The African Energy Chamber’s 2024 Outlook Report highlights that NOCs and majors have the potential to transform Africa’s short-term hydrocarbon supplies and medium-term production, driving greenfield investments and exploration well drilling.
Produced in partnership with Rystad Energy, the report also anticipates North and West Africa to drive capital expenditure (CapEx) spending between now and 2030 and forecasts healthy levels of exploration drilling between now and 2025, with a focus on high impact wells (HIWs).
One of the key takeaways from the report is the position of African NOCs and majors as drivers of Africa’s short-term supplies and medium-term production. NOCs hold the largest working interest share of hydrocarbon potential in Africa and are expected to produce around 2.57 million barrels per day (bpd) of liquids (oil and condensates) and 14.17 billion cubic feet (bcf) per day of natural gas in 2024. This will primarily come from Algeria’s Sonatrach, Libya’s National Oil Corporation, the Nigerian National Petroleum Corporation and Angola’s Sonangol, which are estimated to drive over 85% of liquids supplies from African NOCs in 2023/2024. International majors are the second-largest driver of oil and gas supplies on the continent, expected to produce 1.55 million bpd of liquids and 7.54 bcf per day of natural gas in 2024.
These two groups are also expected to account for the lion’s share – around 65% – of greenfield investment on the continent during the 2023-2030 period. This makes up part of the total potential cumulative CapEx spending over the same period, which is estimated at $450 billion. According to the report, West Africa will drive over 50% of potential CapEx spending through mostly brownfield investments, while North Africa will account for almost one-third of potential spending, primarily coming from Libya and Algeria. Liquids are expected to attract over 60% of total CapEx, and natural gas the remaining 40%. Notably, over the second half of the decade, greenfield expenditures on pre-FEED discoveries are expected to drive the majority of total CapEx spending.
When it comes to forecasting drilling activity, onshore drilling is expected to comprise around 80% of activities, with 967 onshore wells drilled by the close of 2023 and 1,013 new wells drilled in 2024, mostly in northern and eastern Africa. To carry this out, rig demand is expected to grow significantly, increasing by 55% in 2024 compared to a 2020 baseline. Egypt has the most active offshore rigs, followed by Angola and Nigeria. The current market outlook and projected green- and brownfield investments suggest that rig demand could increase to pre-pandemic levels, yet remains contingent on new projects being sanctioned, with demand in countries like Namibia, South Africa, Equatorial Guinea, Ghana and Mozambique being particularly dependent on final investment decisions being made.
Meanwhile, exploration drilling is expected to accelerate, with total cumulative well count estimated at 375 between 2023-2025. Two-thirds of drilling activity will be onshore, concentrated in Algeria and Egypt, while one-fifth will be in deepwater acreage. Once again, NOCs and majors are expected to drill close to 50% of total exploration wells during the same period. HIW drilling – meaning areas with large prospective resources, emerging or frontier basins, or drilling that opens a new play – will also increase over the same period. Six HIWs have been drilled on the continent in 2023, with 11 more expected in the next 15 months. This development, coupled with a series of upcoming licensing rounds on the continent, represent positive indicators for Africa’s upstream future. Africa is currently home to four rounds with bids under evaluation, four rounds that are open for bidding, and five planned rounds including Guinea, Angola, Algeria, The Gambia and South Africa. In total, 177 blocks will be made available across the continent, with to-be-awarded status expected to close in the next 18 months.
