African Oil and Gas: Overview, Trends and Prospects

LAGOS (Capital Markets in Africa) – In a world where ‘easy oil’ is a thing of the past, Africa is popping up on the agenda for many energy players. Not only does it offer a frontier exploration playground, it also represents a growth market where players can make a difference. New countries all over Africa are being explored for hydrocarbons, and some of them are proving to be resource rich. Mauritania and Senegal are good examples of countries where hydrocarbons have recently been discovered. This leads to a scramble for acreage by other players, and the prices will usually sky-rocket as prospectively increases. Oftentimes, this will also be followed by an increase in the government share of the profit.a

To date, the African oil & gas industry continues to play catch-up with the rest of the world. The oil price fall-out at the end of 2014 further exacerbated the already fledgling oil-producing countries in the region. Many of the newly emerging hydrocarbon territories on the continent are struggling because their governments and national oil companies (NOCs) don’t have enough knowledge of the industry. They were riding the wave of high prices and now find themselves paralysed by the prospect of low margins on their natural resources. The lack of industry knowledge has long plagued the African landscape. Some refer to it as “Dutch disease” whereby an economy is negatively impacted by a sharp rise in foreign currency inflow which is what happens when large oil or gas reserves are discovered. This leads to an appreciation of the local currency and makes other locally produced goods less price competitive on the export market. In most cases, the country reaps very few benefits of its own natural resources, making the entire proposition unattractive.

An extract from Bouncing Back: African Oil and Gas. Please download by clicking: INTO AFRICA PUBLICATION: MAY 2018 EDITION.

Contributor’s Profile
Derek Boulware has over 12 years of experience in the oil & gas industry and has delivered projects in 21 countries. He joined the PwC Energy Advisory Operations team based in Cape Town, South Africa in 2013 where he leads the team and has delivered several large-scale strategy projects for local and national oil company clients across the continent. In addition, Derek regularly produces industry Thought Leadership including the annual PwC Africa Oil & Gas Review and most recently a piece on the future national oil company of Africa entitled “The New Nation Builders.” In addition to client-facing work, Derek leads the business development initiatives for the Energy practice across Africa. Countries of focus include: South Africa, Namibia, Mozambique, Uganda, Tanzania, Ghana and Nigeria. Before joining the firm, Derek was with Wood Mackenzie based in Houston,