Positioned as the world’s final frontier for hydrocarbon exploration, Africa is poised to experience significant economic growth in the coming years as a number of countries seek to capitalize on underexplored oil and gas prospects.
Featuring the expertise of industry experts, energy research and business intelligence company, Rystad Energy’s, Exploration Overview webinar, held on 23 February, featured the participation of Aatisha Mahajan, Vice President for Exploration at Rystad Energy; Palzor Shenga, Vice President for Upstream at Rystad Energy; and Taiyab Zain Shariff, Senior Analyst at Rystad Energy; and was moderated by Orian Hernandez, Senior Client Analyst at Rystad Energy.
Following the unprecedented global downturn of the oil and gas sector in 2021 as a result of the Covid-19 pandemic, coupled with commitments towards an energy transition and a low carbon future, hydrocarbon exploration has seen a decline in recent years. Looking towards 2022, however, oil and gas demand is expected to recover strongly, and, despite the global downturn in oil prices, exploration has continued in Africa.
“2021 was not a good year as far as global conventional exploration was concerned, and with the energy transition and net zero commitments having led to wide investments, IOCs are becoming more cautious than ever before,” stated Palzor Shenga, Vice President for Upstream at Rystad Energies.
Boasting approximately 7% of the world’s proven crude oil and natural gas reserves, Africa is far from having exploited its full potential. In the wake of the EU Commission’s labeling of gas as ‘green,’ the coming decade is likely to see a continuation in the rise of gas exploration in Africa, thus contributing to industry support, economic growth, and the creation of a skilled working class.
“[Last year was tough] with just close to 411,000km2 acreage being awarded, which could be noted as the lowest in the decade and exploration and production companies are rather reluctant to move out into new acreages, or move out into new areas,” stated Taiyab Zain Schariff, Senior Analyst at Rystad Energies, adding however that, “We do see a modest increase in offshore activity, maybe around 10%. This could be because wells that have been pipelined are now being drilled.”
Offering the highest rates of return, thus attracting significant investment, offshore oil and gas field developments are expected to increase exponentially within Africa, with hydrocarbons expected to play a major role in satisfying Africa’s energy needs. Major gas resources in Mozambique, Nigeria, Angola, Senegal, and Mauritania, are expected to augment the position of gas as one of the continent’s most important energy sources, simultaneously playing the role of a transition fuel.
In Namibia, oil supermajor, TotalEnergies, is currently preparing to drill in the ultra-deepwater Ondjaba-1 exploration well in Angola’s Block 48, while multinational oil and gas company, Shell, is poised to spud an appraisal well on its major Graff oil discovery in Block 2913A. In Kenya, Italian energy company, Eni, has spudded its Milma-1 exploration well in the deepwaters of the Lamu Basin.
“We see a very good year for Africa in 2022, Graff has been a success, Venus is being drilled by TotalEnergies in Namibia. In addition, we see activity in East Africa as Eni is already drilling in Kenya, and Egypt has been a hotspot for exploration for quite some time now,” concluded Aatisha Mahajan, Vice President for Exploration at Rystad Energies.
Serving as one of the continent’s primary drivers of economic growth, oil and gas exploration in Africa offers significant opportunities for socioeconomic growth, increasing access to energy, and promoting the global energy transition. Fueled by population growth, urbanization, and the emergence of a growing middle class, the outlook for Africa’s oil and gas industry is positive, despite a multitude of economic and external conditions having placed pressure on international oil companies operating on the continent.