Oil companies still have a vital role to play in African energy (By NJ Ayuk)

Behind every discovery, final investment decision (FID) and first oil announcement on our continent are companies of all sizes, driving our energy industry forward and bringing Africans closer to the energy security and prosperity that their oil resources represent. 

Collectively, these companies validate the African Energy Chamber's (AEC) long-standing assertion that the African continent represents the next frontier for energy exploration and production. 

Despite concerns about corporate divestment from the African oil and gas sector in recent years - largely in response to rising global ESG expectations - international oil companies (IOCs) and African national oil companies (NOCs) remain the key drivers. The forces behind Africa's short-term supply, hydrocarbon potential, production and medium-term expenditure. 

As detailed in the African Energy Chamber's (AEC) recently published report, "The State of Energy in Africa to 2024", NOCs collectively hold the continent's largest direct interest in African hydrocarbon potential and supplies due to their involvement in upstream operations, while IOCs hold the continent's largest share of African hydrocarbon potential and supplies. second largest share of their historical operations in North Africa and Sub-Saharan Africa. 

But we are also seeing increased activity from international NOCs (INOCs) and independent companies in Africa. These entities are also contributing to the overall success of the African fossil fuel industry. 

National oil companies play a leading role
As explained in our new outlook report, we expect throughputs from African NOCs to reach around 2.63 million barrels per day (bpd) of liquids and 13.55 billion cubic feet per day (Bcf/d) of gas in 2023. In 2024, while we expect the NOCs' total liquid product to decline to 2.57 bpd of liquids, we anticipate a significant increase in their natural gas production: to 14.17 Bcf/d. 

Of all the NOCs operating in Africa, the efforts of just four account for the lion's share of total supply. According to estimates, Algeria's Sonatrach, Angola's Sonangol, Libya's National Oil Corporation and Nigerian National Petroleum Corporation (NNPC) will be responsible for 85% of the liquids and 88% of the natural gas produced by African NOCs between 2023 and 2024. 

The importance of oil and gas production in the countries represented by these NOCs is due in part to an open, cooperative approach to development and a shared commitment to progress. 

In September 2023, having failed to meet its OPEC quota and faced with falling production, NNPC announced a substantial reduction in its standard contract negotiation period, from three years to just six months. By formalizing the new conditions in an agreement signed with oil majors Shell, Chevron, Eni, ExxonMobil and TotalEnergies, NNPC hopes they will help accelerate foreign investment in Nigeria's hydrocarbon sector. With $13.5 billion currently secured, Nigeria aims to reach a production level of 2.1 million b/d by December next year.

Amid the return of Angola's oil and gas industry to a more prosperous position, which this year saw the country overtake Nigeria to take first place among Africa's largest oil producers, Sonangol has negotiated an agreement with China National Chemical Engineering Company (CNCEC) outlining the development of a refinery in Lobito. With a planned production rate of 200,000 b/d and an expected completion date of 2026, the refinery should ultimately reduce Angola's dependence on gasoline and diesel imports.

In Algeria, Sonatrach is working with Italian energy multinational Eni on natural gas production and the export of liquefied natural gas (LNG) to Europe. Since signing a memorandum of intent in January this year outlining future joint projects, including upstream decarbonization and energy transition initiatives, the two companies have progressed in these efforts, meeting in Algiers as recently as October 2023 to discuss the detection and flaring of fugitive gas emissions. reduction options from Sonatrach's natural gas fields. 

Other recent developments include the Memorandum of Understanding established between Norway's largest oil and gas producer, Equinor, and the Libyan NOC. The agreement includes plans to assess Libya's Mediterranean maritime region for oil and gas potential, and to extend oil and gas training to local personnel. 

Oil majors drive exploration forward

In March this year, in partnership with Shell and QatarEnergy, Namibia's national oil company, Namcor, announced a third oil discovery in the Jonker 1-X well in the Orange Basin off Namibia's southern coast, adding to the significant discoveries made by Shell and France's TotalEnergies in the Graff-1X and Venus-1X wells in 2022. Namibia expects to see the first oil from these discoveries by 2030. 

At the Angola Oil and Gas 2023 conference and exhibition in September, Melissa Bond, Managing Director of ExxonMobil Angola, announced 18 new discoveries in Block 15 and plans to continue drilling in the Namib Basin next year.

Numerous oil and gas discoveries in West Africa also continue to show great promise. Considering only the BP-Kosmos Yakaar-Teranga discovery in Senegal, BP and Kosmos' Orca discovery in Mauritania and Eni's Bailene discovery offshore Côte d'Ivoire total 3.6 billion barrels of oil equivalent, with additional sites in Ghana, Gabon and Angola, this region is an exploration hotspot.

As exploration is crucial to the sustainability of Africa's oil and gas industry, the AEC is pleased to announce active exploratory drilling programs over the next two years, with oil majors operating in Algeria, Egypt, Nigeria and Namibia being the main drivers of these efforts.

Filling gaps and capitalizing on opportunities

Wherever international companies divest from the African oil industry, small players take up the slack. 

Whether it's public pressure to reduce emissions and focus on sustainability goals, or pressure from stakeholders to sell mature fields in search of higher returns, as the oil and gas majors withdraw from parts of their operations, INOCs and fully independent entities remain keen to pick up where they left off. 

By undertaking projects such as redeveloping declining wells to boost production, these small businesses are helping to meet the world's growing demand for fossil fuels while offering ongoing support to host communities facing the dangers of abandonment, and their cumulative efforts add up. to a significant percentage of Africa's energy economy. 

As indicated in our 2024 outlook report, the 24-month period 2023-2024 will see INOCs such as Equinor, PetroChina, China National Petroleum Corporation (CNPC) and several others responsible for three quarters of all INOC liquids production in Africa. In the same timeframe, we expect independent companies such as APA Corporation, Marathon Oil, Wintershall DEA, Perenco, Seplat Energy, Tullow and ConocoPhillips to collectively produce the third largest natural gas output. 

As the AEC continues to advocate a thriving African energy industry and encourage investment in our continent - just as we encourage every hydrocarbon-producing African country to engage in straightforward, mutually beneficial trade negotiations - our own optimism grows. 

For the AEC, every outlook report we publish indicates that Africa's oil and gas industry is secure, growing stronger with time, and poised to become an invaluable asset to the global energy market. 

To read our 2024 outlook report, visit www.EnergyChamber.org .

By NJ Ayuk, Executive Chairman, African Energy Chamber.