By Precious John
‘Closing Deals: Advancing FID During COVID-19,’ a public webinar held on Thursday, June 18 explored the future of deal-making and African energy financing in the short- and long-term, following the unprecedented impact of COVID-19 on the sector.
Hosted by Africa Oil & Power and the African Energy Chamber, the ‘Closing Deals: Advancing FID During COVID-19’ webinar addressed the prioritization of energy projects in an environment of limited capital investment; Natural gas developments are facing fewer delays in FID than oil exploration and production projects.
As operators continue to face uncertainty and a low-price oil environment, a range of survival strategies have been employed in the short term, including halting non-essential activities; adopting furlough or layoff strategies; slowing output; refining sales and purchase agreements and utilizing financial hedging instruments to market crude.
In the long term, however, COVID-19 will necessitate a reassessment of project development plans, many of which carry operating costs incompatible with a US$40-barrel price. “We are in unchartered waters. The IMF is estimating a 3 per cent reduction in global GDP for 2020. The effect is almost triple to that of the 2008 financial crisis,” said Founder and Executive Director of The Boardroom Africa and Brace Energy, Marcia Ashong. “Africa remains largely a commodity-based
