Unlocking the potential of Africa's NOCs

Unlocking the potential of Africa's NOCs

KPMG International conducted a study to investigate the growth strategies and growing-pains of NOCs.

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This KPMG International study investigates the growth strategies and growing-pains of NOCs, focusing on how well NOCs in emerging producer countries in Africa -- those in pre-exploration, exploration and early development phases, are dealing with the development of technical skills and know-how. It sheds light on key aspects of what governments and NOCs need to know when mandating various new roles to an NOC.

 

The study addresses these questions

  • What resources do NOCs require to fulfil their mandate?
  • Is there a mismatch between the roles they are tasked to do and the means they are given to implement it?

 

Becoming an upstream operator is demanding 

In terms of financial commitments and organizational changes to the form and functions that NOCs have traditionally had in Africa, becoming an upstream operator is very demanding. Prior to these discoveries, many have been limited to supporting pre-exploration work, data management, licensing, overseeing regulations, fiscal systems and running downstream operations. 

 

Managing recruitment and skills development 

Since the petroleum sector is new to the country, there are often not enough qualified and experienced potential employees. This was consistently identified as a major challenge. Equally, NOCs are frequently constrained by civil service rules, making it difficult to compete with other industries and companies for national talent. 

 

Five key recommendations for governments 

  1. Governments understanding what different NOC roles cost
  2. Governments and the NOCs reviewing the state of the resource base
  3. Governments approving the finance model
  4. Governments introducing strong accounting and reporting standards
  5. Government and NOC investing strategically. 

Clarity on these core issues will allow governments to do a better job of assigning roles to the NOC and planning for future resource needs.

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