Page 5 - AfrOil Week 11 2022

AfrOil COMMENTARY AfrOil

All of this forces us to adopt a predisposition to oil industry
change. • the need to meet designed and agreed busi-
The draft of the standard has a very special ness-oriented objectives
impact on the way in which these situations are • implementation and assimilation of
acted upon, both from the planning point of accountability culture
view (considering in a systematic and planned • the need to encourage competition
way, the possible consequences of the change, • the possibility of creating a business envi-
the availability of resources, assignment of ronment that would encourage employees to
responsibilities, etc.) as well as regarding the become entrepreneurs
review and control of changes when they have Studies say that in state-owned companies,
occurred in an unplanned manner. the wage cost is relatively small compared to the
total cost of running the company. The under-
Risk as part of the process approach lying problem does not lie in the excess of per-
Through this concept, the organisation is sonnel, which obviously exists, but in the lack
intended to identify those possible scenarios in of availability of capital and technology and in
which the expected results could not be met and poor administration. The increase in productiv-
establish the pertinent actions to address such ity generated by privatisation and the increase
risks. In other words, it is necessary to consider in investment that it would give rise to would
the preventive nature that a Quality Manage- be more than enough to pay the social costs of
ment System must provide, and that seems to restructuring the company.
have been oversimplified with the application of The prevailing system in African NOCs
“preventive actions” as a tool for this purpose. means a permanent growing social and finan-
With this approach, it is not necessary to incor- cial burden to oil-producing countries that
porate any specific requirement on the current translates into low wages, poor-quality goods
preventive action. and services offered to the public and excessive
It is important to remember, however, that dependence on the decisions made by the mul-
the risk-based approach recognizes the diversity tinationals with which they have signed. Joint
of processes that can be defined and the different ventures or production-sharing agreements
consequences that a risk situation can have on (PSAs), which do not necessarily obey or are The prevailing
product and service requirements, or on cus- in line with the short, medium- and long-term
tomer satisfaction. Therefore, the application of policies of African governments that are facing system in African
this approach must be flexible enough. Specific the great problem of more than 600mn Africans NOCs means
requirements on risk assessment methodologies without access to electricity.
are not included. Rather, a generic framework is The analysis of the development and oper- a permanent
established for each organisation to adopt based ation of NOCs of African countries belonging
on its activity and the particularities of its man- to different oil economies – Algeria, Nigeria, growing social
agement method. Angola, Sudan and Equatorial Guinea, etc. –
Statistics show that most private companies shows many similarities. These are countries in and financial
in all sectors of economic activity respect the which the production of oil (and in some, also burden to
management procedures mentioned above and natural gas) has grown at a good rate during
therefore are more efficient, profitable and able the last decade. Additionally, the sharp rise in oil-producing
to achieve the objectives set. The same cannot be international prices has given rise to a sharp
said of state-owned companies, where waste of increase in income obtained from the export countries
resources, chaos, lack of vision and leadership of hydrocarbons. This being the case, there are
are the norm. no restrictive elements that notably affect the
The common denominator in all African extractive and export activity of these consid-
oil-producing states is the existence of national ered landscapes. However, we observe with
oil companies (NOCs) charged with safeguard- great concern in recent years the sharp drop
ing the interests of the state in the oil activity and in prospecting and exploration activity on the
that are designed to be the locomotives of the African continent, a situation that is due to the
economic activity of said countries through the lack of experience and the unavailability of the
implementation of rigorous management pro- necessary technology and funding on the part of
cedures in accordance with international stand- the NOCs to face this challenge, combined with
ards. But unfortunately, after more than 50 years the problems of access to bank financing that the
of activity, they have not risen to the task. large multi-nationals or international oil compa-
That is why the need to partially open these nies (IOCs) are having due to the pressure and
companies to private capital is urgent in order blackmail of environmental extremists.
to bring some rigor in the management of these The main questions are in other different
state “zombies” that have become a real head- spheres, one of which is the real control of the
ache for their governments. A need to start a oil resources available to African countries. In
coherent, pragmatic and well thought partial other words, who controls the deposits? Here,
privatisation process that is based on six funda- we deal with this question based on the func-
mental pillars: tions that NOCs carry out. The central question
• the need to get rid of the chronic ineffi- is to what extent the NOC typology that arises
ciency of state-owned firms from the functions exercised by state compa-
• the need to adopt and assimilate interna- nies provides answers to understand the degree
tionally accepted management methods in the of national control over national oil resources.

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