Q: In entering a new year, and in terms of the profession and industry, how would you describe the “state” of your Region?
A: The importance of the Africa Region as a useful source of energy for the United States and Western Europe has grown considerably over the past couple of years, largely because of:
Furthermore, the impact of the rapid economic growth of “Asian giants” China and India is such that African oil supplies now face increased demand to fuel this growth and, therefore, increased E&P activity. China, for instance, has indicated great interest in West African oil resources, and it recently became Africa’s second-biggest trading partner behind the United States.
Such activity/dynamism has called for continued transfer of technology into the Region and for greater involvement and expertise of African geoscientists and engineers from around the world to explore for and exploit “home-based” hydrocarbon resources and reserves.
It is of note that of the 12 countries that make up the OPEC cartel, a third of them (Algeria, Angola, Libya, Nigeria) are African. A fifth country, Gabon, also had been a cartel member until its withdrawal in 1994.
Q: How would you describe exploration throughout your Region over the past year? For example, was it healthy? Robust? Troubled? Promising?
A: E&P activity in the Africa Region over the past year may be described generally as robust and promising, even though different locations have seen evidences of all four attributes in diverse dimensions – healthy, robust, troubled and (positively!) promising. In various locations of the Region over the past year, seismic surveys have been under way and drilling rigs were being relocated to the area.
In West Africa, the Gulf of Guinea has become one of the world’s most important targets for deepwater E&P. After years of political upheaval and brutal civil wars – particularly in Liberia, Sierra Leone and Côte d’Ivoire – the sub-Region has begun to experience a more positive environment for oil and gas development.
The recent discovery of Ghana’s giant Jubilee Field, coupled with U.S. President Obama’s new African foreign policy, has helped to make West Africa a desirable destination for oil and gas E&P.
“Ghana will begin pumping crude oil next year and expects to begin producing about 500,000 bopd by 2014. The recently sanctioned Jubilee project, with resources of around 1.2 billion boe and valued at $15 billion, will put Ghana on the road to becoming a significant new oil province”, quotes the September 2009 issue of World Oil.
This past December marked the 10th anniversary of deepwater oil production in Angola. Since oil started flowing from Chevron’s Kuito field in late 1999, deepwater production there has grown to ~1.5 MMBPD, eclipsing deepwater output from the U.S. Gulf of Mexico and Nigeria, and sitting in second place after Brazil in the global DW oil rankings. This situation is likely to remain through continuing interest and investment in Angola. Angola has 12 major DW projects exploiting 35 fields that initially contained 6.5 BBO. Angola is the second-largest oil producer in sub-Saharan Africa after Nigeria.
Over the past year, visiting Russian President Dmitry Medvedev discussed various areas of investment and technical cooperation with Nigeria. Moscow suggested investing up to $2.5 billion in Nigeria’s energy sector as it tries to catch up with China in gaining a share of Africa’s natural resources. Russia’s Gazprom has also been keen to get involved in the Trans-Saharan Pipeline aimed at bringing Nigerian gas to Europe. According to World Oil, “Chevron is investing $3 billion a year in existing and new oil and gas projects in Nigeria. ExxonMobil has plans to invest $60 billion in Nigeria over the next several years.”
The only apparent hindrances to these plans are the higher royalty and tax clauses in the proposed energy reform bill, and the continued offshore attacks and pipeline sabotage by militant groups. According to Shell E&P Africa VP, Markus Droll, security has been Shell’s biggest problem in Nigeria.
He said Bonny and Port Harcourt developments east of the Niger Delta were producing less than 150,000 bpd when they could have been producing in excess of 800,000 bpd.
Several discoveries were made over the past year in North Africa, including:
Activity for East and Southern Africa include:
Q: What are the hottest areas of exploration in your Region? Do you see continued activity there?
A: Hitherto, the hot spots had been only in the West and North Africa (particularly Nigeria, Angola, Equatorial Guinea, Algeria, Libya, Egypt, Sudan and Morocco). Today, with major discoveries in these and other previously unknown areas, attention is spreading also to East Africa (e.g. Tullow Oil’s finds in Uganda) and to South Africa, where Royal Dutch Shell in 2009 picked up an offshore deepwater exploration license in the Orange Basin, followed by a Technical Cooperation Study agreement for the onshore Karoo Basin.
Of great significance in these emerging oil provinces of Africa are the contributions of deepwater play fairway systems in West Africa – such as in Nigeria (e.g. the giant Bonga, Agbami, Erha, N’nwa); Angola (e.g. Girassol, Kizomba, Dalia); Congo (e.g. Moho, N’Kossa); Equatorial Guinea (La Ceiba, Zafiro); and lately in Ghana (the giant Jubilee field).
I expect to see increased E&P activity throughout the emerging oil provinces of Africa from 2010 on. Such activity will gradually follow the pattern of countries mentioned above – but many new players will emerge over time and – with good resource management practices – even outstrip E&P outputs of the older “pioneers” by taking advantage of mistakes committed by the latter.
Q: What might be the hot exploration areas to watch in 2010?
A: Those areas south of the Sahara would be Nigeria, Angola, Equatorial Guinea, Chad, Congo Brazzaville, Gabon, Ghana, Cote d’Ivoire, Mali, Cameroon, Sao Tome & Principe, Liberia, Sierra Leone, Namibia, Uganda, Mozambique and Madagascar.
In northern Africa, the areas would be Algeria, Libya, Egypt, Sudan and Morocco.
Q: What are the biggest challenges facing the profession and the industry in your Region in 2010?
A: Five big ones:
Q: What developments do you anticipate happening there in 2010?
A: Africa currently offers “unparalleled opportunities” for both majors and independents.
The year 2010 promises a lot of activity and dynamism for the continent of Africa in terms of oil and gas – O&G – exploration and production.
Oil production in Africa is expected to climb rapidly during the next 10 years. While the United States and Europe still have eyes focused on Africa, competitor China has also indicated great interest in West African oil resources, and it recently became Africa’s second-biggest trading partner behind the United States.
The upside for increased E&P activity in Africa will be that an upsurge in oil prices will create an inflow of petrol dollars into the economies of oil producing states. This will lead to increased competition to attract investment capital into those countries, with hitherto frontier ones upgrading to green and promising destinations.
Q: What are some things that you’d like to see happen in 2010 that would directly help both the industry and the profession in your Region?
A: First, on the AAPG Front:
In general industry terms:
The Africa Region Web site was recently launched and should become a good resource for the region's activities and developments.