Oil and gas trading is perhaps one of the least understood industries but, at the same time, is one of the important aspects to the oil and gas sector. Panelists from the Oil & Gas Trading Panel at Africa Oil & power 2017 took the opportunity to talk about some of the most pressing issues facing traders, such as Africa’s limited refining and storage capacity, investment in upstream and midstream projects, the importance of specs as Africa imports refined products and how the low oil price environment impacted the sector. The expert panel also tried to shed some light on the complex field of trading.
Panelists included Cholo Seane, Executive Director of Aquila Petroleum and Chemicals Trading; Frank Monkam, Origination & Investments of Gunvor Group; Guillaume Quiviger, Senior Investment Manager of Vitol; and moderator Sebastian Wagner, Executive Director of DMWA Resources.
“The trading industry is often regarded as a little bit of an opaque industry and I think most of us here on the panel wouldn’t agree. As one of my mentors used to say, trading is not that difficult. … We try to optimize the pricing a bit,” said Wagner. “So, we hope we can shed a little bit of light on what we do on a daily basis.”
While traders in recent years have capitalized on massive investments in the upstream — such as Vitol’s involvement in Eni’s Sankofa offshore oil and natural gas project in Ghana — these types of investments will be fewer and far between, as the risk appetite for upstream investment waned on the heels of the oil price crash, the panelists said.
The panel also analyzed the controversial topic of specs regulation in Africa, with recent reports showing Africa imports a disproportionate amount of dirty fuels. However, the panelists cautioned reporters to understand why— many African countries, as still-developing markets, often cannot afford the highest quality fuels, and already offer subsidies to poor populations to purchase the cheaper, dirty fuels.
Panelists quickly identified some of Africa’s key challenges in the trading sector, and a severe lack of storage depots and midstream infrastructure topped the list. For landlocked countries, this lack of midstream infrastructure, such as pipelines, is an especially critical issue. At the same time, these challenges represent crucial investment opportunities for oil and gas investors. In many countries, there is massive potential to attract the necessary investment, especially when countries cooperate regionally to take advantage of economies of scale.
See a video recap of the panel here.
The agreement will see Ethiopia exporting 100 MW of electricity to South Sudan over the next three years with plans to increase capacity to 400 MW.