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This year’s Africa Oil Week saw the release of PwC’s annual Africa Oil & Gas Review. The event was attended by over 1500 delegates, including 17 government ministers from South Africa, Nigeria, Mali, Uganda, Gambia, Congo, Niger, Cote d’lvoire, Guinea, Namibia, and Sudan.

Chris Bredenhann“The conference has tackled some of the most compelling issues facing the African upstream today. With luminaries such as Minister Jeff Radebe, Minister of Energy from the Republic of South Africa and Dr Fatih Birol, Executive Director, IEA, outlining their commitment to a sustainable future; Minister Kachikwu confirming the direction of the Nigerian upstream and the American government confirming their commitment to African energy development, Africa Oil Week delivered both insights and tangible take-aways for operators, banks, service companies and governments alike,” says Paul Sinclair, Conference Director. 

He adds that a bidding round from the Republic of Congo, a licensing round announcement from Madagascar and a country roadshow from Uganda, highlighted the important role Africa Oil Week plays in driving new business opportunities for governments and exploration companies across Africa. The event delegates agreed that the outlook for Africa’s oil and gas industry is positive, a finding that was supported by the PWC report.

The report states that tough economic and external conditions have placed pressure on oil and gas companies to be more cost-effective and efficient. Companies have adopted to a low-cost environment, which promises to be even more beneficial given the current recovering oil price. It also found that Companies have taken to restructuring their portfolios with a focus on established regions, less exploration, higher value plays with low break-even-cost, and projects with shorter lead times and lower risk. The industry has also renewed its focus on delivering projects on-time and on-budget.

Despite positive developments, the oil & gas industry still faces numerous and persistent challenges around talent shortages, regulatory uncertainty, political instability, corruption and fraud, and a lack of infrastructure, says Chris Bredenhann PwC Africa Oil & Gas Advisory Leader. Notwithstanding the challenges, Africa does offer plenty of opportunities in the form of unexplored hydrocarbon demand fuelled by population growth, urbanisation and the emergence of a growing middle class, he adds.

At the end of 2017, Africa is reported to have 487.8 tcf of proven gas reserves, 7.1% of global proven reserves, only marginal changes to the prior year. Africa’s share of global oil production has slightly increased by 0. 3% since last year to 8.7% standing at 8.1 million bbl/d. The main contributors continue to be Nigeria, Angola, Algeria and Egypt. Libya also increased its production by 102.9% in 2017, placing it as the fourth-largest oil producer in Africa with an 11% share moving Egypt into fifth position.

Africa is the world’s fastest economic region with a growing population that is becoming more urbanised. According to PwC’s strategy and estimates, Africa’s total energy demand is forecast to increase by 60% to 28 000 trillion btu by 2030. Based on different potential trajectories for economic development, energy access policy and climate mitigation strategies, researchers have put forward various alternative scenarios for energy production and consumption on the continent in the years ahead.

Hydrocarbons are expected to continue to play a major role in the energy mix that will satisfy Africa’s growing energy needs. Major gas resources on the continent, including those in Mozambique, Nigeria, Angola, Tanzania, Senegal and Mauritania, could augment the key position of gas as an energy source for Africans. In the low-carbon context, gas also plays the role of a transition fuel before a wider switch to renewables, a development which is likely to take longer in Africa than on other continents.

“The increase in population and the demand for freight transport will also see an increased demand for liquid fuels. Many African countries are ‘thinking refineries’ at various scales. Countries that are considering new refineries or upgrades include Angola, Equatorial Guinea, Uganda, Nigeria, Republic of Congo, Ghana, São Tomé & Príncipe, and Zambia. Given projected population growth and refined fuels consumption, an estimated additional 3.4 bbl/d of refined fuels will be needed to meet Africa’s needs by 2030,” the report states.

Image credit: https://pricewaterhousecoopers-pwc.africa-newsroom.com/press/media/outlook-for-africas-oil-and-gas-industry-improves--pwc-report?lang=en&display=image

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