Tuesday, December 5, 2023

Stanbic targets oil and gas sectors

Stanbic Bank says it is well positioned to assist all of Botswana’s oil and gas market players with securing energy supply, which will expand import options for refined product to potentially include routes from Mozambique and Namibia. In an interview with Sunday Standard, Stanbic Bank Head of Oil and Gas Coverage Southern Africa, Simon Ashby-Rudd said while Botswana’s oil and gas industry is not prominent it is slowly gaining momentum as most companies that entered the Botswana market have been awarded licenses to explore.

Rudd observed that Botswana’s economy is facing major challenges, but however said the economic environment remains attractive because of multiple attributes. He further said Stanbic has been setting strategy and building its Africa focused oil and gas business. He explained that the oil and gas sector is one of four key pillars as Stanbic has dedicated oil and gas teams situated across Africa, which provide a full corporate and investment banking product range, oil and gas expertise and local industry knowledge and connections to clients active in the industry.

“Lower oil prices will accelerate demand growth, so investment in associated infrastructure such as production storage, transportation and distribution will likely accelerate. However, the margins of local downstream companies may be eroded,” he said.

He stated that in addition to financing and risk management solutions, the bank is able to provide advisory services to its clientele in the oil and gas industry, drawing from a wide pool of successful experience and expertise from across the continent.

“We are also working closely with the infrastructure focused teams across Africa,” he said. “Being a land-locked country, Botswana is forced to import all petroleum products through neighboring countries. The added logistics, versus direct coastal imports, adds to the landed cost of products in-country.”

Rudd emphasized that Stanbic Bank provides full service banking solutions across multiple sectors on the continent. He added that with oil and gas in mind, sources of finance used vary according to the stage of development that the project may be in. He said with regards to the midstream sector, they are able to assist in the financing of pipelines and storage facilities. He pointed out that as a bank they would look to engage with industry players, including the National Oil Company, Botswana Oil limited, to potentially advise them as how to best import product from different source in the most cost-effective manner.

“Botswana has significant coal reserves which will require a route to market to monetize. Coal to liquid is one possible route to market but will require careful consideration of direct coal to liquid challenges as well as opportunity costs of utilizing coal for other purpose,” he stated.

Rudd further said that with almost all of Botswana’s petroleum products currently being imported through South Africa, the country is over-reliant on a single supply source. Diversification could be attained by exploring import options from Namibia possibly through Walvis Bay by road or rail and Mozambique.

He said fuel landed at Beira Port, and transported through Zimbabwe into Botswana by pipeline would increase the security of supply. In addition to this, should exploration and appraisal of unconventional gas resources in the upstream sector be positive within this time frame, the country would be able further increase its security of supply and energy self-sufficiency.


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