…Says Continent’s Oil Producing Nations May Lose $110 bn
As Corona virus ravages the world, thereby pushing down the world oil prices, Oil producing countries in Africa have been called upon to assist petroleum exploration and local service companies.
Making the call in a media statement released on Tuesday, African Energy Chamber says the call becomes necessary, because it anticipates that operators and services companies will be hard hit as a result of the effects of COVIT-19 on the world economy.
“African Energy Chamber,” it explained, “has a fundamental belief that we have to let the market work for itself, it encourages African countries that have engaged petroleum operators and local service companies to find ways to relieve the burden on exploration programs and local companies.
“At present,
Africa stands to lose over $110bn in taxes, petroleum exports, jobs, and
contracts to local companies over the next three months. And, companies are
already taking a hit on their exploration programs and have to find ways to
raise capital to successfully drill wells.
“Extensions are needed to ensure that these
companies maintain success in the near term and OPEC member states need to
immediately engage with the leaders of Saudi Arabia and Russia to ensure that
oil markets are not oversupplied.”
The body called on African governments to, as a
possible solution to these growing issues, consider imposing immediate
cancellations or postponements of tax payments for a period of up to three
months for African owned service companies, indigenous exploration and
production companies, and all international and local companies working on
exploration programs.
“It is a hard time for African oil and gas,”
stated NJ Ayuk, Executive Chairman of the African Energy Chamber and CEO of
Centurion Law group. “ And if the oil price does not see a hike soon, there is
a likelihood that a lot of jobs will be lost in many petroleum producing
countries and, those who were expecting to see first oil soon will be heavily
impacted.
“Final
investment decisions, new field developments and gas projects also stand to see
delays or cancellations which will have a massive effect on many African
businesses and communities who view the industry as an opportunity to move from
poverty to the middle class.”
This, the African Energy Chamber believes will
help employers pay employees and improve their liquidity and reduce some of the
losses in revenue while preventing job losses. African players were already
strained by low profits and difficultly accessing capital for oil and gas
projects.
Should the price war continue, many marginal field producers will likely go out of business, exploration programs will be halted, licensing rounds will fail and the majors will have to make the difficult decisions of scaling back operations.
