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Irina Slav

Irina Slav

Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

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The Next Global Oil Hotspot

There are at least 41 billion untapped barrels of crude oil in sub-Saharan Africa, the U.S. Geological Survey estimated two years ago. During the downturn, oil companies bought licenses there and waited for the price environment to improve to advance their drilling plans. Independents such as Tullow Oil and Kosmos Oil expanded on the continent alongside supermajors such as BP. Now, these drilling plans are gathering pace.

Uganda is one of the hot spots. A newcomer on the oil scene, the landlocked country has welcomed Tullow Oil, CNOOC, and Total in its oil-rich regions. The country’s government sees investments of US$15-20 billion made into its oil industry during the next three to four years and plans to build a pipeline to the Tanzanian coast and a refinery to jumpstart an oil industry, even though no oil is being produced in Uganda yet.

Senegal is another focus of attention. The SNE project, comprising three offshore blocks, might contain up to 1.5 billion barrels of crude, Australian explorer FAR, one of the partners developing the SNE, said. The partnership also includes ConocoPhillips, Cairn Energy—the operator—and Senegal’s oil company Petrosen. The final investment decision on the project is expected next year. The first phase of the project would tap an estimated 240 million barrels.

Senegal is also a potential major gas producer. Kosmos and BP—partners in the offshore gas discovery Tortue that extends into Mauritania waters—expect a final investment decision (FID) for the Greater Tortue project around the end of 2018 and are aiming for first gas in 2021.

Kenya is another African oil hopeful. First oil in Kenya was found in 2012 by Tullow Oil and in June this year the east African country even started exporting crude under a pilot scheme that would see 2,000 bpd trucked to the port city of Mombasa and stored until there is enough to be loaded on tankers and shipped abroad. Related: Oil's Next Hotspot: The Cowboy State

Tullow Oil just announced that it was spudding a well off the Namibian shore, an example of another country that few would have associated with oil yet is staking a claim in the industry. The Cormorant Prospect may hold crude oil resources of 124 million barrels. Tullow has partnered with India’s ONGC Videsh on the project.

The supermajors are also there. Shell earlier this year announced its first exploration rights acquisition in Mauritania. Senegal’s neighbor seems to be more promising in gas rather than oil, with its only producing oil field, Chingetti, currently being decommissioned. Yet gas is increasing in prominence, and if exploration results live up to expectations, Mauritania would garner further attention from the industry, in addition to BP, Exxon, Total, Tullow, and Petronas, which already have a presence there.

Exxon also recently entered Namibia: last month, the supermajor bought a 30-percent stake in an offshore exploration license. Although no oil has yet been discovered in Namibia, there is a theory that its offshore basins may share characteristics with Brazil’s Campos and Santos—Brazil and Namibia were part of one whole a few billion years ago.

Baker Hughes data cited by Bloomberg shows that offshore drilling rigs around Africa are at a two-year high. Rystad has forecast that 30 offshore exploration wells will be drilled this year in Africa, compared with roughly half that in 2017. If prices stay where they are, explorers might add quite a lot of future oil and gas supply from African fields.

By Irina Slav for Oilprice.com

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