For years, Exploration and Production activity in Africa has been primarily focused in West Africa. In recent years, the landscape of this activity has changed, and East Africa and is now emerging as a new hotspot for oil and gas exploration. Exploration and Production expenditure in Africa is expected to increase by 14% in 2012 with a substantial amount coming from emerging developments such as those in the deep East African waters. The continent as a whole has long been tainted by above ground risks and lack of regulatory framework but as companies are gaining an understanding of how to deal with the local political environment, more attention is being drawn to the newfound oil reserves.
As the region continues to boom, more Exploration and Production are shifting their focus to the discoveries being made offshore on the eastern side of the continent. Significant reserves have already been found offshore Mozambique and Tanzania and Kenya has recently announced an auction of 18 offshore blocks that is sure to attract a number of operators looking to enter the local market. Morgan Stanley has predicted that the number of new offshore drilling sites will double in these countries this year.
As Maxwell Drummond would expect in an emerging market, new activity is leading to a talent shortage in the region. However, African countries are already making a significant attempt to attract top managerial talent to the region. There has already been a rise in both permanent and contract salaries and it is expected the increase in average executive compensation will continue. In a recent study, data has confirmed that country managers appointed to positions in Nigeria are among those earning the top bonuses in the world. Expatriates looking to broaden their international management experience in emerging markets should take a serious look at the opportunities the region is offering.
Operational challenges in Africa are not limited to geopolitical risk. Many companies face a number of challenges including high labor litigation risk, stringently enforced government requirements to localize the workforce, cost pressure and difficulties in obtaining work and housing permits. In order to avoid FCPA and Bribery Act compliance issues, companies must remain transparent in their operations and develop sound relationships with their suppliers. This can be done by ensuring local talent is being utilized as much as possible. While senior and middle management typically comprises expats, technical and technical specialist roles are more commonly being filled by local citizens, and indication that developments in training the regional workforce are gaining pace. We have seen a flurry of activity coming from companies looking to recruit senior and middle management for their East African operations, particularly in our London and Aberdeen offices. UK based companies have a significant presence in Africa due to their proximity and good relations with African governments, but with the upcoming block auctions looming, more and more international companies will gain a presence in the region, opening up even more opportunities for the Exploration and Production workforce.
About the author
Sean Buchan joined Maxwell Drummond as a Research Consultant in 2006 and was quickly promoted to Consultant where he worked on a range of senior projects across the Oil and Gas value chain for positions in Europe, the Middle East, West Africa, Southeast Asia and the Americas. In January 2009 Sean was promoted to General Manager for the UK and in 2011 became Vice President Europe, Middle East and Africa. He is now responsible for leading these regional teams and driving the consistent delivery of the firm's executive search projects.Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.
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