In the ever-evolving energy sector, oil and gas companies, particularly those operating across Africa face increasing pressure to demonstrate robust corporate governance practices. With global scrutiny intensifying around climate commitments, ESG compliance, and stakeholder accountability, governance in the oil and gas industry is no longer a box-ticking exercise. It is a strategic imperative.
Governance consulting has thus emerged as a powerful lever to realign boardroom behavior with global expectations fostering trust, enhancing transparency, and preparing firms for a sustainable future. But what does this alignment actually look like, and how can African energy companies position themselves to lead rather than follow?
The Governance Gap in Oil & Gas
Globally, investors, regulators, and civil society are demanding more transparent, ethical, and forward-looking governance practices especially in extractive industries with high environmental and social impact. Yet, in many African markets, governance frameworks remain outdated, compliance-focused, and inward-looking. According to the African Energy Chamber’s State of African Energy 2023 report, “less than 30% of African oil and gas companies have integrated climate risk into board-level discussions, despite mounting investor pressure.”
Similarly, the OECD found in its report on extractive sector governance that “only 35% of extractive industry boards disclose their criteria for director independence, and less than 10% include ESG competencies in board selection.” These numbers highlight a major governance gap that presents both a risk and an opportunity for boards seeking international capital or partnerships.
Global Best Practices for Board Governance in Oil & Gas
To meet global expectations, governance consulting for the sector typically focuses on these five pillars:
- Board Composition and Independence
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- Recruit directors with diverse expertise including in sustainability, digital transformation, and stakeholder engagement.
- Establish clear independence standards and rotate board members regularly.
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According to Spencer Stuart’s 2024 Global Board Index, energy firms with >50% independent directors had 25% higher investor confidence scores.
2. Risk Oversight and Scenario Planning
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- Embed geopolitical, climate, and technology disruption scenarios into board discussions.
- Set up separate committees for ESG, HSE (Health, Safety & Environment), and risk.
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3. Disclosure and Transparency
4. Stakeholder-Centric Strategy
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- Include stakeholder voices in strategy formulation, especially host communities and regulators.
- Adopt Integrated Reporting to capture value beyond profits.
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5. Board Effectiveness and Evaluation
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- Conduct independent annual board evaluations.
- Provide continuous training for directors on emerging issues in governance, technology, and ESG.
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Governance Reform Case Studies
The following table compares several notable governance reform initiatives in oil and gas companies, highlighting the triggers, changes made, and impacts:
|
Company (Country) |
Trigger for Reform |
Governance Changes Implemented |
Impact/Outcome |
|
Petrobras (Brazil) |
2014 “Lava Jato” corruption scandal exposed political meddling. |
New laws mandated internal audit units and statutory audit committees, mandatory codes of conduct, and merit-based board appointments. Petrobras also separated political influence from its governance. |
Investor confidence gradually restored. By 2019 Petrobras’s stock rebounded (from ~USD 3.80 in 2016 to >USD 15 by late 2019). Enhanced transparency and controls reduced future corruption risk. |
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NNPC Limited (Nigeria) |
2025 Government resolution dissolved the existing board and management, citing poor governance. |
A new board of seasoned industry professionals was appointed, emphasizing diverse expertise and transparent oversight. The board’s mandate includes optimizing assets, restoring investor confidence, and preparing for possible public listing. |
Industry observers expect “dramatic improvement in corporate governance” and efficiency. The shake-up was widely hailed as a step toward world-class governance, though outcomes depend on continued independence from political interference. |
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Sonangol (Angola) |
2017 anti-corruption drive by new government targeted SOEs (including Sonangol). |
Most SOE boards were replaced. Sonangol’s regulatory and concessionaire functions were split off into a new national oil agency. Laws now require publication of audited annual reports for major SOEs. Sonangol has been asked to divest many non-core assets. |
Early signs of greater transparency: audited accounts are publicly filed, and governance structures tightened. However, progress has been gradual; Sonangol remains under scrutiny, and the true impact on corruption and efficiency will take more time. |
What Governance Consulting Offers
Governance consulting firms play a critical role by helping oil and gas clients:
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- Assess Gaps using maturity models and board diagnostic tools.
- Design Governance Frameworks tailored to national regulations and global benchmarks.
- Train Boards and Executives in ESG governance, ethics, digital strategy, and stakeholder management.
- Support Compliance with international standards and prepare clients for ESG-linked capital raises or partnerships.
As boardroom conversations shift from quarterly earnings to long-term resilience, governance consultants serve as translators, helping local companies speak the language of global capital, climate action, and inclusive growth.
Conclusion
Governance is no longer a shield, it’s a sword. African oil and gas companies that move beyond compliance and embrace modern governance will not only mitigate risk but unlock strategic opportunities. From attracting climate-conscious investors to improving stakeholder trust and international credibility, board reform is fast becoming a business advantage.
As McKinsey noted in its 2023 report on African Energy Transition, “Governance maturity will determine which firms survive the global energy shift and which ones disappear.”
The stakes are high, but so are the rewards. The future belongs to companies bold enough to govern differently.
At Stransact Chartered Accountants, we work with boards and executive teams across the oil and gas sector to strengthen governance practices and meet global expectations. Our tailored consulting approach helps clients align board structures, disclosures, and ESG oversight with international standards, while staying grounded in local realities.
Reach out to us at [email protected] to explore how we can support your governance transformation journey.
