CAPITAL expenditure by oil majors in sub-Saharan African countries will drop by $100bn over the next five years, analyst firm Wood Mackenzie said at the Africa Oil Week conference in Cape Town early November.
Nigeria and Angola will suffer most because their deepwater projects have the highest breakeven prices. As a result, Sub-Saharan African liquids production will decline to 2.6-million barrels a day by 2030, from 4.8-million barrels a day presently.
‘Governments in Sub-Saharan Africa need to revive the upstream oil and gas industry by offering attractive fiscal terms rather than look to increase state revenues in the current climate,’ Femi Oso, senior research manager for Sub-Saharan Africa at Wood Mackenzie, said.
‘Exploration cuts in the region will also contribute to a longer-term production slump as explorers have shied away from greenfield prospects, in favour of appraising known discoveries. However, the confirmation of the giant Owowo discovery in deepwater Nigeria shows the quality of resources sub-Saharan Africa still has to offer.’
The biggest upstream success story in sub-Saharan Africa is East Africa’s emergence as a gas region of global importance. With more than 168-trillion cubic feet of gas found and limited regional demand, East Africa is on track to become a major global liquid natural gas (LNG) supplier and various export projects are awaiting final investment decision.