Oil and gas companies are paring back investments and slashing jobs, which is taking an enormous toll on oil-producing regions, particularly in North America.
But it is not just the north that is suffering. The Global South is also seeing investment dollars dry up as international exploration companies cut drilling plans, and in some cases, even cancel in-country plans all together. In fact, in many countries in Africa and South America with a burgeoning oil and gas sector, regulatory rules are a bit of a moving target. Worse yet, the necessary infrastructure – oil and gas pipelines, processing stations, even roads – are still developing, making drilling operations more difficult relative to well-trodden areas in North America.
Moreover, 2015 will likely be an historic year for the global oil and gas industry. Tens of thousands of jobs are starting to disappear and capital investment plans are being dramatically scaled back. That makes frontier areas for the industry – Africa and parts of South America in particular – first in line for cutbacks.
Take East Africa. The leading international oil and gas company in the region is Tullow Oil PLC (LON: TLW), which had a rough 2014. It blew some serious money drilling multiple wells in different parts of Africa, only to see them come up dry. In April 2014, Tullow drilled a deepwater well off the coast of Mauritania, which failed to find any oil or gas. That led to a $415 million write down…