4 May 2018

Can you tell us about Herbert Smith Freehills’ history on the African continent?

We are not newcomers to Africa, having acted on numerous matters in all of the 54 jurisdictions of Africa over a period of some 30 years.

It became clear to us in the early 1990s that there was a genuine need amongst our client base to have a dedicated team of lawyers specializing in the African market place, and in 1998 we established a core team of English and French qualified lawyers in Paris committed to building the firm's practice on the continent.

Our team has since grown to include over 200 partners across our global network who advise on matters in Africa, with some 80 partners currently assisting our clients on a broad range of issues arising from their transactions and projects in Africa's oil and gas sector.

We achieved a major milestone in late 2015 with the opening of the firm's Johannesburg office – our first office in Africa. Supported by a number of South African partners who are recognised market leaders in their respective fields of expertise, our office advises inbound and outbound investors across various sectors and industries in the Southern Africa region and Africa more broadly.

Where do you see the opportunities for growth within the industry in the next 5 years and how is Herbert Smith Freehills’ positioned to support these opportunities?

The African oil and gas industry continues to evolve. Our clients are optimising efficiencies across the value chain, strengthening balance sheets and introducing new technologies, whilst continuing to navigate complex regulatory environments, geopolitical risk, disputes and market disruption. Our specialist Africa oil and gas team is helping our clients shape new strategies to continue to grow and deliver value to stakeholders.

From plans for gas-to-power in markets such as Ghana and South Africa, to the construction of LNG terminals in Mozambique and Djibouti, and the subsequent emergence of a secondary LNG market, to asset divestments and opportunistic M&A, we act across all elements of the value chain and advise the full spectrum of sponsors, lenders and investors. This platform gives us a finely calibrated perspective on the opportunities and challenges which are likely to arise in the sector in Africa over the coming years.

In addition to our technical knowledge and oil and gas industry insight, our long standing experience in Africa also means that we have the Africa “know-how”, local connections and negotiation and language skills needed to address the issues and realities of doing business on the continent, and make us particularly well placed to help our oil and gas clients to achieve success, whether they are new entrants to this exciting market or established operators.

What do you see as the key challenges facing the industry in the region over the coming 5-10 years and how is Herbert Smith Freehills positioned to overcome these challenges?

Trying to predict what will become the ‘new normal' is always a risky exercise, but from an African perspective I think one key theme will continue to be local content.

Local content has been a key driver for a number of years as Governments look to promote greater local involvement in oil and gas operations, promoting local value creation, training and opportunities. It will be interesting to see how the combination of cost efficiency measures driven by the lower oil prices of the past few years and the increasing importance of technology, innovation and artificial intelligence in the sector will impact on local content aspirations.  Local value creation and local job opportunities are a key element of Africa's progress, not just in terms of domestic GDP growth but also for global socio-political considerations, including security and migration issues. The extent to which oil and gas companies and policy makers can shape and encourage local content in this new business climate, where technology will continue to be a disruptive force in the years to come, will be key to ensuring sustainable and inclusive growth.

Building into local content is ‘Africa-content'. Intra-African trade is much lower than in other regions, currently standing at approximately 15% compared to for example 60% within Europe.  The creation of a pan-African trading block has been a priority of the African Union and earlier this year 44 African heads of State and Government officials met in Rwanda to sign the framework. There is still much work to be done, but this has the potential to significantly change the landscape in terms of internal market and the delivery of goods and services.  This pan-African vision may also spur more domestic oil and gas companies to consider a broader pan-African portfolio.

In terms of how we as a firm are positioned, oil and gas is part of the firm's DNA and our Africa strategy has always been pan-African (we have worked on matters in each of Africa's 54 jurisdictions).  Our Africa oil and gas specialists have been working hand in hand with other specialist practice groups, including our CSR, BHR and TMT teams, so that we are at the forefront of market developments and can apply that broader knowledge and expertise to our work in the sector.

What have been the evolutions in your business in the African region over recent years?

There is a lot of political momentum to improve energy access in Africa and an increase in the funding pool for new projects, including natural gas and renewable power generation.

We have seen a big increase in recent years in the development of LNG, whether for export and/or domestic consumption, including in particular in the Rovuma Basin in Mozambique, where we have been advising clients on the development of the gas fields straddling the Area 1 and 4 blocks and the proposed Coral FLNG project and onshore LNG facilities. We are also advising on the development of the Ethiopia-Djibouti gas to LNG mega project.

Natural gas and LNG have a significant role to play in Africa's energy mix and there has been a big increase in proposals for gas to power projects throughout the continent. For example we are currently advising Vitol SA on its involvement in the US$7 billion Offshore Cape Three Points (OCTP) oil and gas project in Ghana with ENI, which will supply enough gas to power Ghana's thermal power operations for 15 years.

During the lower oil price we saw a drop in exploration expenditure, with our traditional oil and gas clients instead focusing on the consolidation of their businesses and the selling off of non-core assets. We have advised on a number of mega-deals over the past 12-24 months, both buy and sell side, including advising ENGIE on the disposal its upstream oil and gas business (our role centered on the African, Middle-Eastern and Asian assets in ENGIE's portfolio); the lenders to Assala Energy on Assala's acquisition of Royal Dutch Shell's entire onshore oil and gas assets in Gabon; Perenco on the acquisition and transfer of operatorship of various mature upstream oil & gas assets in Gabon from Total; and Maurel & Prom on its acquisition by Pertamina.

We have also seen a return to exploration and development with the emergence of certain regional hotspots such as Senegal, which has kept us busy.

Finally, new players continue to be active in the market, including PE backed vehicles, oil traders, indigenous oil and gas companies and oilfield services companies, and we are also seeing an increasing use of alternative funding structures.

What are the strategic priorities for Herbert Smith Freehills’ in the next 12 months?

One of our key priorities in the coming year will be to continue to support our new Johannesburg office as it ramps up its activities both in South Africa and more generally throughout the continent.

The office has expanded rapidly since we opened in late 2015 and now includes a number of South African partners and directors who are recognized as being among the best in the market in their respective fields. Our strategic objective is to combine the skills of our Johannesburg-based lawyers (who include several Francophone Africa specialists) with those of our teams in Paris, London, the Mid-East, Australia, Asia and elsewhere across our network to enable our Johannesburg office to assist our clients throughout the continent, while remaining an integral part of the firm's global Africa practice.

As a firm we have also invested heavily in technology and innovation over the past few years, and a continuing priority is to ensure that we harness the developments in technology and digitalization to continue to drive efficiencies and innovation in the provision of our legal services.

What question or industry issue are you looking forward to hearing about at the Africa Assembly?

The Government sessions are always a very useful opportunity to hear about the latest in-country developments. The financing session also looks very interesting, with the emergence of alternative financing structures, the role of the traders and new models being developed by oil field services providers. I am sure that will lead to a lively discussion.

Lastly, like many who have been attending the Africa Assembly since it first started, it is a great forum to catch up with old friends from across the globe and discuss opportunities.

About Nina Bowyer

Nina is a partner in the global energy team at international law firm Herbert Smith Freehills. She has a particular focus on the oil & gas sector across Africa, having advised on matters involving over 40 jurisdictions throughout the African continent over the past 15 years. Nina also co-heads the firm’s Africa practice, together with London finance partner Martin Kavanagh.

Nina’s practice spans the full supply chain from upstream awards to distribution, offtake and marketing arrangements. She has particular expertise in the drafting and negotiation of asset and share purchases and farm-in/farm-out arrangements, as well as advising on joint venture structuring and related financing arrangements.

Nina is a regular speaker at Africa industry focussed events and is consistently ranked as a leading lawyer for African oil and gas mandates. She is also cited for her in depth knowledge of individual jurisdictions across Africa, including notably in Nigeria where she is one of only 3 international lawyers recognised by Chambers Global 2018 as a foreign expert in the Nigerian energy & natural resources sector.

“Nina Bowyer is an established figure in the energy market, particularly in Africa. She has great experience advising clients on projects in the oil and gas and mining sectors. One client says: ‘Nina is very reactive, listens carefully to what the client wants in order to deliver the right service and is very good in negotiations’.” (Chambers Europe 2018)