Africa holds around 7% of the world’s proven crude oil and natural gas reserves, yet the continent remains largely under-explored. It’s safe to say that the motherland is far from having exploited its full potential. For this potential to bear fruit and translate into economic development and jobs, several things need to happen. Good thing is, they are slowing taking shape.
The rise of the African continent
For example, it is encouraging to see African oil and gas companies becoming more and more a part of the continent’s economic empowerment story. In this context, 2020 is likely to see a continuation in the rise of the African private sector’s contribution to supporting industry growth and jobs creation.
An emergence of strong African oil companies (AOCs) across the value chain, from field operators to services providers, is a key emerging trend for the sector. Many companies from West Africa particularly are seeking regional expansion across the continent and driving regionalization. As most countries strengthen their local content regulations, the trend is likely to accelerate.
Regional and international cooperation
This year will prove whether African nations have learned how to cooperate on transnational energy deals and infrastructure for the benefit of all involved. It could see the unlocking of multi-billion-dollar opportunities through transnational energy cooperation and projects. This applies to planned and stalled pipeline projects in need of revival such as the East African Crude Oil Pipeline for instance, but also to upstream investments and developments, especially in the Gulf of Guinea. Similarly, the way African Continental Free Trade Area (AfCFTA) impacts intra-continental trade could be a boost to the energy sector if properly utilized.
On the international stage and under the leadership of Secretary General Mohammad Sanusi Barkindo, Opec has welcomed more African producers – Equatorial Guinea (2017) and the Republic of Congo (2018) being the latest ones. As the organisation further expands the Opec/non-Opec outreach across Africa to find consensual solutions to market stability while offering technical assistance to upcoming producers, 2020 might be the year a new addition of an African oil-producing country as Opec member.
Expanding midstream and downstream infrastructure
New refinery and petrochemical complexes are being constructed and existing ones will be expanded in the near and medium term. The continent is likely to see the emergence of regional hubs and markets with the strategic ambition of procuring petroleum products and natural gas. Examples include Equatorial Guinea’s LNG2Africa initiative and the Akinokien import and re-gasification terminal, the Dangote Refinery in Nigeria, and Ghana’s Tema LNG terminal project, among others.
Market access is also increasing on the back of several pipeline projects such as the Lokichar-Lamu Crude Oil Pipeline in Kenya, and the intensifying talks over the 5,660km pipeline that could supply gas to as many as 15 West African countries between Nigeria and Morocco. Niger also signed the Transport Convention on the construction and exploitation of the Niger-Benin Export Pipeline, key to Niger significantly increasing its crude oil production over the next five years to as high as 100,000bpd. In East Africa finally, Ethiopia and Djibouti have reached an agreement on a gas pipeline that will offer an exit route for Ethiopia’s gas fields and help unlock tremendous value in gas export potential.
NJ Ayuk, Chairman of the African Energy Chamber.
Africa is transitioning to gas
There is a promising outlook for the African gas sector. Countries without substantial gas resources will be turning to liquefied natural gas (LNG) imports to power their homes and industries. Ghana, for example, will is installing a new floating re-gasification unit in 2020. Ivory Coast, Morocco and South Africa have also looked at installing these units in the near future. The urgent need for rapid industrialization will create tremendous opportunities for gas to fuel African economies in a more cost effective and environmentally sustainable manner. The race is on.
At the end of the Gas Exporting Countries Forum’s 2019 Summit, Equatorial Guinea launched the Declaration of Malabo – a document affirming the importance of retaining rights of member countries for natural gas resources – which will lead to the securing the energy transition Africa needs and to meeting sustainable development goals and attracting investment into gas infrastructure projects.
Technology
Africa’s potential for innovation and leapfrogging is slowly affecting its hydrocarbons sector – we are finally seeing the adoption of sophisticated software and tools such as artificial intelligence (AI) and machine learning (ML) in oil and gas. New ways to drill wells and handle equipment are being adopted, new seismic data collection techniques and petroleum data management tools are being designed.
The trend is also helping the industrial and manufacturing sectors to save cost and address the logistical and power challenges of operating on the continent.
We definitely see international technology providers investing and collaborating with African companies to drive efficiency and environmentally-friendly production methods in 2020 and beyond.
Security concerns
We are likely to see an increase in African governments and oil companies doing more to protect the security of energy infrastructure and assets on the continent. Oil & gas resources and commodities are prone to security risks – leaving countries victims to energy theft, vandalism, piracy. Such acts cost Africa’s oil & gas sector several billion dollars a year in losses and reparations. With insecurity now spreading to East Africa, the industry has taken as a responsibility to seriously address the issue.
Regulatory reforms
With hundreds of blocks and acreages up for grabs in 2020 and a widening energy infrastructure gap, sub-Saharan African countries are increasingly competing for investments and technology. Countries like Senegal, Benin, Gabon, Algeria and Cameroon have already implemented structural and regulatory reforms in 2018/19 to attract new investment. Several others are still restructuring their energy policies to provide more incentives to develop domestic oil & gas reserves (associated and non-associated), fuel for thermal generation and both expand and diversify their energy infrastructure.
For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.
Sources: [1], [2]. Image sources: [1], Markus Spiske [2].
Home Affairs’s Recent Beitbridge Border Crossing Problems
Nearly 60 000 people crossed the Beitbridge border post in a 24-hour period earlier this month.
This is according to the Department of Home Affairs after complaints of long waiting periods, chaotic queues and under-staffing at the border post.
Thousands of people travelling back into South Africa had arrived at the border late evening on January 3 and were only assisted the next day.
Scores of people sat in long snaking queues waiting to be served by South African immigration officials. Others sat around the immigration area with their belongings and slept there the night.
GroundUp spoke to people who had waited several hours to be seen by an immigration officer.
One woman who had arrived at 23:00 said her brother was waiting for her on the other side of the border to drive her back to Johannesburg. She was only assisted after 09:00.
Another Zimbabwean woman said she had left her baby with her husband. She went to buy goods and did not expect that it would take that long when returning. It is unclear when she was assisted.
Scorching temperatures
When GroundUp arrived, only one immigration officer was processing and assisting people. During previous visits, five immigration officers were there to serve people travelling into the country. More staff only arrived at 07:00 January 4.
By then, travelers were exhausted and had begun shoving and pushing to get to the front to be served. One staff member tried to keep people calm but they did not listen.
After about 30 minutes of chaos, several police officers arrived. They ordered the group to stand in three lines.
People endured scorching temperatures and were only served by midday on January 4.
Siya Qoza, spokesperson for the Minister of Home Affairs, said 51 immigration officers were meant to be on duty at all times. He said 29 832 people had crossed the border on 3 January. The next day, 53 immigration officers were on duty and 30 137 people crossed into the country, he said.
When asked why more staff were not sent to assist during one of the busiest periods, Qoza said he could not respond to this.
For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.
Sources: [1], [2]. Image sources: [1], [2].
South African Expat Tax Amendment Countdown Begins
Compiled by Carin Smith.
An amendment to the Income Tax Act will bring considerable change to the expat landscape as from March 1, 2020.
Jean du Toit and Jonty Leon are the technical editors of the publication “Expatriate Tax – South African Citizens Working Abroad and Foreigners in South Africa”.
Amendments to the Income Tax Act are due to come into effect from March and, among other things, South Africans working overseas will only be exempt from paying tax on the first R1m they earn elsewhere.
The exemption was discussed in the 2019 Budget Review and has been the subject of some controversy in South Africa, Fin24 previously reported.
Du Toit and Leon say that in the 2017 Taxation Laws Amendment Bill, it was announced by National Treasury that the expat exemption would be repealed in its entirety – meaning that the totality of an expat’s income earned abroad would be subject to tax in South Africa.
“This perturbed the expat community, their employers and other stakeholders.
“Following presentations to the Parliamentary Standing Committee on Finance and many submissions and workshops later, expats were begrudgingly handed a R1 million per annum exemption, and an extension to the effective date of the amendment to March 1, 2020,” explains Du Toit.
“It must be understood that expats’ entire remuneration will be taken into account. What this means is that, if they remain tax resident, they will be taxed fully on any allowances and benefits, as if they were just a normal employee working in South Africa.”
Leon foresees that the R1 million exemption will, in some case, likely be exhausted “somewhat rapidly”.
This will especially be the case where the employer pays for “benefits” such as security costs or drivers, international school fees, medical insurance or housing, even though these may not provide any economic benefit to the expat.
One of the unforeseen consequences, in the view of Du Toit, could be that expats may simply decide to sever their ties with South Africa and cease their tax residency.
“Unfortunately, the solutions for the expat in relation to this amendment are now becoming very limited. The expat exemption only relates to South Africans who are tax resident, so the obvious answer would be to cease tax residency of South Africa,” says Leon.
“However, doing this isn’t as simple as one might think. There are different options when doing this, but by far the cleanest and most direct approach would be to financially emigrate, provided this is done correctly.”
He cautions that ceasing tax residency, however, comes with certain tax implications, which must be understood fully before one embarks on this path.
For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.
Sources: [1], [2]. Image sources: [1], [2].
Home Affairs Gazettes New, Tougher Laws for Refugees and Asylum Seekers
Home Affairs Minister Dr Aaron Motsoaledi has gazetted the Refugees Amendment Act, which came into effect from 1 January.
The amended act has new rules for refugees and asylum seekers in South Africa.
Speaking to Clement Manyathela on the Xolani Gwala Show, Dr Motsoaledi explains the new rules in the act. “We have added more exclusions on when can you get exclude for applying for asylum. In the new act we expel you if you commit fraud because when you defraud documents, you destroy the sovereignty of the country and undermine everything Parliament has done”, Motsoaedi said.
Motsoaledi says changes to the laws are much broader than what has been covered in the media. He explains that the act includes several updated definitions, including what it means to classify as a dependent.
According to Motsaoledi, applicants will be excluded if:
For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.
Sources: [1], [2]. Image sources: [1], [2].
The Future Of African Oil & Gas
Africa holds around 7% of the world’s proven crude oil and natural gas reserves, yet the continent remains largely under-explored. It’s safe to say that the motherland is far from having exploited its full potential. For this potential to bear fruit and translate into economic development and jobs, several things need to happen. Good thing is, they are slowing taking shape.
The rise of the African continent
For example, it is encouraging to see African oil and gas companies becoming more and more a part of the continent’s economic empowerment story. In this context, 2020 is likely to see a continuation in the rise of the African private sector’s contribution to supporting industry growth and jobs creation.
An emergence of strong African oil companies (AOCs) across the value chain, from field operators to services providers, is a key emerging trend for the sector. Many companies from West Africa particularly are seeking regional expansion across the continent and driving regionalization. As most countries strengthen their local content regulations, the trend is likely to accelerate.
Regional and international cooperation
This year will prove whether African nations have learned how to cooperate on transnational energy deals and infrastructure for the benefit of all involved. It could see the unlocking of multi-billion-dollar opportunities through transnational energy cooperation and projects. This applies to planned and stalled pipeline projects in need of revival such as the East African Crude Oil Pipeline for instance, but also to upstream investments and developments, especially in the Gulf of Guinea. Similarly, the way African Continental Free Trade Area (AfCFTA) impacts intra-continental trade could be a boost to the energy sector if properly utilized.
On the international stage and under the leadership of Secretary General Mohammad Sanusi Barkindo, Opec has welcomed more African producers – Equatorial Guinea (2017) and the Republic of Congo (2018) being the latest ones. As the organisation further expands the Opec/non-Opec outreach across Africa to find consensual solutions to market stability while offering technical assistance to upcoming producers, 2020 might be the year a new addition of an African oil-producing country as Opec member.
Expanding midstream and downstream infrastructure
New refinery and petrochemical complexes are being constructed and existing ones will be expanded in the near and medium term. The continent is likely to see the emergence of regional hubs and markets with the strategic ambition of procuring petroleum products and natural gas. Examples include Equatorial Guinea’s LNG2Africa initiative and the Akinokien import and re-gasification terminal, the Dangote Refinery in Nigeria, and Ghana’s Tema LNG terminal project, among others.
Market access is also increasing on the back of several pipeline projects such as the Lokichar-Lamu Crude Oil Pipeline in Kenya, and the intensifying talks over the 5,660km pipeline that could supply gas to as many as 15 West African countries between Nigeria and Morocco. Niger also signed the Transport Convention on the construction and exploitation of the Niger-Benin Export Pipeline, key to Niger significantly increasing its crude oil production over the next five years to as high as 100,000bpd. In East Africa finally, Ethiopia and Djibouti have reached an agreement on a gas pipeline that will offer an exit route for Ethiopia’s gas fields and help unlock tremendous value in gas export potential.
NJ Ayuk, Chairman of the African Energy Chamber.
Africa is transitioning to gas
There is a promising outlook for the African gas sector. Countries without substantial gas resources will be turning to liquefied natural gas (LNG) imports to power their homes and industries. Ghana, for example, will is installing a new floating re-gasification unit in 2020. Ivory Coast, Morocco and South Africa have also looked at installing these units in the near future. The urgent need for rapid industrialization will create tremendous opportunities for gas to fuel African economies in a more cost effective and environmentally sustainable manner. The race is on.
At the end of the Gas Exporting Countries Forum’s 2019 Summit, Equatorial Guinea launched the Declaration of Malabo – a document affirming the importance of retaining rights of member countries for natural gas resources – which will lead to the securing the energy transition Africa needs and to meeting sustainable development goals and attracting investment into gas infrastructure projects.
Technology
Africa’s potential for innovation and leapfrogging is slowly affecting its hydrocarbons sector – we are finally seeing the adoption of sophisticated software and tools such as artificial intelligence (AI) and machine learning (ML) in oil and gas. New ways to drill wells and handle equipment are being adopted, new seismic data collection techniques and petroleum data management tools are being designed.
The trend is also helping the industrial and manufacturing sectors to save cost and address the logistical and power challenges of operating on the continent.
We definitely see international technology providers investing and collaborating with African companies to drive efficiency and environmentally-friendly production methods in 2020 and beyond.
Security concerns
We are likely to see an increase in African governments and oil companies doing more to protect the security of energy infrastructure and assets on the continent. Oil & gas resources and commodities are prone to security risks – leaving countries victims to energy theft, vandalism, piracy. Such acts cost Africa’s oil & gas sector several billion dollars a year in losses and reparations. With insecurity now spreading to East Africa, the industry has taken as a responsibility to seriously address the issue.
Regulatory reforms
With hundreds of blocks and acreages up for grabs in 2020 and a widening energy infrastructure gap, sub-Saharan African countries are increasingly competing for investments and technology. Countries like Senegal, Benin, Gabon, Algeria and Cameroon have already implemented structural and regulatory reforms in 2018/19 to attract new investment. Several others are still restructuring their energy policies to provide more incentives to develop domestic oil & gas reserves (associated and non-associated), fuel for thermal generation and both expand and diversify their energy infrastructure.
For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.
Sources: [1], [2]. Image sources: [1], Markus Spiske [2].