Market Trends of Africa Oil and Gas Industry
This section covers the major market trends shaping the Africa Oil & Gas Market according to our research experts:
Upstream Segment to dominate the Market
- Africa accounted for roughly eight per cent of the global oil output in 2020. Nearly 6865 thousand barrels per day of oil is produced on the continent that same year. The region generated 6.9 million barrels daily, the lowest production level since 2000. Crude oil and natural gas production is distributed widely in Africa but heavily concentrated in the West and North regions.
- West Africa's offshore oil and gas industry continues to expand, albeit not very fast, opening up more market opportunities. West Africa's offshore deep and ultra-deep space has continued to attract oil explorers and producers to expand their operations, especially in Southern and Western Africa, where significant projects have either started or have been unveiled, awaiting resource appraisal and development.
- The growth of offshore exploration and production activities has been mainly driven by the efforts of governments in their region to provide critical incentives and supporting policies to unlock the investment opportunity, as well as the growing number of international oil and gas companies interested in exploring alternative fields to replace the maturing offshore producing sites in countries such as Nigeria and Ghana.
- In December 2021, PGS secured a contract from an unnamed company for a 3D seismic survey in offshore West Africa. Similarly, in August 2021, the shallow water drilling contractor Borr Drilling secured awards for two offshore rigs in Africa for two years plus options.
- Furthermore, several long-term tenders for the development of reserves have been issued in Angola, Ghana, and Nigeria. The offshore region has also recently witnessed successful discoveries, such as Eni's recent finding in offshore Cote d'Ivoire and Ghana. Such discoveries will require an additional appraisal, and development activities in the region are likely to attract investors, thereby driving the market demand during the forecast period.
- Thus, based on the factors mentioned above, the upstream segment is expected to dominate the African oil and gas market during the forecast period.
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Nigeria is Expected to Dominate the Market
- Nigeria is one of Africa's largest countries in terms of proven oil and gas reserves. As of 2020, Nigeria's crude oil and natural gas reserves reached 36.9 thousand million barrels and 5.5 trillion cubic meters, respectively. However, crude oil production in the country has been witnessing a declining trend recently, from its peak at 2,487 thousand barrels daily in 2004 to 1,798 thousand barrels in 2020. This has been mainly due to maturing oil fields and a lack of new foreign investment in the country.
- Nigeria is one of the largest and oldest oil producers in Africa. The oil and gas sector is one of the most important sectors in the country's economy, accounting for more than 90% of the country's exports and 80% of the federal government's revenue. As of 2020, Nigeria had the largest oil and gas production in the West African region, with around 86.9 million tons of crude oil and 49.4 billion cubic meters of gas.
- Furthermore, the country plans to become an export hub in Africa by exporting not only to regional countries but also to other Asian countries like India and China, where the gas demand is anticipated to increase in the coming years, resulting in increased upstream activities in the region.
- In January 2022, Nigerian National Petroleum Company Ltd secured a USD 5 billion corporate finance commitment from the African Export-Import Bank to fund major investments in the Nigerian upstream sector. This is likely to aid the growth of the market during the forecast period.
- Therefore, based on the above-mentioned factors, Nigeria is expected to dominate the African oil and gas market during the forecast period.
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