Africa stands on the cusp of an oil and gas boom

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Energy markets have had a tough time of late. On 15 September 2019, the oil price posted its largest intraday rise on record after a drone strike on a Saudi Arabian oil facility took out 5% of the world's entire supply.

We support clients through all the cycles and provide strategies to manage the risk that volatile oil and gas prices pose to them

Shirley Webber, Head of Coverage, Natural Resources, Absa Corporate and Investment Banking

Absa provides financing to its offshore oil clients, supporting their balance sheets through several products and services.

The bank is intimately involved in the burgeoning Mozambican LNG projects. “For us, it’s important that we help other African countries achieve success,” says Webber. “We are a pan-African bank. We assist with the building of economies.”

In the Ugandan and Kenyan oil industries, Absa's participation goes beyond merely providing funding. “We have an enterprise service development team. They advance loans to local companies to enable them to participate in these projects. We have to see the fruits of these resources filter down to the citizens of those countries.”

Absa brings liquidity to the balance sheets of national oil companies, so they can play a meaningful role with this natural resource belonging to their countries. Its involvement can ultimately also include the development of the actual gas and oil fields, the pipelines, refineries and storage terminals.

Facilitating imports and exports

Africa already exports huge amounts of oil and LNG. Absa expects Mozambique to join the ranks of energy exporters such as Nigeria and Ghana.

“In Mozambique, not all the LNG can be exported,” says Webber. “We need to grow the local economy. Some of the LNG will be processed and will remain in the country for domestic use, and that's why beneficiation is important.”

For more detail, watch the video below. Shirley Webber (Head of Coverage, Natural Resources, Absa Corporate and Investment Banking) in discussion with Tawanda Madondo (Natural Resources, Absa Corporate and Investment Banking) about the future of mining in Africa and Australia's interests in African mining and energy.