Africa becomes the center of global oil and gas exploration

Biased activity is evidenced by explorers who delineate assets in their portfolios as "core" areas of operation, with the majority of guided exploration expenditure devoted to exploring these areas. Secondly, the acceleration in the development of proven basins against a backdrop of booming renewable energy sources has been demonstrated by the recent flurry of activity in the Guyana Basin and the Namibian sector of the Orange Basin. These basins have not only seen an increase in activity, but have also contributed significantly in recent years to the world's declining conventional discovery volumes. In addition, the availability of vast resources in technically and financially challenging offshore areas was illustrated by increased activity in deep and ultra-deep waters, and by the announcement of exceptional discoveries in these areas.

A shift towards "essential" areas

Guyana and the Orange Basin continue to drive exploration spending, and explorers are expected to spend around 50% of this year's planned exploration expenditure (expex) in offshore basins, with French major TotalEnergies planning to devote around 30% of its total guided exploration expenditure of $1 billion this year to exploration in Namibia. This risk appetite on the part of explorers is underlined by the fact that 15% of this year's estimated expenditure will be devoted to proving the subsurface potential of environmentally challenging, high-cost ultra-deepwater areas. However, a concentration of exploration in so-called core areas could prove disadvantageous for some host countries, which could see their underground potential remain unexplored. TotalEnergies recently indicated that it was ready to abandon its Brulpadda and Luiperd discoveries offshore South Africa, a decision that could lead to the failure of these ground-breaking discoveries.

Following the rapid rise of Brazil's pre-salt fields with the announcement of the discovery of the huge Tupi field in 2006, discoveries such as Eni's Zohr gas field in the Mediterranean Sea raised the hopes of countries like Egypt to replicate Brazil's success. However, the North African nation has since failed to unearth a discovery comparable to Zohr. Guyana and Namibia have, however, managed to follow up their basin-opening discoveries with a series of similar discoveries, with ExxonMobil making the Liza discovery on the Stabroek block offshore Guyana in 2015 and Namibia releasing TotalEnergies' Venus and Shell's Graff discoveries in early 2022. With ExxonMobil and its Stabroek partners already heading towards sanctioning their seventh development, the announcement of over 12 billion barrels of oil equivalent (boe) of recoverable resources on the block is set to propel Guyana into fifth place among conventional liquids producers by the mid-2030s.

"These volumes in Guyana have not only increased the cash flows of companies holding stakes in the discoveries, but have also had a profound impact on the economic conditions of the host country by accumulating billions of dollars via its oil fund." Aatisha Mahajan, Vice President, Upstream Research

Namibia, despite having announced oil and gas volumes of over 2.5 billion barrels of oil equivalent, is still in its infancy as far as its upstream sector is concerned, and awaits the development of its discoveries. The announcement of further volumes via future exploration could help the country realize its dream of replicating the successes of Brazil and Guyana, although it will have to overcome the effects of the resource curse, which has had a negative impact on many resource-rich African countries in the past.

Namibia on the move

Discoveries in Namibia and French Guiana have seen industry players rush to these countries to secure exploration blocks. Following the success of majors Shell and TotalEnergies in Namibia, their counterparts BP, Eni and Chevron are now interested in the country's exploration blocks, with a series of wells to be drilled over the next few years, which would make ExxonMobil the only major company not present in the basin. In addition, Galp Energia's Mopane discovery, announced earlier this year with an inferred resource potential of around 10 billion barrels of oil, has attracted industry attention, with around 12 major oil and gas companies reportedly expressing interest in acquiring 50% of the Portuguese operator's 80% stake in the area. What's more, with numerous wells scheduled to be drilled, Namibia could be on track to replicate Guyana's success, at least in terms of resource potential, mainly due to exploration success on different blocks compared to Guyana, where success was limited to Stabroek.

While mature upstream areas such as Southeast Asia, the US Gulf of Mexico and the Norwegian Continental Shelf continue to attract international explorers, due to their rich infrastructure networks and ability to economically exploit medium-to-small discoveries, explorers will continue in the coming years to probe the southern Atlantic margin, focusing on mature countries such as Brazil, Mexico and Guyana, while Africa also occupies a prominent place. According to Rystad Energy's analysis, Africa tops the list of regions where the greatest number of high-impact wells are scheduled to be drilled this year, with 13 of the 36 planned.

Source : Aatisha Mahajan (Rystad Energy)