By Teddy Nwanunobi
Sub-Saharan African’s largest oil and gas producers (Nigeria and Angola) are forecast to see declining crude oil and condensate production from 2021, despite the region’s keenness to rebound and ramp up investment in the oil and gas sector after a difficult 2020.
GlobalData, a leading data and analytics company, added that the countries have a relatively small number of projects coming online within the next five years.
“Sub-Saharan Africa has so much potential. It could easily overtake Europe in regional oil and gas production if utilized properly. However, companies have been more cautious than ever over their investments. Some of the huge discoveries made over the past decade have seen significant delays with no final investment decision (FID) in sight: as is the case with Shell’s Bonga Southwest/Aparo, which was discovered over 20 years ago,” GlobalData said.
European majors are gravitating towards an increasingly gas-heavy portfolio to reduce their carbon emissions.
This is forcing them to reallocate capital away from oil heavy developments to lower carbon projects.
The forecast for Sub-Saharan Africa’s total output (boed) is forecast to grow to 2025, as the production of natural gas will begin to outweigh crude oil and condensate, oil and gas analyst at GlobalData, Conor Ward, said.
Gas currently makes up 22 per cent of the regions’ production, and it is forecast to grow to approximately 30 per cent by 2025.
However, this forecast hinges upon multiple developments that have not yet received foreign income dividend (FID).
“Sub-Saharan Africa is seeing a shift of investment away from the more developed countries in the region, most notably Nigeria, and more towards frontier countries such as Mauritania, Senegal, Mozambique, and Uganda as the fiscal terms offered by the host countries are far more appealing and have a large untapped resource base. If Nigeria wishes to continue to attract investment and achieve a plateau in production, it will need to tackle the above ground risks which companies face,” Ward said.