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Felicity Bradstock

Felicity Bradstock

Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.

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Africa’s Oil Industry Is Set To Flourish In 2023

  • A combination of factors, from growing global demand to supply uncertainty and the need for low-carbon oil operations, means that 2023 could be a big year for Africa’s oil industry.
  • At the COP27 climate summit, African governments made it clear that they would be developing their natural resources in order to battle energy poverty.
  • With government support and the potential to use new low-carbon production methods and carbon capture technology, there is plenty of potential for African oil nations going forward.

Several energy firms have developed oil and gas projects in Africa and the Caribbean in recent years as they shift to focus on low-carbon oil and future-proofing their operations. With mounting pressure to decarbonize, many oil and gas majors have moved away from aging, carbon-intensive operating sites in favor of developing new projects in non-traditional oil regions. Meanwhile, African countries are determined to claim their piece of the global energy pie, unwilling to give up valuable natural resources without taking a stake in operations. So, as several states across Africa continue to develop their oil industries, what’s expected for 2023?  As the demand for oil and natural gas continued to rise in the post-pandemic period, we saw governments turn to alternative oil powers for their supply, as countries across the world imposed sanctions on Russian oil. As well as boosting oil production from traditional sites, many countries began to foster relationships with new oil powers, in the hope of ensuring a low-carbon oil supply while the global demand for fossil fuels remains high. Most of these low-carbon operations are being developed in regions with recent discoveries of huge reserves, such as the Caribbean and Africa, where oil majors are using low-carbon production methods and carbon capture technology to ensure crude output is less harmful to the environment. 

At the COP27 climate summit, held in November, in Egypt, African government representatives made it clear that countries across Africa should be allowed to develop their fossil fuel resources to help lift their people out of poverty. As the strong global demand for oil and gas became clear after the U.S. and Europe moved away from Russian energy, African leaders spotted the opportunity to promote the development of low-carbon oil across the continent. Namibia's petroleum commissioner, Maggy Shino, stated “There are a lot of oil and gas companies present at COP because Africa wants to send a message that we are going to develop all of our energy resources for the benefit of our people because our issue is energy poverty.”

Related: ADNOC Raises $2.5 Billion From Gas Unit IPO

This has helped spur the development of the oil and gas industry, with several projects planned for the continent in 2023. In addition, the annual Africa Oil Week will be held again in October, to promote opportunities in the continent’s oil industry. More than 70 oil and gas projects are slated to come online by 2025, which could provide as much as 2.3 million bpd of crude, according to analysts. 

TotalEnergies announced it would be investing in Angola’s Begonia field last year, which adds to its other projects in the region. This could boost its production in the area by 30,000 bpd. Operations are expected to commence towards the end of 2024, following an investment of $850 million. 

One of Africa’s biggest oil producers, Nigeria, also has big plans to diversify its oil operations by developing new projects outside the Niger Delta in the north of the country. After years of delays, Shell is going ahead with its Bonga North Project this year, to be followed by the $10-billion Bonga South West field in 2024. Bonga North is believed to hold as much as 525 million barrels of crude, which could support Nigeria’s goal of boosting production to pre-pandemic levels, having repeatedly failed to achieve OPEC quotas in recent months. 

Uganda has plans to continue expanding its oil industry through its TotalEnergies-operated Lake Albert Development. The project has seen an investment of $10 billion to date. Uganda has major plans for the development of the Tilenga and Kingfisher upstream oil projects, and the construction of the long-anticipated 1,500-km East African Crude Oil Pipeline, which have seen years of delays. If completed, Uganda could see an output of 230,000 bpd from Lake Albert.

And Ghana is focusing on its domestic production, which it hopes to double by the end of the year, from under 200,000 bpd to around 420,000 bpd. Recent discoveries in the Tano Cape Three Points Block have attracted greater foreign investment in the region, with Norway’s Aker Energy running operations. 

And new oil powers are emerging in Africa, as Africa Oil Corp (AOC) announced two production-sharing contracts with the Republic of Equatorial Guinea in February. AOC is expected to hold 80 percent of operated interests in the offshore Blocks EG-18 and EG-31 if government approval is achieved, with state-owned GEPetrol holding the remaining 20 percent. The companies plan to spend $7 million on the initial exploration period. AOC expects the developments to offer “low-cost, low-risk gas development opportunities.”

After identifying a clear space for Africa in the international oil arena, thanks to the strong global demand for low-carbon oil and gas, countries across the continent are acting quickly to ensure their seat at the table. While long-established oil powers, like Nigeria, are expanding their industries, newcomers, like Ghana and Equatorial Guinea, are encouraging greater exploration for the development of new projects that could provide low-carbon oil and gas to fill the gap in the green transition.

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By Felicity Bradstock for Oilprice.com

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