In a recent podcast episode, Sandile Mbulawa, the Chairman of Prism Investment Holdings, sheds light on the oil and gas market’s magnitude and the imperative need for balanced growth in tandem with decarbonisation efforts.
Sizing up the oil and gas market
Mbulawa begins by providing an overview of the oil and gas market, a domain that surpassed a staggering two trillion dollars in 2022. To put this in perspective, the combined worth of the top ten commodities in the metals market was less than two hundred billion dollars.
Balancing emerging markets growth with decarbonisation
As the world grapples with the dual challenge of emerging markets growth and decarbonisation, Mbulawa underscores the importance of a “just transition”. It is not merely about achieving net-zero emissions by 2050; it is about doing so without sacrificing job security, financial stability, or essential life necessities.
Fostering collaboration in Sub-Saharan Africa
The scale of projects in the oil and gas sector demands significant investment in infrastructure. Mbulawa advocates for collaborative efforts across borders, pooling resources for shared processing facilities, ports and pipelines, amongst others. This approach not only optimises resources but also strengthens regional bonds.
Empowering local economies
Mbulawa acknowledges the capital-intensive nature of oil and gas projects and the challenge of limited indigenous investment. However, he highlights an expanded proposal around local participation– the multitude of ancillary businesses that arise alongside primary projects.
Lessons from other sectors
Drawing parallels between mining and agriculture, Mbulawa advocates for an integrated approach for the upstream oil and gas sector. Lessons in taxation, revenue management, and facilitating international investments are invaluable in propelling this sector forward in Sub-Saharan Africa.
Managing Material Investment Risks
Mbulawa encourages gorvernments to promote investor friendly laws. With Prism’s deep experience in working with governements, Mbulawa highlights that they could assist to bridge certain bottlenecks through their advice. With regards to oil and gas price risks, Mbulawa suggests that the size of this industry players introduces inherent price risk mitigants as they have various levers to pull during adverse price environments. Prism can assist various players during sponsor selection and analysis period in order to mitigate against price stalling investments.