06/06/2005
Hunting for elephants in Africa's oil sector - article
Africa is being eyed anew for potential elephants in the oil and gas sector, riding on the back of soaring oil prices, the depletion of resources elsewhere and newfound stability in many countries, experts say.
Governments on the continent are opening up and even those which had been producing oil for decades are saying that new opportunities for investment are emerging, a four-day oil and gas conference in the Mozambican capital heard last week. "It is my feeling that there is a new shift towards Africa, with a lot of projects... especially if you look at the healthy price of oil," said Pierce Riemer, director general of the World Petroleum Council.
"Things are looking a lot more promising than they did in the past," he told reporters on the sidelines of the conference, attended by more than 400 delegates from 40 countries involved in the oil and gas sector.
Often referred to as the black gold of Africa, the continent has become a prominent player in the global oil and gas market, pushing its production to some 8.04 million barrels per day, and accounting for between seven and 11 percent of the world's total oil production.
Nigeria is the largest oil supplier, pumping out 2.4 million barrels per day, resulting in revenue of 34 billion dollars last year.
In sub-Saharan Africa, Angola and Equatorial Guinea are top players. Libya and Algeria rank second to Nigeria continent-wide and Egypt is also a major oil producer.
But the new frontier for oil and gas exploration lies in east and southern Africa, delegates at the meeting heard.
This region, stretching from the Sudan in the north to Mozambique in the south, is catching the attention of oil companies hunting for elephants, the term used within the industry to describe major new oil and gas deposits.
"For many years, east Africa has been left abandoned and stranded," said Chris Matchette-Downes, managing director of the British-based MDOIL company.
"East Africa was always seen as 'the other side of the fish pond'," Matchette-Downes said in reference to its location in relation to oil markets in Europe and the United States, supplied by the far larger West African oil producers.
"Well, the other side of the fish pond now has countries like China and India and people have left it alone for the last 30 years, but now they are coming back," he said.
Petroleum investments in east Africa have exceeded 100 million dollars in the last two years, but the only east African country to actively produce oil so far was Sudan, with some 400,000 barrels per day.
The region, however, still lagged far behind west Africa, which has more than 14,000 wells, compared with only 479 in the Indian Ocean, suggested Matchette-Downes.
Madagascar has proven to have some of the largest potential oil deposits, while oil and gas has also been found in Kenya, Tanzania and Mozambique.
Shell's chief of oil exploration in Africa, Martijn Minderhoud, added: "East Africa seems to be somewhat misrepresented."
But even the older oil fields in west Africa have seen recent new developments including a cross-country joint venture between Nigeria and the island state of Sao Tome and Principe, the conference was told. This zone reportedly holds between four and 13 billion barrels of oil reserves, according to the British-based African Energy magazine.
Also doing well from recent oil exploration was Equatorial Guinea, the so-called Kuwait of the continent and sub-Saharan Africa's third largest oil producer after Nigeria and Angola, seeing some eight billion dollars in investment in the oil industry since the start of the year.
"Petroleum is a very exciting and great opportunity here. A lot of companies thought there was no oil and no future in Equatorial Guinea. But they have been proven wrong," said Gabriel Nguema Lima, the country's vice minister of mines, industry and energy.
Duncan Clarke, chief executive of Global Pacific and Partners, said that the smaller independent oil companies, looking at investments in the smaller oil and gas fields, were leading the exploration charge in Africa. "Many independents prefer Africa. Asia has lost some of its attraction and the Middle East is largely a closed book," he told the conference.
But Riemer of the World Petroleum Council, which represents some 60 countries, including members of the Organisation of Petroleum Exporting Countries, said he believed that larger discoveries could still be made. "There are great opportunities still for 'elephants'," he said.
Source: Petroleum World |
