…To witness falling crude oil production
Despite the expected reforms in the Nigerian Oil and gas sector, raising funds to finance the activities of the industry in the country and other parts of the Sub-Saharan Africa, in the next five to 10 years would be an uphill task.
This is because only few new projects are being sanctioned in Nigeria and Angola As international oil majors are reassessing their investment priorities and projects compete for less capital amid an ongoing capex discipline
Simply put, international majors are shifting their investment priorities.
Lack of sufficient investments and few new projects could derail Sub-Saharan Africa’s ambition to increase its crude oil production through 2025 after a difficult pandemic-hit 2020, GlobalData said in its report.
According to the company, the two countries will see falling crude oil and condensate production from this year onwards. At the same time, they also have a relatively small number of oil projects that would come on stream within 2025.
OilPrice.com which reported the investigation by GlobalData, says Sub-Saharan Africa has a lot of potential and could easily top Europe in terms of oil and gas output, Conor Ward, Oil and Gas Analyst at GlobalData, said, commenting on the findings.
“However, companies have been more cautious than ever over their investments. Some of the huge discoveries made over the past decade have seen significant delays with no final investment decision (FID) in sight: as is the case with Shell’s Bonga Southwest/Aparo, which was discovered over 20 years ago,” Ward said.
“Sub-Saharan Africa is seeing a shift of investment away from the more developed countries in the region, most notably Nigeria, and more towards frontier countries such as Mauritania, Senegal, Mozambique, and Uganda as the fiscal terms offered by the host countries are far more appealing and have a large untapped resource base,” Ward added.
Nigeria has to address the above-ground risks for companies if it wants to attract investment, the analyst noted.
Nigeria approved last month a new petroleum industry bill in Africa’s top oil producer and exporter, putting an end to 20 years of debates and delays. International oil majors have not been flocking to Nigerian oil assets now that fossil fuels are even more fiercely competing for Big Oil’s capital plans as majors start shifting more funding to low-carbon energy sources.