Natalie Thompson
Thu, Aug 10, 2023 2:00 PM

African Countries Urged to Attract Foreign Direct Investments to Harness Vast Gas Resources

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African Countries Urged to Attract Foreign Direct Investments to Harness Vast Gas Resources
African countries, particularly Nigeria, are encouraged to take deliberate steps to attract foreign direct investments (FDI) in order to tap into their vast gas resources. Shell Nigeria Exploration and Production Company (SNEPCo) highlights the importance of liberal trade and fiscal policies, as well as stable social, political, and economic environments to attract FDI. The decline in FDI inflows to Africa and the rise in gas demand create an urgent need for investments in gas infrastructure. Africa must improve fiscal terms, energy policies, and contractual terms, and foster regional cooperation to enhance the continent's energy landscape.

Lagos - African countries are being advised to take deliberate steps to attract foreign direct investments (FDI) in order to fully capitalize on their extensive gas resources. Elohor Aiboni, the Managing Director of Shell Nigeria Exploration and Production Company Limited (SNEPCo), highlighted the importance of liberal trade and fiscal policies, as well as stable social, political, and economic environments, to attract FDI.

According to Aiboni, capital investments that are crucial for harnessing Africa's oil and gas sector are more likely to flow into countries that boast a stable macro-economic policy environment, low or moderate inflation rates, stable interest rates, predictable exchange rates, easy access to foreign exchange, and minimal capital controls.

While discussing statistics published by the United Nations Conference on Trade and Development, Aiboni expressed concern over the decline in FDI in Africa from a record $80 billion in 2021 to approximately $45 billion in 2022. This alarming decrease in investments poses a significant challenge to developing countries striving to achieve the Sustainable Development Goals (SDGs) by 2030.

It is important to note that the inflow of FDI has been impacted by global commitments to reduce greenhouse gas emissions, as well as the desire of hydrocarbon resource-poor countries to reduce their dependence on fossil fuels and accelerate the development of renewable energy sources.

Aiboni stressed the urgency for African oil and gas producing countries to take actionable steps in creating enabling environments, improving access to available capital pools, and attracting the necessary skills and capabilities to fulfill the energy needs of their growing populations and to position themselves favorably in the ever-evolving energy landscape.

Within the context of Nigeria, Aiboni pointed out that despite having the largest proven gas reserves in Africa, the country could face a gas supply shortfall of at least three billion cubic feet per day by 2030. This potential deficit is driven by estimated increases in population, inadequate infrastructure, security challenges, and limited access to energy.

She highlighted the potential investment opportunities in gas infrastructure such as pipelines, processing facilities, and coastal LNG regasification. These infrastructure projects would aim to connect currently stranded gas reserves both onshore and offshore with domestic industrial and commercial consumers at rates reflective of the market.

Aiboni advised Nigeria and other African countries to continue focusing on improving fiscal terms, the political climate, energy policies, and contractual terms to make them attractive to potential investors and energy companies.

She emphasized the importance of regionalization and cross-border cooperation, along with the implementation of the African Continental Free Trade Area (AfCFTA). Developing sub-regional and regional gas and energy networks can bring about better economies of scale and justify investments into infrastructure that would benefit the entire continent.

It is evident that African countries, with Nigeria as a key player, face an urgent need to attract foreign direct investments to fully harness their vast gas resources. This requires concerted efforts to create enabling environments, improve access to capital, and foster regional cooperation. Only through these steps can Africa effectively navigate the changing energy landscape while meeting the energy demands of its growing populations.

Source of content: OOO News 2023-08-10 News

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