2015 Africa Asia Oil & Gas Special
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In collaboration with Africa Southeast Asia Chamber of Commerce
Sep, 2018
10-minute read
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Notwithstanding the recent slowdown in global oil and gas markets, Africa’s attractiveness to foreign investors in the oil and gas sector has improved significantly within the last decade. According to the World Energy Outlook, about 30% of the world’s hydrocarbon discoveries from 2009 to 2014 were made in Sub-Saharan Africa.
Africa Represents 8.5% of Global Oil and Gas Reserves
According to U.S. Energy Information Administration (EIA) and OPEC Statistics, total African oil reserves as at end 2013 is about 128 billion barrels – more than double the reserve numbers recorded in 1980. Over the same period, bolstered by offshore gas finds in Mozambique and Tanzania, Africa’s gas reserves are estimated to have almost tripled - from 210 trillion cubic feet (Tcf) to 606 Tcf. In all, Africa’s total oil and gas reserves, distributed across 23 African nations, are about 228 billion barrels of oil-equivalent - equivalent to about 8.5% of the world’s total oil and gas reserves.
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2013 Ranking of Top 10 Countries (by Oil Reserves)
1 Data refers to conventional crude oil only. Canada’s conventional oil reserve is 4,893 million barrels in 2013. By including oil sands, Canada’s oil reserve is estimated to be about 170,000 million barrels in the same year.
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2013 Ranking of Top 10 Countries (by Gas Reserves)
African Energy Exports Look East
There is today a systemic slowdown in demand for African oil and gas from North America and the EU. The fall in African oil imports from these two regions can be attributed to several factors such as slower economic growth in the EU, the rise of renewable energy sources and the shale gas revolution in the USA.
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Against this backdrop, African oil is gradually looking East. Underpinned primarily by commodity and energy flows, bilateral trade between Asia and Africa today stands at US$500 billion. Between 2007 and 2011, China’s share of African oil exports increased from 10% to 14%, while the USA’s share fell from 30% to 23%. Led by China, Asia today consumes for over 30% of Africa’s total oil export.
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Asian Investments in African Oil and Gas
According to the Organisation for Economic Cooperation and Development (OECD), Africa will need new investments worth US$1.25 trillion over the 2001 to 2030 period to develop its energy sector, especially for upstream exploration activities. The amount of investment required to develop oil and gas related infrastructure up to 2035 is estimated to be US$2.2 trillion. With these significant capital needs and the scaling back of investments by Western big oil majors in recent years, Africa will need to look for new partners and alternative source of fund raising. Against this background, several players are emerging.
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Asia's Role in Africa's Offshore
As more onshore and shallow-water fields in Africa mature and face declining production, the more geologically challenging and technically costly deepwater projects will become more prominent among Africa’s oil and gas mix. McKinsey’s analysis shows that deepwater oil projects have grown from 1% of total African oil and gas supply in 2000 to 20% of that in 2013, and the figure is expected to grow to 27% by 2025.
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Offshore prospects in Africa are currently concentrated in two regions. The first is East Africa, where offshore deepwater gas fields along Tanzania and Mozambique coasts have attracted significant foreign investments. Anadarko has discovered gas in the Rovuma basin Area 1 offshore Mozambique. Eni has also discovered gas in the adjacent Area 4 with its partners Galp Energi, KOGAS, and Mozambique NOC ENH. The other region is the Gulf of Guinea, which includes countries such as Nigeria, Ghana, Ivory Coast, Republic of Congo, Gabon, Cameroon, Equatorial Guinea and Angola. Exploration activities led by Total Gabon and U.S.-based companies Marathon Oil and Cobalt have discovered natural gas in Diaman-18 field offshore of Gabon. Shell and CNOOC have also discovered gas in the Leopard-1 deepwater field 145 km off the Gabon coast. ENI has successfully found about 4 billion barrels of oil-equivalent offshore along the coast between Congo and Gabon.
