Paul Eardley-Taylor, Head Oil and Gas from Standard Bank at Africa E&P Summit 2019
Interview Conducted by Our Summit Journalist, Ed Reed
AFRICA E&P SUMMIT 2020 DATES ANNOUNCED: 20 - 21 MAY 2020, REGISTER NOW FOR THE BEST EARLY BIRD RATE OF £1,495 + VAT
ER: Do you think things are improving around Africa?
PET: The theme of my talk yesterday was about exploration and how to encourage it. While Standard Bank does not cover the whole continent, we do cover 20 markets south of the desert, so from our perspective, there are a number of themes coming through in exploration which we think are worthy of further consideration by the industry and relevant governments.
ER: Are there things in particular that need to change?
PET: I think so. What we’re looking at, if you follow the energy thesis around the world, global oil demand will increase probably 1 to 1-and-a-bit percent per annum, gas a bit more and demand is going to increase by far less than population and GDP. Within that space, it’s really crucial for African governments to understand where their resources sit competitively, especially against the challenge of the Americans. What we’ve been struck by are projections, from the likes of BP, that throughout the 2020s America will be producing 20 million bpd of liquids, covering oil, tight oil and NGLs. That will peak at about 23 million bpd in 2030 and then decline. The key issue from our perspective is to encourage African exploration, how can it be assured that the guys putting the money in will have access to market in the future.
ER: Given that demand for gas is increasing faster than oil. What sort of prospects do you think there are for gas developments around the continent?
PET: It’s pretty good at the moment. If you look at the projections, gas globally is projected to grow by about 2% per annum, LNG by about 4% per annum and what we’ve seen recently is three different new African LNG export projects: Cameroon, Senegal-Mauritania, and the biggest of all, which is Mozambique, which could be the 4th or 5th largest supplier in the world. In Mozambique, floating LNG projects are already under construction and two onshore LNG projects are expected to take FID this year. The common theme across all of those different developments is really the speed of development.
ER: Do you think that the super-majors are seeing the progress that they need to in terms of approving new developments?
PET: What’s coming through is a challenge to the traditional mode of African project development. You have some projects that have taken an awful long time and haven’t yet closed. Kudu [in Namibia] was the classic development, but interior oil has also taken its time to develop in places like Uganda. In contrast, you have very fast developments in the north, you have Egypt, Senegal-Mauritania, as I’ve mentioned now Mozambique, all of which are really going from first exploration to FID in less than a decade. Our contention is that if the new African exploration provinces want to have a place in the market of the late 2020s – and the 2030s and beyond – is that it is essential to speed up processes as much as possible to ensure that there is a competitive space for new African exploration.
ER: Is the bank market appetite there for sustaining that sort of investment?
PET: I’m not so sure there’s any more money required from it because the technical processes will be the same. It’s arguable that even less money is needed because the development can be done in a shorter time period, but what has always been the case is for the largest projects there are always multiple sources of capital available for them, whether it be on the balance sheet, as was done by BP for Senegal-Mauritania, or traditional project financing as has been adopted by each of Anadarko and ExxonMobil and Eni for their Mozambique LNG projects. For the right project, developed over the right timeframe with the right economics, there’s traditionally been no shortage of capital and we don’t expect that to change.
ER: Have you enjoyed the summit? Maybe you could tell us a little bit about what you’ve done here?
PET: It’s a very good summit. It’s actually the first time I’ve been to this one in London – I’ve been to other events organised by Frontier. You’ve got a very high quality set of speakers, they are generally talking to pertinent prospects, there’s good access to the industry and it’s very well organised, so it will develop a reputation as a growing event on the London scene.