Oil, gas industry in Africa promising amid rising uncertainty
Although the global energy market is in an exciting phase of transition, and disruptions with new technologies unlocking significant new reserves, processing, transportation and downstream uses that were previously unviable, unknown or inaccessible, but the future of the industry in Nigeria and other African countries remains increasingly uncertain.
According to the latest Africa oil and gas review by PwC, decarbonisation driven by the environmental sustainability agenda is shifting the energy mix at an accelerating pace, positioning gas ahead of coal by 2030 to become the world’s number two fuel.
For Nigeria and other countries, the challenges will be how to wade through mid and downstream segments development, regulatory complexity and uncertainty and contractual frameworks.“It is critical, however, that the sector retains and builds on its strategic portfolio management, enterprise risk management, capital project delivery, capital sourcing and allocation discipline, market and customer insights and relationships and adopts new technologies and innovations to improve performance if the hard-fought wins in cost savings are to be retained. Progress in addressing corruption and improving corporate governance will also need to be urgently addressed,” James Mackay, PwC Director Capital Projects & Infrastructure, said.
Against this backdrop, African NOCs and their partners, contractors and funders must chart a course through increasingly uncertain waters.“The future for the African oil and gas industry is exciting as well as challenging, and we can look forward to the growing participation of Africa as a global consumer and supplier of energy,” Mackay concludes.
Andries Rossouw, PwC Africa Energy Utilities & Resources Leader, also says: “Renewed optimism has returned to Africa’s oil & gas industry on the back of a rebound in prices and increased investor interest. The African oil & gas industry has been through some difficult and challenging years in the wake of the oil price crash. However, the industry has restructured itself and is more competitively placed in terms of efficiency and operational performance. The outlook for the industry continues to improve with oil & gas companies targeting cautious growth in areas less vulnerable to external volatility while maintaining their cost and operational margins.”
Globally, 2018 was a successful year in oil & gas exploration with discoveries almost doubling those made in 2017.Notwithstanding Africa’s endowment in vast natural resources, including substantial oil and gas reserves, West Africa was the only African discovery to make it onto the 2017 and 2018 top 10 lists for new discoveries.One of the most dramatic finds in Africa over the past decade is Mozambique’s natural gas estimated at over 180 tcf, which has already unlocked the first three large-scale LNG projects.
These projects, together with project expansion phases and additional exploration have the potential to position Mozambique as the third largest LNG producer in the world after Qatar and Australia by 2030.Hydrocarbon resources also provide growth opportunities in countries that can capitalise on the potential. Maximising the benefits from these endowments provides direct income to governments, employees, suppliers and shareholders of megaprojects.
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