Countries drill 1,060 wells, as AEC lauds policy changes

Capital Expenditure (CapEx) in the oil and gas sector of Nigeria and other African countries has surged by 23 per cent, hitting $47 billion from $38.5 billion in 2023.

With over 1,060 oil wells drilled across the continent and the rate of oil rigs increasing, the CapEx witnessed in 2024 may nosedive in 2025 to around $43 billion due to delays in Final Investment Decisions (FIDs) but resurge to a decade-high of approximately $54 billion before 2030.

While the details were revealed in ‘The State of African Energy, 2025 Outlook’ published by the African Energy Chamber (AEC), the Chairman, NJ Ayuk, linked the development to policy changes in key African countries.

The report noted that national oil companies that would play dominant roles in the investment were linking improvement in the sector to traditional players like Nigeria.

West and North Africa led the CapEx spending, with West Africa contributing over 50 per cent of the continent’s total CapEx from 2023 to 2030, a development reported to be driven by established oil producers like Nigeria and Angola, and emerging players like Mauritania and Senegal.

The report noted that liquid hydrocarbons would continue to dominate Africa’s hydrocarbon CapEx, attracting over 60 per cent of the total investment through 2030. It added that natural gas was expected to increase from 30 per cent in 2023 to over 40 per cent by the end of the decade.

It also revealed that offshore projects dominated CapEx in 2023, but by 2024, onshore and offshore spending were equal, adding that onshore developments would account for 56 per cent of capex by 2030, driven by lower unit costs.

SIMILARLY, onshore drilling remained dominant, accounting for 80 per cent of the 1,060 wells drilled in 2024, with North Africa leading onshore activity and West Africa leading offshore drilling.

Offshore rig demand would move to 46 rig years in 2025, a 59 per cent increase from 2020 levels, driven by new projects and exploration activities, but contingent on FIDs.

Exploration drilling in Africa rose by over 150 wells in 2024, the report further noted, as Southern Africa emerged as a hotspot, especially in Namibia’s Orange Basin.

According to the report, Africa’s exploration spending is anticipated to surpass $6 billion in 2024, driven by major discoveries in Namibia and continued investments in North and West Africa.

It equally noted the numerous licensing rounds planned across Sub-Saharan Africa between 2024 and 2025, with countries like Nigeria, Namibia and Tanzania opening new blocks for development.

After a surge in the merger and acquisition activity in 2022, African upstream M&A deal value dipped in 2023 but rebounded in 2024, surpassing $12.7 billion by July, driven by portfolio high-grading by major oil companies.

Ayuk said African greenfield spending would exceed brownfield by 10 per cent by 2030, as the capex trends demonstrate that investors won’t limit themselves to mature fields.

“As we highlight in our 2025 report, one of those opportunities is natural gas. Africa holds nearly 18 trillion cubic metres of reserves, which will prove essential for a just energy transition as natural gas can provide significant near-term emission reductions while fostering energy security and economic development.

“Global demand for this clean-burning resource is also growing, particularly in Asia. That is why I am glad to see a greater emphasis on developing natural gas resources. In 2023, capex spending on natural gas was about 30 per cent, but this is projected to grow 10 per cent by 2030,” he said.

Stressing that a great deal of credit for the progress goes to common sense policy changes in nations such as Namibia, Senegal, Mauritania, Egypt and Angola, Ayuk stated that while COVID-19 artificially slowed capex for several years, the uptick was inevitable once the world opened up again.

“However, I believe a lot of it comes down to economic reality; global energy needs are rising. Africa has vast, untapped resources. I urge all parties to continue building a thriving energy industry that takes Africa – and the world – into the next century,” Ayuk said.