Increase accessibility for equity investments — GNPC CEO to African oil, gas companies
The Chief Executive Officer (CEO) of the Ghana National Petroleum Corporation (GNPC), Opoku-Ahweneeh Danquah, has called on African oil and gas companies to increase their accessibility for equity investments through listing on local and international stock exchanges.
“Listing and capitalisation of non-African oil and gas companies (E&P, Integrated O&G and Energy Equipment and Services) on major stock exchanges such as the New York Stock Exchange (NYS), London Stock Exchange (LSE), among others, completely dwarf that of African companies hence the need for them to list.
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“Currently, no African national oil company (NOC) is listed on a public stock exchange in Africa or abroad, compared to multiple listings of non-African NOCs such as Equinor and Saudi Aramco. This can be partly blamed on the reluctance of African governments to divest some ownership of their NOCs,” Mr Danquah said when he addressed participants at the Africa Energy Week in Cape Town, South Africa, on the topic “Securing capital in the current financial landscape”.
Despite the development, he said it was refreshening that “we are seeing the good intentions within Africa to increase capitalisation of NOC through listings. For instance, the Nigerian NOC, the Nigerian National Petroleum Corperation (NNPC), plans to launch an IPO in mid-2023.”
Special banks
Furthermore, Mr Danquah said there was also an urgent need to develop and strengthen African-focused development and finance banks to provide funding that accelerated the continent’s economic development through the sustainable exploitation of its vast fossil fuel resources.
For example, he said the African Export-Import Bank (Afreximbank) could provide critical project and trade financing to boost the development and intra-African trade in oil and gas.
“The bank recently helped with a combined US$1.75 billion facility support to the NNPC and independent firm, Eroton,” he said.
The GNPC CEO further stressed the need for financial sector players in Africa to provide long-term funding to unearth the full potential of the oil and gas industry on the continent.
“The global risk of tightening financial markets coupled with the clear and present danger of capital flight out of African fossil fuel projects is a clear impetus for increased involvement of the African financial sector in securing long-term capital for oil and gas projects,” he said.
Discoveries
Mr Danquah said over the last decade, natural gas had dominated African fossil fuel discoveries accounting for about 80 per cent of discoveries between 2011 and 2022.
Importantly, he added that, unlike crude oil, monetisation could be more practically achieved by serving proximate markets.
“Consequently, the benefits of natural gas projects are mostly retained within the continent. This should serve as a strong incentive to increase government-backed financing for projects, especially within frontier basins to de-risk projects and provide energy security.
“In this regard, Africa's growing gas resources and low access to electricity present opportunity for regional energy project development, financing and intra-African trade under African Continental Free Trade Agreement (AfCFTA),” he said.
He said governments could further support gas commercialisation by taking a more regional view to expand market access and develop key infrastructure.
“Large gas reserves may, for example, be able to efficiently serve regional power pools or gas markets through inter boundary gas pipelines that connect processing and LNG facilities or gas-powered electricity generation.
For example, according to 2019/2020 statistics from the Southern African Power Pool (SAPP), 69.5 per cent of power supplied to the power pool by Mozambique in 2019 or 2020 was generated from external gas plants.
“It is estimated that effective implementation of regional power pools could lower power investment costs in Africa by US$80 billion through 2040,” he added.
