Phillip Steyn, Rhino Oil and Gas Exploration vice president and chief operating officer, is a resident of South Africa currently residing in Cape Town who has previously lived in Tanzania. He has worked and travelled extensively throughout Africa, and has more than 10 years of African business experience. An original founder of Rhino Resources, Ltd. in Africa, one of the continent’s fastest growing independent oil and gas exploration companies headquartered in Cape Town, Steyn is responsible for the company’s strategic land acquisition and high level negotiations as well as its day to day operations. He has operational experience in several African countries, concluded several successful deals for oil and gas concessions in Africa and speaks fluent Kiswahili. Steyn first featured in Realnews as a guest writer. In this interview which Realnews did via a questionnaire, Steyn speaks about the declining price of crude oil in the international market and how it’s going to affect oil exploration in the continent in future. He is of the view that African economies have survived downturns in oil and gas as well as other commodities before. Steyn is confident that the continent will survive this one too. Excerpts:
Realnews: South Africa is warming up to explore and exploit its oil and gas resources at a time that crude oil price is declining. How will the scenario at the international market affect investment in the oil and gas sector in the country?
Steyn: The oil price plunge of 2014 and ongoing depressed commodity market represent a unique opportunity for independent energy companies like Rhino. Today majors and supermajors are implementing draconian cost-cutting measures across the board and reducing their spend in Africa and other frontier areas. However, the need to develop these resources remains as critical as ever, and this void is being filled by independents like us. Our small size and nimble footing allow Rhino and other companies similar to us to pivot, re-strategize and lay the groundwork in advance of the inevitable pricing uptick, while also ensuring the development of this much needed resource for the people of South Africa is not neglected.
Realnews: Oil resource curse has been afflicting some oil producing countries in Africa like Nigeria where about 70 percent of the 180 million people are living in poverty. What lessons can South Africa learn from Nigeria?
Steyn: We see natural resources like oil and gas a blessing rather than a curse and think about how a country like Nigeria would be without the benefits they provide. We view the potentially abundant natural resources in South Africa in the same way. They are a blessing, but one that must be used wisely and safely in order to ensure they spur the advancement of the country’s people and its economy.
Realnews: What do you think about the Nigerian oil and gas industry?
Steyn: Nigeria clearly has immense oil and gas resources that can be used for the betterment of its people and economy. While we think very highly of the country from a geological perspective, we believe that significant structural and legislative advancements need to occur. For instance, the long-stalled Petroleum Industry Bill (PIB) must be resolved to provide clarity to international investors and local operators about the country’s laws.
Realnews: Do you think that African economies that depend heavily on oil will survive this downturn in the global crude oil price?
Steyn: African economies have survived downturns in oil and gas as well as other commodities before, and we’re confident they will survive this one too. This is all part of the normal commodity cycle. The important thing that has to take place during these times is for the impacted economies to plan and adapt. That way they can place themselves in a stronger position than they were previously for when the market rebounds.
Realnews: There are many predictions that the global oil price would increase this year. With Countries like US and Iran pumping oil into the international market do you think there will be a rebound in the price of oil soon?
Steyn: Everybody’s worried about Iranian oil now, and we expect there will be continued downward pressure on prices for foreseeable future. However, we do anticipate things getting better toward the end of 2016 or in early 2017. Right now, capital outflows from China are increasing the value of the dollar, and with lack of storage for oil in the U.S. the market is overcorrecting. At some point, though, the impact of the lack of investment will kick in.
Of course, if oil ends up going below $30 per barrel for an extended period of let’s say 3 to 6 months, 25 to 50 percent of U.S. shale companies will end up out of business. Ultimately though, no one knows what the strategy for the operators in Middle East is. They may just be waiting for a certain number of the U.S. shale companies to go out of business before they decide to change production limits.
Realnews: It is common knowledge that Nigeria has vast gas resources, Is your company thinking of investing in Nigeria?
Steyn: We have evaluated investment opportunities in Nigeria in the past and will certainly do so again in the future. With today’s depressed price environment and further declines likely in the near future, there is certainly the potential to make investments there that could be very profitable.
That said, the attractiveness of these opportunities will have to be weighed against the uncertainty in the region that I previously mentioned and factors such as security issues that have recently developed and are unfortunately a major area of concern. Until these issues are resolved, we will be especially cautious about any opportunities in the region.
Realnews: Can you give us an overview of what your company does, its challenges and prospects for the future?
Steyn: Rhino Resources is a technology-driven, independent oil and gas exploration and development company focused on Africa. Based in Texas, we are working with a number of partners on the ground in South Africa and other regions of the continent.
We currently hold the permits and are applying for rights to two offshore areas, totaling more than 28,000 square kilometers, as well as five onshore areas, totaling nearly 74,000 square kilometers, within the country.
We also significantly expanded our African footprint recently with the acquisition of two offshore blocks in the Comoros territorial waters off Mozambique in East Africa and the signing of Production Sharing Agreements in the AGC Senegal/Guinea-Bissau Cooperation Zone in West Africa. In addition to these positions, we hold two offshore blocks in Namibia, one of them bordering the Kudu Field.
This is clearly an exciting time for Rhino. We strongly believe untapped oil and gas resources in Africa can one day enhance prosperity for the continent and are confident their development will create highly skilled technical jobs as well as provide significant benefits to communities in areas such as education and health. While we have a long road ahead of us, the idea of safely unlocking these lower cost domestic energy resources is on the way to becoming a reality, and we are excited to be a part of the solution.
Realnews: DVN GL issued a New Reality survey stating that cost management will be a higher priority for professionals in the oil and gas sector in 2016. How is this playing out in your company now?
Steyn: In a low commodity environment like today’s, cost of services is always an important part of your economic model. However, one of the bright spots currently is that service costs have come down greatly.
Combining these savings with recent advances in technology allows Rhino to explore and develop Africa’s oil and gas resources not just safely, but also cost-effectively. For instance, we are utilizing an array of advanced technology to find oil and gas, such as advanced satellite imagery and mapping, controlled source electromagnetic surveys, gravity gradiometry surveys, magnetic surveys and new advanced full tensor gravity mapping. We have also made significant investments in a wide array of software and hardware to process and interpret both 2D seismic as well as state-of-the-art 3D seismic data, including quantitative seismic interpretation for direct hydrocarbon indicator identification via super computer.
By using advanced technology, we are able to eliminate non-productive areas and focus on productive oil and gas producing areas, which increases our success and reduces our environmental footprint.
Realnews: Could you provide any other information you will like our readers to have.
Steyn: We are very excited about the future of Africa. We believe the continent is going to be one of the great growth stories of the next decade and look forward to having the chance to play a small part in what is about to unfold.
— Feb 22, 2016 @ 01:00 GMT