A lack of infrastructure is a 
 pressing priority for Africa 
 as it underpins the success of the continent’s oil and gas industry, says Arthur Hanna, energy practice industry MD for Accenture, a global management consulting, technology services and outsourcing company.

Africa is increasingly seen as a major global player in the energy field, as it contains about 10% of the world’s oil reserves and about 6% of its gas reserves.

While Africa is no stranger to the challenges facing the global energy industry, such as a shortage of equipment, rising costs of capital and a skills deficit, Hanna tells Engineering News that the continent’s existing infrastructure needs to be upgraded.

He says that it is encouraging to see development in certain countries, such as Angola, but that there are countries in Africa that have not given infrastructure the “green light”, which is preventing investment into these countries.

Given the credit crunch, he says, oil demand growth in emerging economies like Africa’s is 
expected to be much slower than previously forecast.

Hanna predicts that there will be a decrease in oil and gas 
demand. However, wider economic problems, like the credit 
crunch, are resulting in more 
immediate problems for some firms, which have financed 
upstream projects or oil services expansion on the back of large amounts of debt, and are now finding that accessing funding is an issue, he says. 
Across the industry, the focus will be on capital expenditure and cutting costs to cope with the economic downturn.

In response to growing barriers to trade as a result of the global economic downturn, Hanna tells Engineering News: “As we enter the recession, there will be a temporary emergence of protectionism, as countries seek to protect jobs and income within their boundaries. This will have a knock-on effect not only on the oil and gas industry, but also on other industries.”

Other challenges facing the oil and gas industry include the growth in population, the volatility in energy pricing as a result of governments subsidising fuel prices, a lack of technology, and the climate change agenda.

Meanwhile, Hanna points out that soaring oil and gas prices, 
rising energy demand and the need for greater energy security 
are the primary drivers for a global industry that is emerging around the production, pro-
cessing and distribution of biofuels.

Other key factors driving the industry include growing envi-
ronmental concerns, which are driving demand for sustain-
able and cleaner fuels, and governments’ aggressive targets 
regarding carbon dioxide emissions reduction.

Hanna says that while most governments support the creation of an international market for biofuels, legislation will be primarily directed through 
domestic priorities, such as 
energy security, agriculture and environmental protection.

He says that key factors need 
to be tackled effectively in order for competing biofuels supply companies to succeed in the indus-
try. These include the continued pressure from governments to achieve energy security, as well as how effectively such companies 
can respond to the need to sustainably deal with feedstock sup-
ply, and related storage and transportation concerns, which will lower production costs and 
increase feedstock yields.