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  • Oil in Africa – Everything You Need To Know

    17/02/2020

    According to an estimate, more than 57% of Africa’s export earnings come from hydrocarbons. Proven oil reserves in the continent have grown by almost 150 percent in the four decades between 1980 and 2020, increasing from 53.4 billion barrels in the 80s to well over 130 billion barrels today.

    All these facts have forced foreigners to take notice. An estimate by Al Jazeera news claims that while ExxonMobil – a US-based oil giant – has committed to invest more than $24billion, its Italian counterpart ENI plans to spend almost the same amount on Africa’s oil and gas sector in the near future.

    Throw into the mix the ever-rising Chinese appetite for oil, a nation of over 1bn people which already imports 66 percent of its total oil from Africa, and one could predict that the oil-and-gas sector in this region is a potential gold mine for both foreign and local investors who want to make huge profits.

     

    How to Access the African Oil Market?

    Here are five steps you need to follow to explore, extract, refine and distribute African oil:

    Step #1: Obtain Drilling and Land Use Permits

    The first step requires getting drilling and land-use permits from regulatory authorities. You have two ways to go about this step. First, you can submit an application, wait for months as the commission checks your application, and hope that they give you the permit.

    Found this route too risky? Then you might want to hire a lobbyist. Make sure the one you’re going to pay your money has contacts on the ground. In fact, it’s better if you hire a whole lobbying organization as its connections would be more powerful to get you the abovementioned permission.

    Step # 2: Execute a lease with the property owner

    Once you have zeroed in on the site where your geologist claims there are ample chances of oil deposits, you’d need to get a lease from the property owner. Here too the lobbyist – provided they have an attorney in their team – will come to your rescue by preparing the proper lease documents.

    Step # 3: Hire subcontractors

    Unless yours is a million-dollar company, you might need to hire inexpensive subcontractors to perform technical tasks. For example, you might need the help of a geophysical firm to get seismic measurements of the site where you have suspect oil reserves. Provided you have no knowledge of the local market, you can ask your lobbyist to recommend companies.

    Step # 4: Start drilling

    Provided the seismic data ends up showing sufficient oil in the surface, you’d need to start drilling exploratory wells. Provided your estimate of reserves is huge, acquire the services of a drilling company. Also, make sure you have all the equipment and the supplies which you’re going to need down the line to cap the walls and store the crude oil in tanks.

    Final Step: Develop the area around the site

    Once you’re sure that the oil beneath your feet is sufficient to cover the vast amounts that you’d have to spend to extract it, you’d have to carry out the development of the surrounding area to make it livable for the people who will be working on the site.

    Apart from building roads into the site and living accommodations for the working personnel, you’d need either permanent structures for offices (brick-and-mortar buildings) or you can carry out your office work in temporary ones (trailers).

     

    Conclusion

    Africa might be the future of the world, but it’s the oil under the feet of the Africans that is the future of the continent. Investors would do well to realize this crucial fact if they’re to fully exploit this tremendous opportunity afforded to them by this region.

    More importantly, if the investors want to make the entire abovementioned process go seamless, they’d do well to hire a lobbyist. With their contacts on the ground and connections in the corridors of power, such organizations can take the pain out of the entire investment process.

     

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