As cautious confidence returns to the oil and gas industry, the spotlight is back on Africa. There have been many significant discoveries as well as planned major projects across Sub Saharan Africa in recent years. Unfortunately, some challenges that have plagued the region for years still exist, thus adding a risk premium to financing costs which was once tolerable during the triple digit oil price days. The recurring challenges are regulatory uncertainty, political instability and infrastructure deficit.
Lloyd’s Register (LR) plays a significant “de-risking” role in the region by navigating regulatory requirements for primary stakeholders in the offshore industry as well as supporting government institutions in the development of standards, processes, guidelines and requirements based on our years of experience working with multiple national regulatory bodies.
Compliance, assurance and performance optimisation underpins all our activities and resonates heavily in this environment in several ways. Across the SSA region mandatory local content requirements is the norm and develops local capacity as well as capability. This positive development introduces its own risks to capital intensive and typically high-risk projects due to the level of maturity and expertise of the local service companies involved. Our independent assurance role through classification, verification, validation and certification, starts from the concept phase to decommissioning gives all project stakeholders the required confidence at every stage of their project, ensuring they are completed on time and on budget.
Another form of assurance is ensuring our customers make decisions with the right information. We have seen operators who invested heavily in overvalued assets because of hyped pre-downturn valuation prices and insufficient technical and commercial due diligence. For some this has meant tying up capital in the purchasing process, leaving little money for long-term, well-needed asset maintenance, leading to a significant loss of revenue and in some cases bankruptcy. Building on our breadth of experience and knowledge of different projects globally, we help customers operating in Africa make informed decisions when investing in offshore assets by leveraging a blend of technical expertise and a deep understanding of commercial consequences.
Approximately 40% of global crude oil and natural gas production originates from fields that have been in operation for over 25 years. In Africa, almost 30% of production stems from these so-called legacy fields[i]. Reducing operating expenditure (OPEX) and increasing efficiency is paramount, we help operators achieve this in a variety ways including novel technology adoption, LR’s Technology Qualification helps verify an acceptable level of confidence during development to deployment, for example digital twin technology which can provide accurate insights on the health of assets, specifically its electrical, mechanical and structural systems.
Most of today’s offshore assets, floating units for example, are built to last however extreme weather conditions can accelerate wear-and-tear and cause structural damage during operation. By understanding the condition or health of assets, operators can increase productivity and extend the life of their assets, this can be done through optimising integrity and maintenance, reducing operational costs by up to 40%.
[i] Africa Oil & Gas State of Play November 2018
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