gas potential that many energy experts see the continent as gas’s new frontier, he enthuses. The power shortages that gas could help fix have been battering Africa’s economy for decades, Ayuk laments. The main reason is that governments own most countries’ utility assets, he contends. Governments that have separated power creation and distribution, and privatized it, are reducing their electricity deficits, he says. If adopted continent-wide, unbundling could go a long way toward solving the power crunch, he asserts.
Ayuk is concerned about American companies’ reduction in energy investment in Africa, which he ascribes to their assessment that Stateside shale prospects remain good and do not pose the risks that Africa does. He spends most of Chapter 17 making a case for why American energy companies, whose leadership and inventiveness he admires, should renew their commitment to investing on the continent.
“We need American oil and gas companies to continue operating in African communities and to continue hiring African people, purchasing from African suppliers, and partnering with African companies,” he says. “And we need companies willing to share knowledge, technology, and best practices.”
The bottom line, he says, is that “doing this remains very much in the interest of the American companies. They can reap tremendous financial rewards here.”
Ayuk also makes a case for Africa’s oil and gas industry hiring and promoting more women. His main argument is one that you hear reverberating across the business world: Why limit your company’s potential by failing to consider half of your country’s human capital?
He underscores his argument by pointing to African women who have achieved petroleum-industry success, including becoming CEOs.
Although “Billions” deals with one of world’s most complex industries, it is easy to digest because Ayuk writes in a straightforward, concise and zesty style. This makes the book a joy to read. I learned a lot about Africa’s oil and gas industry in “Billions” — and its prospects for the future — and had fun while I was doing it.
Mfonobong Nsehe is a Contributor @ Forber Billionaires