African energy firms must adapt in order to cope with forthcoming growth in the country’s oil and gas market, a new report has warned
Local economies are set to benefit from recent oil and gas finds in the continent – provided suppliers, service providers and other businesses are geared up to meet this growth.
According to the report, from logistics firm DHL, African oil supply growth will continue over the next 25 years at a range of between 500,000 and 2 million barrels a day.
However the focus will shift to unconventional oil and gas operations, due to a 5% annual decline in conventional oil production.
“Africa will need to adapt in order to keep up with the demand, as well as evolving trends in this highly competitive sector,” said DHL’s head of energy sector Steve Harley.
“We have also witnessed an increased demand for the resource on the continent, and currently Africa is the region with the highest increase in oil consumption globally – 5% in 2012 versus only a 1% increase globally.
“This is likely to continue as many of the fastest growing economies are situated on the continent.”
The report, which looks at maintenance, repair and operations supply chain management for energy companies across the continent, was compiled following interviews with industry experts and oil, gas and mining professions in procurement, supply chain and materials management.
New developments, which are either located in very remote areas or technically challenging, brought the issues of infrastructure, transportation and expertise to the fore, he said.
“Extraction from unconventional sources is more complex and relatively more expensive from a supply chain perspective,” said Mr Harley. “As such, customers will need complementary expertise form integrated logistics suppliers to meet the challenges of these new geographies and technologies.”
The report found that logistics suppliers needed to provide oil and gas companies with end-to-end supply chain solutions.
And as businesses expand into unfamiliar markets and are forced to handle more supplier relationships, having one party who is responsible for management of the complete supply chain will become imperative, it said.
DHL Express Sub-Saharan Africa managing director Charles Brewer said: “This is particularly true in Africa. While the continent is showing promise, issues around infrastructure, regulatory hurdles, and lack of an integrated supply chain in most markets, can be a major hindrance for energy businesses.
“Couple that with the need to optimise production and improve supply chain management to enhance service and reduce cost, and you understand the need for integrated suppliers to introduce more robust metrics, optimise the inventory and find cost-effective transport solutions.”
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