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Africa’s Hydrocarbon Future
As of 2009, there are 19 African countries with gas reserves and a Africa. New reforms are under way in Nigeria, and in time Angola is
few more with gas potential, with more coming forward with likely to reshape Sonangol for a more market-related role – even
discoveries, and new producers are expected to enter the African gas partial equity quotation. Several state oil companies have already
world. One example is Ethiopia, which has resources in development initiated restructurings, a potential precursor to forms of partial
in its Calub gas/condensate field in the Ogaden. New LNG trains are privatisation. They include Petroci, NNPC (evolving into Napcon),
already in motion in Angola and Equatorial Guinea, as well as in GNPC (Ghana) and even PetroSA in South Africa. However, many
traditional LNG zones such as Egypt, Algeria, Libya and Nigeria. This initiatives remain stalled, and the full fruits of this process are some
pattern will reinforce the oil game and allow Africa to balance its time off. Equally, the creation of state companies has picked up in
hydrocarbons business in a better way, since private and state gas the 21st century, with around a dozen entities formed – including
players in Africa include a widening range of companies, many with Sonagas, Sonangas, Gambia National Petroleum Company, SMH
an explicit strategy of gas exploration. (Mauritania), SHT (Chad) and NatOil (Uganda). New state players are
in creation in Madagascar and Zambia too.
Because the African
Undoubtedly, there is a long way to go before Africa as a whole
continent is vast and diverse in might witness a wave of partial privatisation, but it is one route to
government structure and
expansion and international ventures that state entities elsewhere
have found of benefit to commercial strategy (including Ecopetrol in
energy market type, no simple Colombia, Gazprom and Petrobras). Why should Africa not at some
paradigm of privatisation can
stage reach this stage of maturation?
be drawn.
Africa’s Investment Stakes
African oil and gas has come of age. This can be seen in growing
The African gas renaissance will be a fast-growth element over investment opportunities, rising oil production, fast-emerging gas
2009–2030 and beyond, based on Africa’s rising enhanced gas potential and export capacity and the financial stakes for
reserves and production. All of the super-majors are deeply involved institutions, financiers and all players connected to the nexus of oil
in this game, and many independent companies are taking on gas and money. Even if not top of the class in world terms, Africa’s
deals, including local African companies. The number of gas projects petroleum financing opportunities are substantial. In growth-rate
of different sorts in Africa has increased rapidly. Bringing these terms, Africa is a leading destination for capital within world energy.
projects to market is the challenge for governments and companies. The Organisation for Economic Co-operation and Development
This will require stability, sustained economic growth and investment (OECD) has estimated that US$1.25 trillion is likely to be invested in
confidence in contracts and state commitments, none of which can African energy over 2001–2030, just ahead of expectations for
always be guaranteed. Russia and the Middle East.
Future Hydrocarbon Bounty The energy investment share of African gross domestic product
Another potential hydrocarbons prize could reside in future long- (GDP) up to 2030 is anticipated to be 4–5%. Around 50% of African
term policy shift if African states decide to embrace privatisation. energy investment is projected for electricity and power, 48% for oil
Few have yet done so in the upstream industry. One day, however, and gas (30 and 18%, respectively) and the remaining 2% for coal.
privatisation might emerge. This could arise for several reasons as A fair share of funding will meet gas-power needs. Significantly,
Africa’s state players develop their energy philosophy, policies and 30% of the energy investment volume will be for exports to markets
commercial strategies. However, because the African continent is outside Africa, primarily for LNG. Meanwhile, the Organization of
vast and diverse in government structure and energy market type, no Petroleum Exporting Countries (OPEC) Africa’s exploration and
simple paradigm of privatisation can be drawn, but I would hazard a development investment needs for 2001–2010 will take around
guess that this global process will present itself more intensively one US$50 billion, and non-OPEC Africa some US$30 billion.
day in Africa.
In 2011–2020, African oil and gas investment will reach around
Governments remain the dominant controlling influence in Africa’s US$130 billion, with upstream outlays for OPEC Africa around
upstream, downstream and IPP markets. They are powerful and locally US$90 billion and non-OPEC Africa absorbing US$30 billion or more,
active players in the upstream, especially in key producer countries. with the downstream industry receiving only around US$10 billion.
Most large and long-established African state players are in general This offers an investment prize of considerable substance.
not yet up for full-scale or even partial privatisation, or at least most Investment will be needed to build African hydrocarbons. Much will
have not yet been prepared for this process (through reform, come from abroad, as Africa is largely capital-deficient. Most new oil
rationalisation, commercialisation, liberalisation, deregulation, asset production is slated to come from growth in OPEC Africa (Angola is
sales, de-monopolisation, restructuring and preparation for equity now included in this category), emphasising the critical future role of
disposals). However, some of this can be expected in time. Nigeria, Algeria, Libya and Angola. The continent’s gas trajectory is
likewise expected to attract large investment and financing. Production
Potentially, integrated African state players with significant assets will exceed local demand throughout 2009–2030, with a rising volume
and capacity may contemplate partial equity disposals, offering the of net gas exports to exceed 150 billion cubic metres (bcm) by 2010,
greatest opportunity for the benefits of privatisation to be reaped in over 220bcm by 2020 and 300bcm by 2030, when total gas volumes
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EXPLORATION & PRODUCTION – VOLUME 7 ISSUE 1
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