The Africa Oil & Gas 2015 special considers how the continent will cope in the face of lower oil prices and a dip in industry confidence. OPEC’s decision to maintain production in late November, thereby punishing high-cost producers, has had an outsized impact on Africa’s major oil powers, which tend to be highly reliant on hydrocarbon revenues. Frontier exploration, which is largely driven by small companies, has also been punished owing to investor concerns.
There are, though, opportunities to be had for those able to invest counter-cyclically. Service prices will come down, some rig rates have already halved and seismic acquisition is headed in a similar direction. Larger companies that may have investigated frontier opportunities are pulling back, protecting dividends at all costs, reducing the competition for new acreage. Additionally, importers of oil – or oil price-linked products – will see their bills come down.
The report involves comments from Berwin Leighton Paisner partners on finance for Africa, Oando Energy Resources’ CEO on progress made through the acquisition of ConocoPhillips’ assets in Nigeria and AGR executives on the benefits of outsourcing.
- Hard times - Africa offers the frontier acreage into which companies are eager to pile when the going is good. In the present slowdown, life is looking harder
- Opportunities arising - Changes in pricing and appetite for risk will have an impact on African investment decisions
- Competing for investments - North American companies have turned away from investments in Africa as opportunities closer to home have arisen
- Sounding the frontier’s depths - The lure of frontier exploration continues to be the big draw of Africa, which remains one of the least drilled places in the world
- The London-Africa link - Financing African projects has continued to find support in the UK
- Delivering African work - Logistical efficiency is important when working in frontier regions and, with the rise of unconventionals, will become more so
- Uganda and its energy future - Uganda’s oil industry is opening up, with production licences and infrastructure decisions coming soon
PROJECTS & COMPANIES
- Halfway there - Oando’s upstream arm took a leap forwards with its acquisition of ConocoPhillips’ Nigerian assets – but more is still to come
- Silver linings playbook - Chariot has taken stakes in a number of frontier basins in the Atlantic and remains optimistic, despite some punishing misses in Namibia
- Covering the gap - In the quest for efficiency and new opportunities, AGR has high hopes