A recent report from Ernst & Young (EY) shows expected areas of intense oil and gas growth in Africa as believed by the company’s experts.
Noting that many African nations have seen a great deal of social, political and economic reform since the end of both the Cold War and the Apartheid era, EY states that Africa is on a pattern of sustainable growth that could open up areas for exploration that were previously thought too unstable to be either safe or financially feasible. In many of these regions, the revenue from resource production, especially oil and gas, has provided the tools to pay off national debts, develop infrastructure and establish regulatory agencies that stimulate investor confidence.
According to the International Monetary Fund (IMF) nine African nations were among the 20 fastest growing economies in the world between 2009 and 2013. In fact, EY reports that between 2000 and 2010, the average African economic output more than doubled.
“It is therefore not too surprising that investors are optimistic about the potential for growth in the African oil and gas sector,” reads EY’s report introduction. “While there are, in Africa, as elsewhere, risks—some fragile regimes, some weak legal systems, some inefficient and ineffective institutions, and some potential for civil unrest—the rewards are commensurately high.”
According to the IMF’s 2013 World Economic Outlook, Africa is due to trail only Asia in terms of economic growth in the next five years.
Along with EY’s full report, the group released an infographic (see below) that simplifies their projection for the most promising African economies for investors to look to.
Resources generally, and oil and gas specifically, have played an important role in this growth. African countries continue to increase their production of oil and/or gas. Revenues from higher prices and the investment that new discoveries are attracting have made a key contribution to growth and developmental initiatives.
Reserves and production: As of the end of 2013, according to the Oil & Gas Journal, proved African oil and natural gas reserves are estimated to be almost 228 billion barrels of oil-equivalent (boe). Total reserves are up sharply from the 2012 total of 213 billion boe, due largely to revisions in proved gas reserves.
Exploration and drilling activity. African drilling activity accounts for a relatively small portion of the global industry total — typically ranging between 4–7% of the global total. However, beginning in late-1999 drilling activity has increased fairly steadily, except for the brief, but sharp downturn following the collapse of oil and gas prices in late-2008. As of the end of 2013, Baker Hughes reported 138 active rotary rigs in Africa, out of a global total of 3478 rigs. Rig activity in Africa is dominated by land drilling, but in recent years, offshore activity has notably increased, particularly off West Africa.
Other oil and gas activity. Accompanying the sustained growth in the upstream segment of the African oil and gas industry is strong growth in the associated midstream and downstream ‘infrastructure’ parts of the business — terminals, storage capacity and, most critically, pipelines and refineries. New pipeline capacity may be necessary particularly where new production is “land-locked” such as in the case of Chad, South Sudan and Uganda.Watch Ungodly Acts (2015) Full Movie Online Streaming Online and Download
Locations of growth
The majority of reserves and production remain concentrated in six countries — Nigeria, Libya, Algeria, Angola (oil), Sudan (oil) and Egypt (gas). However, there have been ever-increasing discoveries of new oil and gas (for example, in Ghana, Tanzania, Mozambique and Uganda) and prospected fields in many countries (including Sierra Leone, Mali and Kenya).
Yet significant challenges remain, EY continues, particularly in terms of infrastructure development and political stability/transparency.
Some have noted that in many parts of the continent, governments are getting tougher on the industry. This might include imposing local content restrictions, pressuring companies to accelerate development and threatening to withdraw licenses if there is insufficient activity, attempting to collect capital gains taxes for farm-outs, denying/reducing tax rebates and/or levying higher import duties, and imposing tighter environmental terms. But all-in-all, the challenges seem to be outweighed by the potential rewards.
For more info, wee the full report HERE: