Africa’s Oil and Gas Industry: Trends, Challenges, and Potential

BMI’s Africa Oil Gas Report

BMI’s africa oil gas report interprets energy trends in sub-Saharan Africa for a global audience of professionals, consultancies, and financial institutions. It provides independent forecasts and competitive intelligence.

As prices recover, African producers face increased cost pressures from investors and lenders. They must optimize their fiscal regimes and reduce their carbon intensity.

Natural gas

With a host of new gas discoveries in Mozambique, Tanzania, Senegal and Mauritania, Africa is poised to become a major natural gas exporter. But the rush to exploit these reserves threatens the continent’s climate policies. With Europe and East Asia shifting away from intensive fossil fuel use, export windfalls could be short-lived. And the infrastructure needed to convert to gas-powered power will be expensive, a Global Energy Monitor briefing warned.

Multilateral financiers have already withdrawn from coal and oil projects under pressure from a vocal green lobby, and the threat of global climate change is making them wary of funding new LNG development as well. That has put African independents on the back foot. Yet promoting gas for domestic consumption can boost industrialisation and economic growth, reduce poverty and help wean poor people off biomass cooking stoves. This can be done by ensuring LNG project developers allocate some of their production to the local market, as well as by developing long-distance pipelines and intra-regional networks that encourage gas-based industrialisation and power generation.

Oil

Oil is the most widely used fossil fuel in the world and provides the basis for a large portion of Africa’s energy export revenues. The occurrence of organic-rich, oil-prone Type I and II kerogens in sedimentary basins and their entrapment within reservoir rocks with intrinsic petrophysical properties is responsible for the large oil deposits in Africa.

But many academics have warned that countries endowed with natural resources tend to end up with worse economic and social outcomes once they cash in. In Angola and Nigeria, for example, corrupt officials siphoned billions in profits from oil sales away from local communities.

However, new discoveries are driving a resurgence in African upstream projects. Several major greenfield Financial Investment Decisions are expected throughout 2023, including Baleine (Eni) in Cote d’Ivoire, Venus (TotalEnergies) in Namibia, and Graff (Shell) in Tanzania. These projects are being financed by the Majors, but Africa must reduce costs and improve project delivery to compete.

Renewables

As world energy demand shifts toward lower-emission fuels, Africa’s oil and gas producers will have to focus more on meeting domestic demand. This will require a combination of strategies, including investing in the right energy mix and promoting renewables.

Renewable resources are usable energy sources that run on an inexhaustible or replenishable supply of natural “fuels.” These include sunlight, wind, rivers (hydroelectric power), hot springs and biomass. The ways in which these resources are harnessed are sufficiently different, however, that laws and regulations usually treat each resource as a separate technology.

Attracting private investment in renewable energy could help African countries make the transition to a low-carbon future. Surveys indicate that governance-related risks – such as complex bureaucracy and changing regulation – pose the greatest challenge to this effort. However, governance improvements can mitigate these risks. Similarly, improving infrastructure and streamlining permitting processes can also reduce project costs. These investments can create new business opportunities for energy companies and other stakeholders.

Infrastructure

The development of infrastructure for the transport and processing of natural gas in Africa can help to lower energy costs and improve reliability of supply. Countries with significant gas reserves could invest in gas pipeline infrastructure to connect them with regions where demand is expected to be strong, such as those in North Africa and South Africa.

Moreover, with international energy companies increasing their focus on renewables and carbon-reduction initiatives, Africa’s oil and gas companies need to build local expertise and skills to drive the industry forward. This can be done by driving regional content policies and coordinating global recruitment campaigns to attract qualified professionals to the region.

This report provides industry views, independent forecasts and competitive intelligence on the African oil and gas market. The report is a must-read for industry professionals, consultancies, government departments and regulatory bodies. It interprets trends in the continent’s Petroleum Industry and explains them in ways that accountants, project financiers, energy journalists and public affairs specialists can understand.

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