- Hosted by Africa Oil & Power and the African Energy Chamber, the ‘Closing Deals: Advancing FID During COVID-19’ webinar addressed the prioritization of energy projects in an environment of limited capital investment.
- Natural gas developments are facing fewer delays in FID than oil exploration and production projects.
Thursday, June 18, 2020, Cape Town, South Africa – ‘Closing Deals: Advancing FID During COVID-19,’ a public webinar held on Thursday, explored the future of deal-making and African energy financing in the short- and long-term, following the unprecedented impact of COVID-19 on the sector.
As operators continue to face uncertainty and a low-price oil environment, a range of survival strategies have been employed in the short term, including halting non-essential activities; adopting furlough or layoff strategies; slowing output; refining sales and purchase agreements and utilizing financial hedging instruments to market crude.
In the long term, however, COVID-19 will necessitate a reassessment of project development plans, many of which carry operating costs incompatible with a $40-barrel price.
“We are in unchartered waters. The IMF is estimating a 3% reduction in global GDP for 2020. The effect is almost triple to that of the 2008 financial crisis,” said Marcia Ashong, Founder and Executive Director of TheBoardroom Africa and Brace Energy. “Africa remains largely a commodity-based economy, and raw materials make up one-third of the continent’s export income. The road to recovery will be extremely slow and arduous. The full effect of COVID-19 on our economies is not fully recognized yet. From the oil and gas perspective, it has derailed major projects. For example, the Aker decision in Ghana [to postpone FID] will postpone further work on its Pecan discovery.”
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