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After a year of rebound and recovery, Africa’s old and new hydrocarbons markets have an opportunity to further entrench the continent’s position as the world’s hottest oil and gas frontier in 2019, according to the African Energy Chamber. The body has identified 10 trends that will define the continent’s energy sector over the next 12 months.

New African frontiers opening up

Independents are leading the way in exploring and opening up new frontiers across Africa. This year will be key for the advancement of new exploration and production development projects from West to East Africa. Developments to watch notably include Senegal’s SNE field development, Niger’s Amdigh oilfield development, and the opening up of Kenya’s South Lokichar Basin.

Confirming Africa as a global exploration hotspot

Ongoing bidding rounds in existing and new African hydrocarbons markets will tell if Africa further confirms its position as the world’s new exploration hotspot and manages to attract necessary investment in its oil and gas acreages.

Africa’s struggling FLNG industry

After the start of commercial operations at Golar LNG’s Hilli Episeyo FLNG vessel in Cameroon in June 2018, hopes were high that Equatorial Guinea would soon move forward with its own Fortuna FLNG project, set to be Africa’s first deep-water FLNG development. However, the development of the $2bn project has stalled due to a lack of financing.

Meanwhile, new entrants in Africa’s hydrocarbons stage are making remarkable advances towards the development of their own FLNG industry. On December 21st last year, BP finally announced its FID for phase 1 of the cross-border Greater Tortue Ahmeyim development between Senegal and Mauritania, which involves the installation of a 2.5MTPA FLNG facility. It became the third African FLNG project to reach FID after Cameroon’s 2.4MTPA Hilli Episeyo and Mozambique’s 3.4MTPA Coral South FLNG.

Mega projects on the move

The recent inter-governmental co-operation agreement between Senegal and Mauritania, and BP’s FID on its cross-border Greater Tortue Ahmeyim development, bode well for the future of West Africa’s hydrocarbons industry. The project aims at extracting the 15Tcf of gas estimated to be held in the Tortue gas field, located at a depth of 2,850 metres. However, the ability of both Senegal and Mauritania to work out their differences to ensure a more sustainable development of their offshore reserves and facilities around the MSGBC Basin is a factor to watch out for.

African mega gas projects are not the sole property of the continent’s West coast, with Mozambique moving forward with two landmark projects putting the Southern African nation on the global LNG map. Sub-Saharan Africa’s biggest petroleum producers, Nigeria, is also moving forward with massive oil development projects in 2019.

International contenders and pretenders

Africa is increasingly becoming an important region for international actors willing to benefit from the continent’s vast resources. Independents are leading the way in exploring and opening up new frontiers across Africa.

While China has asserted its position of a contender in the continent, will new continental dynamics lead the Asian giant to change its investment strategy or portfolio? With Russia’s intentions on the continent becoming clearer and clearer, will the first Russia-Africa Summit this year translate into more concrete Russian deals across the continent? At the same time, will the US’ “Prosper Africa” initiative launched in December 2018 be able to counter both rising international competition and declining US influence on the continent?

A complex energy diplomacy dilemma for OPEC in Africa

With a majority of its members made up of African nations since the joining of the Republic of Congo in June 2018, OPEC’s evolving relationship with the continent as it strives to manage the global supply glut will require skillful diplomatic ingenuity.

On one side, Africa’s biggest producers and OPEC members Algeria, Libya, Nigeria, Angola and Congo-Brazzaville, are striving to boost their domestic output, which makes it harder and harder for the organisation to negotiate its production cuts. On the other side, the continent is also home to a flurry of upcoming petroleum producers like Senegal, Kenya or Uganda, or old players making a comeback like South Sudan, some of them part of OPEC’s Declaration of Co-operation – whose upcoming or increasing output adds another layer of complexity to the formulation of OPEC’s global oil prices management strategy.

Increasing African output from OPEC and non-OPEC member countries only complicates OPEC’s maneuver capabilities and increases its dilemma of both providing a stable pricing environment conducive to investments, while avoiding a worsening of the supply glut that would push prices further down.

Africa’s biggest petroleum producers casts their ballots

Among the series of elections happening in the continent this year, from Senegal to Mozambique, none will be more important for the African oil sector than that of Nigeria this February. The Nigerian presidential election is set to shape the future of the industry, not only because Nigeria is Africa’s biggest oil an gas producer, but because what happens in Nigeria impacts the rest of the subcontinent one way or the other.

Algeria and Libya are also entering an election year, with the 2019 Libyan general election set for the first half of the year, and Algeria’s for April. Both countries are on a transformation path. Libyan authorities plan to more than double the country’s output to 2.1 million barrels per day by 2021, providing politics doesn’t tamper hydrocarbons governance and the work of the National Oil Company

Angola’s steady road to reforms

Since taking office in the summer of 2017, Angolan President João Lourenço has been implementing a bullish reformist agenda which is drastically transforming the governance of the country’s oil and gas sector. Angola is reforming fast, but will market forces allow changes to happen at that pace and yield the results that the government is looking for?

South Sudan’s march to peace

The major progression in South Sudan, and one on which the entire economy relies, is that of the peace accords. The Sudanese and South Sudanese authorities have time and again demonstrated their commitment to the peace process, which has remained peaceful for the most part. However, will peace deals translate into investment promises and money being invested into the South Sudanese economy this year? Some signals point to that direction, with South Africa’s Central Energy Fund committing $1-billion to South Sudan late last year, but markets are still sceptical and observers will remain pragmatics and wait to see how the peaceful transition is managed and how oil production resumes before making any concrete moves.

Improving market access for East African producers

With Uganda set to join the club of African petroleum producers by the early 2020s, efforts to develop adequate infrastructure for the evacuation of oil that will be produced from the Lake Albert Basin have started. The pipeline is crucial for the further integration of the East African community and to set a positive record of joint planning, financing and implementation of landmark energy projects in the region.

Watch the video: https://www.africa-newsroom.com/press/media/10-developments-that-will-shape-africas-energy-sector-in-2019?lang=en?display=video

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