Africas oil gas market could see more opportunities

Influenced by the epidemic the energy transition, many oil companies have seen a sharp decline in proven reserves. Big oil companies' underground reserves fell 15 per cent last year, according to an analysis released on May 5 by Z-Advisors Energy. Seeking new reserves of oil gas production has become a top priority in the energy industry, Africa has attracted the attention of many oil gas capital because of its resource endowment unique advantages.

International oil company

Promoting multiple upstream projects in Africa

In recent years, international oil companies, such as Shell, BP ExxonMobil, have seen significant declines in proven reserves. Remarkably, Eni has avoided a decline in proven reserves over the past decade. The company believes this is largely due to its significant exploration success in Africa.

In fact, Eni is the only oil gas company eyeing the African pie. Africa's upstream sector continued to be active last year, even as most oil companies cut back on capital expenditure. Total's purchase of Tullow Oil's Ugandan assets was one of the biggest deals in Africa last year, while Woodside increased its stake in Senegal's Sangomar development.

This year, the trend will continue. Total has begun producing oil the second phase of its Zinia project off the coast of Angola, which will reach 40,000 b/d by mid-2022, Up Stream reported May 6. At the same time, the company said it would press ahead with a $5.1 billion plan to extract more than 1 billion barrels of Ugandan crude oil pipeline it across East Africa. It is a rare frontier oil development at a time when most big companies are retrenching will further cement Total's leading position in Africa. Qatar Petroleum also announced an agreement with Shell on April 5 to partner in two exploration blocks off the coast of the Republic of Namibia. Eni, with its impressive African roots, continued to push ahead this year. On April 6, the company announced the discovery of an estimated 250 million barrels of oil in the Cuica play offshore Angola. The company also plans to invest about $7 billion in Angola over the next four years with partners in exploration, production, refining other areas. Eni Chief Executive Guido Brusco bluntly said Angola was key to the company's future growth strategy.

Facility follow-up policy reform

Favorable oil gas development

A number of discoveries have been accompanied by a significant increase in investment in infrastructure, technology services, paving the way for the oil gas industry. Uganda, for example, has been plagued by delays in crude production because of a lack of infrastructure, such as pipelines refining facilities, despite its vast reserves. only will this be alleviated, but the landscape of Africa's oil industry is likely to change with the construction of the East African crude oil pipeline, which on April 11th reached a final agreement with all parties involved. The 1,455-kilometer-long pipeline will carry 216,000 barrels of crude oil per day (BPD) Uganda to the Tanzanian port of Tanga is expected to become operational in 2025.

Elsewhere in Africa, construction of oil gas facilities has also accelerated. Angola neighboring Zambia also recently signed a $5 billion memorandum of understanding to study the feasibility of building an oil pipeline between the Angolan port city of Lobito the Zambian capital Lusaka, which is expected to cost about $5 billion.

At the same time, the timely implementation of policies regulations also provides more guarantees for the future development of oil gas in Africa. Nigeria's 12-year-old Petroleum Industry Act (PIB) has entered the final reading process , if passed, will be the country's first oil gas industry reform in nearly 60 years. It is widely believed that this round of amendments will change the oil gas industry in Nigeria dramatically. Wood Mackenzie, a market research firm, sees the move as an important means to improve the competitiveness of the country's oil gas sector in the upper, middle lower reaches. In addition, some resource countries have made their oil gas assets more competitive by raising taxes, tightening foreign exchange controls opening more blocks. Earlier this year, Angola's oil gas authority announced that it would submit nine blocks (three blocks in the Lower Congo Basin six blocks in the Kwanza Basin) to international tender grant development concessions by June 2021. On May 3rd it announced that it was in direct talks to license other oil blocks.

Africa's oil gas prospects look good

But it is still challenging

Africa's proven oil reserves have been increasing in recent years, second only to those in the Middle East South America. According to Statista, Africa's proven oil reserves reached 125.8 billion barrels in 2020. Among them, Libya has the largest oil reserves in Africa, followed by Nigeria. African energy expert Neil Ford believes the next few years will bring more exciting news for oil gas exploration in Africa.

East Africa, as one of the five major distribution regions of the global deepwater basins, is a promising target for many oil companies. The proximity to the Indian Ocean the Asia-Pacific region, coupled with low development costs, offer considerable potential for future oil exports the region. The combination of low oil development costs pipeline investment is likely to leverage more capital into East Africa, according to several industry groups. Total CEO Andrew Pan also said the region is likely to attract more than $10 billion of investment in the future.

In addition, there are also a lot of industry focus on West Africa. Nigeria, a traditionally strong market, plans to double its oil production by 2025, with a goal of increasing output by 4 million b/d in six years. The country plans to launch more than 100 oil gas projects by 2025, could account for 23 percent of Africa's oil gas projects in the next four years, according to an April report by Global Data. However, it is important to note that due to the outbreak the energy transition, major oil companies are becoming more cautious about investing. Political instability regulatory uncertainty are also putting additional pressure on the outlook. PricewaterhouseCoopers Africa's oil gas consulting leader, Chris Bradenham, has said that the African oil gas industry is fraught with complex challenges headwinds, but challenges also bring opportunities.

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Source: International Gas Network