Oil majors envision big gains in Africa

The optimistic response to a recent discovery in Côte d’Ivoire by Italian oil giant Eni, the first major discovery in the country in two decades, suggests that many African states are not yet ready to ditch fossil fuels and switch to renewable energies.

In September, Côte d’Ivoire announced a major offshore oil and gas discovery, following initial exploration success in 2014. The positive outlook has led several international oil companies to fight for the country’s oil reserves. country. A 2019 license round saw the government sell exploration blocks for a total of $ 185 million, with Italian Eni taking a major stake, with two exploration blocks- CI-501 and CI-504, as well as the French company Total, which is taking over exploration and production activities in the country. Britain’s Tullow Oil had already obtained licenses in the region in 2017.

Oil Major Eni said last month it discovered up to 2 billion barrels of oil and an additional 2,400 billion cubic feet of associated gas from the Whale Well, located about 60 km off the coast. The well offers the first commercial discovery in deep water in more than 20 years.

The discovery adds to Côte d’Ivoire’s proven reserves, which previously stood at around 100 million barrels. Eni shares the new reserves with the state government, which has a 10 percent stake. While the country’s production is significantly lower than that of Africa’s largest oil producers, at just 50,000 bpd, the find offers optimism about potential new discoveries in unexplored areas.

Several major international players have shown interest in the West African region, hoping to develop the region’s oil industry before global demand for oil declines. West Africa’s upstream oil and gas market is expected to reach a CAGR of about 6.7% between 2020 and 2025. Under-explored oil fields and low production costs are two of the main drivers of investment by oil companies in the region.

It is not just Côte d’Ivoire that is seeing the development of its oil and gas industry, as several countries on the continent are moving forward with oil projects this year, attempting to strike while the iron is always hot.

Another West African country looking to get lucky on recent discoveries in Senegal. Between 2014 and 2017, several major oil and gas discoveries were made in the region, with discoveries of 1 billion barrels of oil and more than 40 trillion cubic feet of gas.

In the same region, BP is expected to start drilling operations in the basin of Mauritania, Senegal, Gambia, Guinea-Bissau and Guinea-Conakry (MSGBC) in early 2022. BP hopes to expand its project LNG gas plant Greater Tortue Ahmeyim, expecting to produce 2.5 million tonnes of LNG per year. Australian company Woodside Energy will start producing oil and gas in the Sangomar oil field by 2023.

This month, the Norwegian company BW Energy also announced projects in West Africa, win two blocks near its Dussafu asset during Gabon’s 12th licensing round, which has been repeatedly delayed since 2019 due to the pandemic. BW will work in partnership with Vaalco Energy and Panoro Energy as operator of blocks G12-13 and H12-13 for an exploration period of eight years. At present, Gabon would have 2 billion barrels of proven oil reserves, but again, there is great potential in exploring underdeveloped oil fields.

Beyond West Africa, Tanzania, in the east of the continent, is rushing to develop its natural gas reserves. After the end of talks with international companies in 2019, President Samia Suluhu Hassan aims to start the development of the country’s LNG industry by 2023. With an estimate 57,000 billion cubic feet of gas reserves, Tanzania is eager to begin operations before global demand for oil and gas begins to decline as the energy transition accelerates.

Not to mention the modern success story of the East African state, Uganda, with its first commercially viable oil discoveries in the Lake Albert Rift basin in 2006 and 2009, the country gradually developed its national oil and gas industry. It now expects to acquire a major pipeline, the East African Crude Oil Pipeline (EACOP), which will be able to transport 210,000 bpd from two national oil fields, operated by TotalEnergies and CNOOC, to the port of Tanga in Tanzania for export. Despite several lockdowns, Uganda hopes EACOP will be operational by 2025

While many African countries must attract investment from international oil majors to develop their booming oil sectors, these emerging economies will nonetheless reap the rewards of a newly developed oil and gas industry, at a time when many Western states are turning the corner. back to fossil fuels. fuels and where demand is still high. The untapped oil and gas potential of several African oil regions and the potential for low-cost production are winning the favor of several large international players, who are looking to Africa and the Caribbean.

By Felicity Bradstock for Oil Octobers

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