The region could be a key growth market for the oil and gas industry in the future, writes Joshua Belo-Osagie, Maritime Strategies International (MSI).
Improved sentiment surrounding the energy market outlook offshore West Africa, the positive mood underpinned by rising oil prices, the reform of regulatory frameworks in key markets such as Angola and Nigeria and the discovery of major prospects offshore Côte d'Ivoire and Namibia.
Moreover, the implications of Russia's invasion of Ukraine have only reinforced some of these pre-existing dynamics, which were in place before February 2022.
Local infrastructure projects include the Nigeria-Morocco pipeline, a potential pan-African offshore pipeline that hopes to connect 11 African countries before extending to Europe. Highly ambitious in scope, engineering and design studies are nevertheless well advanced, giving a further indication of the importance of future developments on the ground in the region supported by international interest.
This renewed interest has prompted MSI to include an analysis of the resurgent West African offshore market, including a forecast of rig demand and construction activity in its latest Mobile Offshore Drilling Unit (Modu) report.
Fixed floating platforms
About 40 fixed and 32 floating platforms are expected to be installed in West Africa between 2022 and 2026. In the most optimistic scenario, where almost all of these projects go ahead as planned, this would mean a marked change from the less active 2018-2020 era, which saw many service suspensions and disruptions.
A resurgence of offshore construction activity in West Africa due to higher oil prices and improved regulatory frameworks looks set to support increased demand for development drilling in the middle of the decade.
This is particularly the case for drillships, as a number of deepwater prospects are advanced, including discoveries such as Eni's Whale and Total's Venus, which are expected to be developed on an accelerated basis.
West African production growth was driven by the ultra-deepwater sector.
The average depth of fixed platform installations has remained fairly constant over the past two decades in West Africa, but when floater installations are taken into account over the same period, there is a clear trend towards deepwater exploration. The number of floating platforms deployed in the region has steadily increased over the years, with a greater share of floaters operating at depths of 1,000 metres and more.
Additional activity for fixed platform facilities is likely to be relatively limited and driven by brownfield efforts to rejuvenate production in mature regions such as Nigeria. The more predictable environment offered by the country's Petroleum Industry Bill is likely to support ongoing efforts in this regard, but the combination of a challenging economy and a mature production base means that the benefit of planned fixed rig installations will likely be capped.
By contrast, the theoretical potential of floating platform facilities is much greater; if the two dominant regional producers, Nigeria and Angola, are to maintain or increase their production, it will be through the exploitation of their ultra-deep water resources
Prospects and outlook
The oil supply shock caused by the Russian-Ukrainian conflict may further increase the focus on African field developments as governments and supermajors seek to replace sanctioned barrels and rebalance an already undersupplied market. Perhaps the most important development in the African offshore sector this quarter was the discovery of significant resources in the Orange Basin offshore Namibia.
Total's pre-drill estimate of the Venus-1 wildcat is about 1.5 billion barrels of oil, while Shell's Graff discovery - in which an appraisal well has been drilled - could contain more than 400 million barrels of oil. Both supermajors will be looking to accelerate their respective developments, which could be a boon to the Namibian economy.
Shell intends to tender for the Bonga Main Life Extension and Upgrade Project in the second quarter of 2022. The project, currently at the FEED stage, aims to recover an additional 60,000 bpd from the existing Bonga Main FPSO, and will include packages covering FPSO surface modifications; pipelines, flowlines, risers and installation; subsea equipment and umbilicals.
The Bonga Main Life Extension and Bonga North projects have replaced Bonga Southwest on Shell's priority list; both brownfield operations will require less investment from operating partners while providing faster returns to NNPC.
In Angola, Total's search for a converted FPSO on the Cameia-Golfinho project is nearing completion. The French supermajor has begun its evaluation of the FEED submitted by three groups of subcontractors including Technip Energies of France working with Yinson of Malaysia; Saipem, based in Italy, working with MISC of Malaysia; and Bumi Armada, based in Kuala Lumpur.
Total intends to develop the Angolan pre-salt Cameia project in Block 21/09 and the Golfinho discovery in Block 20/11 with a single 100 kb/d field
Un appel d’offres formel est attendu au deuxième trimestre après l’achèvement de l’évaluation FEED ; Total espère sélectionner un contractant en 2022 en vue d’une mise en service du projet d’ici fin 2024.
More platforms needed
As the changing geopolitical situation and the emergence of a more favourable and stable local regulatory climate make clear, West Africa is a market that will require increased deployment of resources to meet demand.
Future development drilling, combined with some exploration work, will generate an increasing level of demand for offshore platforms in the future. MSI also expects to see an increase in well intervention work for existing rigs in the region as many of them age and require more maintenance.
The benefits will not be felt in the same way; the self-raising units have limited work, and their employment is centred around Nigeria and Congo, while the floating units have healthier levels of demand, mainly from Angola.
It is possible that a prolongation of the conflict in Ukraine will further boost drilling activity in West Africa, posing an upside risk to the MSI forecast, as demand for hydrocarbons in Europe - including oil but mainly gas - will seek new sources of supply.
About the author : Joshua Belo-Osagie covers offshore market analysis at MSI with a focus on field development projects. He is responsible for the maintenance and development of MSI's proprietary offshore energy models and databases and contributes to market reports and ad hoc consulting projects. He holds a BSc in chemical and biomolecular engineering from the Georgia Institute of Technology.