Africa continues to attract more foreign investment with lucrative offers of abundant hydrocarbons
Africa, the world’s second largest, and second most populated continent, is often overshadowed by the Middle East when it comes to the production of oil and gas, but the continent is showing signs of change as exploration activity begins to take off.
Africa currently supplies about 12 per cent of the world’s oil, boasting significant untapped reserves estimated at 132.4 trillion barrels of oil, or eight per cent of the world’s proven reserves. According to a report published by PricewaterhouseCoopers (PWC), the continent holds natural gas reserves of 513.2 trillion cubic feet (tcf), roughly seven per cent of the world’s supply. 91 per cent of the continent’s yearly gas production capacity of 7.1 tcf is found in Nigeria, Libya, Algeria and Egypt.
North Africa has traditionally dominated the oil and gas scene, but political uncertainty, sabotage, and terrorism, such as the attack on In Amenas gas facility earlier this year, have led to a loss of production (of over a million barrels per day) and has shaken investors’ confidence. It is expected that production will rebound, particularly in Libya, where more facilities are being brought back on stream and amendments to EPSA bidding rounds are taking place, but in the meantime, the African oil and gas industry has begun to look elsewhere.
The continent has identified over 4200 oil and gas blocks, more than half of which are still open, subject to force majeure or in the application process, says the PWC report.
The opportunities in sub-Saharan Africa appear to be particularly bountiful, especially for those companies willing to take higher risks. Only about 30 per cent of the region’s 2900 blocks have already been licensed.
In addition to looking at sub-Saharan Africa, an increasing number of companies have begun to consider East-Africa as fresh grounds in their hunt for hydrocarbons.
“Large gas finds in Mozambique and Tanzania, and oil potential in Uganda and Kenya, have sparked a flurry of exploration activity across Africa,” said Chris Bredenhann, Africa oil and gas advisory leader for PWC in an article recently published by Engineering News. “Governments around Africa are reviewing or developing their energy policies. Many countries are investigating changes in the government take, taxation regulations and State participation,” he added.
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