Opportunities in the African oil & gas sector

EICDataStream, which tracks over 8,500 projects across the global energy industry shows there are currently 715 active and future energy projects throughout the region. Out of this, 361 are to be found in the upstream oil & gas sector, 72 in the midstream sector, and 134 downstream.

From the deepwater sedimentary basins of Angola, Gabon, Ghana and Nigeria through to onshore exploration in Libya, Algeria and Egypt and the under-developed East African Rift System, extending from Lebanon in the North to Mozambique in the South, the African continent remains at the forefront of oil & gas technology advances.

Offshore activities

Many of the most high profile activities in the region can be found in the deepwater fields offshore, West Africa.

Analysts Douglas-Westwood predict that along with the Gulf of Mexico and offshore Brazil, Africa will account for 85% of global deepwater expenditure between now and the end of 2012, with annual expenditures worldwide likely to reach over US$ 24.6 billion by 2012. Douglas-Westwood also estimates that overall capital expenditure for the period 2008-2012 is expected to total US$ 38.2 billion, 47% of which will be accounted for by Africa.  

EICDataStream tells us that there are today 62 future and current projects taking place, offshore Africa with the Gulf of Guinea and offshore Angola receiving continued attention. According to AfriDev Capital Partners, more than US$ 20 billion in development is likely to occur in the Gulf of Guinea over the next decade.

Current projects which are on stream include the Jubilee field, Ghana’s first deepwater oil development which, as of January 2011, was producing 50,000 bpd; the Kizomba field offshore Angola, which has an estimated 3.5 billion barrels of recoverable reserves; Shell’s giant Bonga field which has been producing 225,000 bpd since it went into production in 2005, while Total’s Akpo field is close behind and is likely to increase capacity over the next few years

Future offshore projects currently going through preliminary and feasibility stages include Block 32, offshore Angola which is at the pre-FEED stage and where the operator, Total, is looking to target two FPSOs with a potential value of US$ 1.5 billion; and a number of projects at the exploration and drilling appraisal phases. These include the Ofrima & Udele Oil fields, offshore Nigeria where the operator, Sinopec discovered oil with its first exploration well in July 2010; and the Acajou Oil and Gas fields, off the Cote d’Ivoire which is at the planning stage and where Tullow Oil is considering a number of tie-backs.

And it’s not just offshore West Africa which is the focus of activities. In August 2010, the first deepwater oil was discovered offshore East Africa in Mozambique’s Rovuma Basin.  Majors such as Italy's Eni, Petronas of Malaysia and China National Offshore Oil Corporation (CNOOC) have all moved into East Africa with Tullow’s success in Uganda being one which many companies hope to replicate.

Downstream

In the downstream sector, there are 134 current and future downstream projects. These include the US$ 6 billion Escravos Gas-to-Liquids (EGTL) project in Nigeria, with the purpose of reducing flare emission in the Niger Delta and likely to be completed by the end of 2012 or early 2013; the US$ 5 billion Mellita Refinery in Libya; and the Kogi project in Nigeria - a new oil refinery, which will be one of three refineries under a US$ 23 billion framework agreement signed in May 2010 between NNPC of Nigeria and the China State Construction Engineering Corporation (CSCEC).

There also remain strong potential opportunities in strengthening the region’s underdeveloped energy infrastructure - from refineries in countries like Nigeria, Angola and Kenya, to LNG export terminals with by far the most ambitious LNG plant in Africa being the US$ 9 billion project at Soyo in Angola.

While challenges such as security, the need for highly trained local personnel, market entry costs, and complex government legislation remain, we are certainly seeing plenty of opportunities for the UK supply chain.  For example, UK exports of goods to Nigeria were worth £1.2 billion in 2009, according to UKTI, the UK government’s international trade and investment arm. The UK is also the second largest investor in Angola with annual investments of over US$ 3 billion, a figure which is likely to continue grow.

Author: Mike Major, CEO, The EIC (The Energy Industries Council).

Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/22032011/opportunities_in_the_african_oil_and_gas_sector/