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AFRICAN ENERGY OUTLOOK www.energychamber.org 2020
AFRICAN ENERGY OUTLOOK 2020 African Energy Chamber
Foreword:
Leadership for Transition
NJ AYUK
EXECUTIVE CHAIRMAN
AFRICAN ENERGY CHAMBER
Dear Reader,
At the African Energy Chamber, we are passionate about promoting Africa’s oil and gas
sector, free enterprise and individual liberty. Our goal is to see a dynamic, fast-moving
private sector unleashed to unlock the continent’s extraordinary potential.
After nearly a century of oil exploration and production, we have not come close
to exhausting the resources of this last-remaining great hydrocarbons frontier. The
opportunity is vast. Africa holds around 7 percent of the world’s proven crude oil and
natural gas reserves. So, how do we move forward?
That question arises at a time of transition in the global energy industry. The United
States is exporting its shale revolution. Trade disputes are disrupting long-established
global supply chains. The technological and economic challenge of securing a lower-
carbon future persists. And, here at home, we are witnessing a growing imperative to
ensure that natural resources deliver transformative development to host countries and
local communities.
These factors present real challenges and significant opportunities for our industry.
We believe that a prosperous future African energy industry is one that faces this
period of transition holistically and in unison, remaining true to the principles of free
enterprise that we have seen deliver incredible progress elsewhere around the world.
As we move into a new decade, the Chamber is stepping forward to provide
the leadership and initiative required to deliver that concerted action. We have
established an unrivalled platform – rooted in an extensive network of relationships and
comprehensive knowledge of the industry – from which we work to open dialogues
and create trust between essential stakeholders in the industry, including energy firms,
investors, government and local communities.
This report is part of that effort. We are providing a thorough look at the oil and
gas sector across sub-Saharan Africa, with a focus on key strategic and operational
developments for 2020, identifying opportunities for investment and profiling key
figures. Most importantly, the report offers an insight into what could be achieved if the
industry is supported properly.
We look forward to welcoming you into our network and empowering you to push
this tremendous industry forward in 2020.
Thank you.
CONTENTS
24
Production
42
Outlook
06
Outlook 26
State of Play: African LNG 32
Facilities 33
In Focus: The Rise of African Gas 34
Investment
Outlook
Business
36
Environment
64
Outlook 44
Introduction 08 Investment Outlook: Oil 46
Energy Markets 09 Announced Oil Projects 48
Strategic Outlook 14 Investment Outlook: Gas 50
Regulatory Outlook 16 In Focus: Floating Gas Makes Waves 52
Finance & Trading 18 Infrastructure Announced Gas Projects 54
Outlook Twenty-Five
In Focus: China’s Africa Energy 20 Market Access 56 Movers & Shakers
State of Play: China in Africa 23 Key Projects 38 Services Outlook 58 to Watch
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BUSINESS
ENVIRONMENT
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Introduction Energy Markets
Africa’s Proven Reserves
Oil
PRICE RECOVERY CONTINUES U.S. SHAPES SUPPLY with the growing importance of
The recovery in oil prices was AND DEMAND petrochemicals, will remain key
sustained throughout 2019 and is Several key market trends have market drivers in 2020.
expected to be maintained in 2020, emerged since the price recovery. Notwithstanding this, overall demand
125 billion barrels of oil 509 tcf of gas with forecasts around the $60-70 The first is the United States growth is expected to decline
per barrel range, which is consistent becoming a net exporter of crude moderately over the coming years
7.3% of global reserves 7.2% of global reserves with long-term average prices. Brent oil and products. IEA forecasts due to the impact of ongoing U.S.-EU
crude oil prices have averaged $65.67 show that gross U.S. oil exports and U.S.-China trade disputes.
Source: BP Statistical Review 2019 per barrel year-to-date, a 31 percent are poised to overtake Russia
increment over the 2015-17 average and close in on Saudi Arabia by
price of $51.03 per barrel. At the same 2024. Shale producers are now
Output has increased from the
time, global oil demand increased able to respond more swiftly to U.S., Brazil, Canada and Norway,
THE MID-2014 TO 2017 OIL PRICE CRASH recent years, is currently under recovery with by an estimated 1.8 percent in 2018, price signals than other suppliers, affecting global prices.
SIGNIFICANTLY IMPACTED AFRICA’S OIL new refinery and petrochemical complexes driven by strong growth in the United meaning that further price rises
AND GAS SECTOR. being constructed and upgrades to existing States and China, according to the could lead to even higher levels
ones scheduled in the near term. International Energy Agency (IEA). To of U.S. supply. Equally important,
Tough economic conditions, as well as As global competition for investments meet this demand, there has been however, is the increasing supply
political instability, regulatory uncertainty heats up, foreign investors remain concerned a 3.43 percent increase in global oil growth from non-OPEC producers
and inadequate infrastructure to evacuate about uncertain fiscal terms in sub-Saharan production from 97.09 million barrels like Brazil, Canada, and Norway, as
products to market meant that several oil and Africa. Governments must find better ways per day (mmb/d) to 100.40 mmb/d OPEC capacity declines.
gas projects were either halted or cancelled. to reconcile their expectations of short-term from 2015 to 2018, driven primarily by On the demand side, economic
The downturn also had a severe impact on tax gains with the need for sustainable and increased U.S. shale production. growth in China and India, along
oil-dependent economies – including Nigeria, long-term investment in exploration and
Angola and the Republic of the Congo – production. There are tens of billions of
which have experienced stalled economic dollars’ worth of projects which are being Europe Brent Spot Price FOB Dollars per Barrel
growth and tightening government revenues. delayed due to uncertain environments.
140
As we look toward 2020, however, This section of the report provides an
the view is very different. International oil outlook on sub-Saharan Africa’s oil and 120
companies (IOCs) and African national oil gas business environment in 2020 and
100
companies (NOCs) are adapting to the low beyond beginning with analyses of global
INDUSTRY DOWNTURN
price environment. Africa holds significant energy market conditions in 2019 and their 80 AND RECOVERY
potential for international investors. At the impact on African producers in 2020. This
60
end of 2018, the continent was assessed to is followed by an analysis of key strategic
have 509.6 trillion cubic feet (tcf) of proven challenges that are likely to shape Africa’s 40
gas reserves and 125.3 billion barrels of energy sector in 2020 and a~~ look at key
20
proven oil reserves1. Africa’s downstream developments in the areas of regulation,
sector, which has also remained stagnant in infrastructure and finance. 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: U.S. EIA, Thomson Reuters
1. BP Statistical Review 2019
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Global Oil Demand Growth
PIXABAY
GLOBAL IMPACT ON SUB- EXPLORING SMALLER MARKETS
2018 –2024 (mmb/d) SAHARAN AFRICA Smaller countries in east and
Beyond commodities prices, west Africa are likely to drive the
0.74
there are several factors which are exploration and development of new
0.63
currently shaping the global oil and fields in 2020 and beyond. Examples
gas business environment. Most of such projects include Senegal’s
0.51
notably, the transition to a low carbon SNE field development by Woodside
future (including the use of natural Energy and Cairn Energy and the
gas as a transition fuel) underpinned Lokichar Basin project in Kenya by
by the Paris Climate Agreement Tullow Oil. Deepwater drilling is likely
and a sharp focus on efficiencies to continue into 2020 in Africa’s
and cost reduction across the frontier regions Senegal, Mauritania,
0.53 industry, from operators to suppliers. Namibia and South Africa as well
These complex conditions impose as in more established markets
constraints on energy firms which such as Nigeria, Angola and Ghana.
require continued capital rationing. In Likewise, several countries, including
this context, although Africa’s diverse existing and upcoming producers, are
0.17
energy industry possesses an array expected to auction new blocks in
0.14
of investment opportunities across year-long licensing rounds.
0.21 the value chain, these fundamental
global challenges are likely to
0.25
0.23 impact sectoral investments in
2020 and beyond.
Africa’s energy landscape is $6.1 billion
0.44 0.12 in CAPEX for Nigerian upstream
dominated by large IOCs, as such
oil projects currently under
their strategic decision-making on
construction – 35% of SSA total
0.32 0.32 0.16 the continent is shaped by global
(Global Data)
developments. While some IOCs
are pulling back from the continent Nigeria will lead the way in
(for example, Occidental divesting terms of upstream expenditure as
0.16
Anadarko’s African assets following a the continent’s largest producer.
$38 billion takeover), we can expect According to analysis from Global
to see the strengthening of strategic Data, there are currently nine oil
alliances between smaller and larger projects across SSA which have
IOCs to enhance project viability reached final Investment decision
-0.12
and competitiveness. One such (FID); they have a combined total
example is the agreement between CAPEX value of $17 billion. Five
2018
2020
2022
2024
U.S. firm Kosmos Energy and Shell of them are in Nigeria with a total
to cooperate in offshore projects in CAPEX value of $6.1 billion.
Rest of the world
Middle East Namibia and São Tomé and Príncipe .
India
China
Source: IEA
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Gas PRICE CONVERGENCE AFRICAN OUTLOOK Several countries are
restructuring their energy policies
These developments mean that There is a promising outlook for the
gas prices will continue to converge African gas sector. The urgent need to provide more incentives to
GAS ON STEADY GROWTH and other emerging markets in Asia. other initiatives that will encourage and likely fall at key regional hubs for rapid industrialisation will create develop domestic gas reserves
The natural gas market has been Along with increasing European gas the development of low-carbon in Europe, North America and Asia, tremendous opportunities for gas (associated and non-associated) to
growing at an accelerated rate imports, LNG markets are set to gas technologies, such as carbon driven by lower project costs and to fuel African societies in a more provide fuel for thermal generation
over the past decade and is grow in 2020 and undergo drastic capture utilisation and storage, and greater efficiencies in shipping. cost effective and environmentally and other industrial uses, such
expected to remain as the fastest- changes over the next five years as hydrogen fuels. Spot prices since late 2018 at key sustainable manner. Large population as petrochemicals. Significant
growing fossil fuel well into the next China and India emerge as major hubs have fallen in part due to LNG increases, particularly in gas attention is also likely to be placed
decade. The resource is widely LNG buyers, according to IEA market oversupply as well as new producing countries such as Egypt, on gas-to-power initiatives to meet
recognised as a critical transition estimates. The Asia Pacific region technologies and innovations bringing Nigeria and Ghana, will be one of increasing electricity demand while
fuel toward a low carbon energy is expected to account for almost down project breakeven costs. This the critical drivers for African gas also reducing gas flaring, especially
future, with its demand having 60 percent of total consumption trend is expected to continue in 2020. demand growth. According to PWC in Nigeria. The continent is likely
increased at an average rate of increase by 2024. The IGU estimates estimates, Africa’s energy demands to see the emergence of regional
2 percent per annum since 2010, that, China’s clean air policies have will grow by 60 percent by 2030. The hubs and markets with the strategic
twice the global primary energy
demand rate, according to the
prompted a move away from coal,
making it the fastest-growing market Chinese demand for 70% of global rapid development of projects in
Egypt (Zohr Field) and Mozambique
ambition of procuring LNG imports
for gas-to-power projects to replace
natural gas will increase by proven gas reserves are
International Gas Union (IGU). for natural gas. Similarly, across the recoverable at average (Coral South) demonstrates the expensive liquid fuels. Equatorial
This growth is driven by booming globe, expect to see the expansion 134 bcm breakeven price of
14 | African Energy Chamber African Energy Outlook - Business Environment | 15
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Strategic Outlook U.S Crude & Petroleum Products Exports to China (thousand barrels)
30,000
OCT-18:
Gulf of Guinea and Somalia pose
25,000
CHINESE IMPORTS
OF WEST AFRICAN
more immediate risks to the sector
20,000 CRUDE REACH compared to Islamic Terrorism.”
7-YEAR HIGH OF
ENERGY SUPPLY AND DEMAND change will have a major impact on with especial interest in the Cabinda, 15,000 1.7 MMB/D However, he also contends that both
ARE INTIMATELY LINKED TO THE refineries and a significant knock-on Mondo and Saturno grades, though 10,000 energy companies and government
SHIFTING SANDS OF GLOBAL effect on demand and prices for the overall Angolan market share in are working effectively to mitigate
5,000
AND REGIONAL STRATEGIC heavy sweet crude oil grades that are China is being squeezed by Saudi the impact on supply. “Governments
0
TRENDS. THIS SECTION PROVIDES ideal for producing IMO-compliant Arabia. Further, U.S. sanctions on are resourcing their navies and
AN OUTLOOK ON THE KEY bunker fuels . Venezuelan and Iranian crude exports Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 adopting a regional approach to the
ISSUES INFLUENCING AFRICAN West African producers are well have also benefited Angola. Source: U.S. EIA issues,” he says.
PRODUCERS IN 2020, WITH AN positioned to benefit from the new In Nigeria, the NNPC’s most recent
INTERACTIVE LANDSCAPE OF regulation. According to ClipperData, TRADE WAR OPENS DOOR data shows a 77 percent increase in
THREATS AND OPPORTUNITIES. around 75 percent of global heavy In 2019, the global economic picture be a major facilitator for increasing pipeline sabotage incidents between
sweet crude is produced in the looks uncertain as the United States’ intraregional trade. Just 16 percent SECURING ENERGY May and June 2019. According
region, with Chad (Doba Blend), trade disputes with China and the of international trade by African INFRASTRUCTURE to S&P Global Platts, in August,
IMO 2020 TO BOOST Cameroon (Lokele) and Angola European Union (EU) take their countries takes place between September’s drone attack on a Paul McGrath, Chairman of the Oil
WEST AFRICA (Dalia) accounting for more than toll. The IEA has cut its forecast for African countries, according to Saudi Aramco facility and its impact Producers’ Trade Group of the Lagos
From January 2020, the International 90 percent of that supply. Prices global oil demand growth by 0.1 research by the African Development on global oil prices underscored Chamber of Commerce of Commerce
Maritime Organisation (IMO) will for these grades were trading at million barrels per day to 1.3 million Bank. The new agreement will the relentless challenge of securing and Industry, told fellow industry
implement new regulations that a premium of up to $3 on dated in 2020. Tit-for-tat tariffs have hurt reduce trade barriers, and African energy infrastructure. Producers professionals that high security costs
require the shipping industry to use Brent in August. China, where economic data shows Union estimates that this will boost throughout the Sahel are well are “escalating as peculiarities of
marine fuels with a sulphur content Demand for Angolan crude has signs of slowing growth, which could intra-African trade by 60 percent accustomed to this reality, with a the business environment require
of no more than 0.50 percent. The picked up in 2019, particularly from have a direct impact on demand for within three years. diverse range of threats affecting the additional resources be deployed
marine sector is responsible for Chinese refiners. Data from IHS African crude. Mineral products, chemicals, region, from vandalism in the Niger to secure our people and assets.”3
half of the global fuel oil demand Markit shows an 8 percent year-on- Notwithstanding this risk, machinery and transportation Delta to violent unrest in Libya and NNPC officials say they are working
– equivalent to 3.8 million barrels year increase in Angolan exports to however, China’s trade war with the currently dominate intra-African community disputes in Kenya. closely with the government and
per day in 2017. Thus, the regulation China for the period January to July U.S. is also creating opportunities trade. Increased trade and industrial Senior IHS Markit Country Risk relevant security agencies to prevent
for African producers to replace activity will have a knock-on effect Analyst Dr Theo Acheampong further rises. Despite the spike in
U.S. oil exports, which have on energy demand, particularly for argues that piracy is a major concern incidents, however, total monthly
2019 Heavy Sweet Crude Exports by Load Region fallen dramatically following the power generation purposes. As Africa heading into 2020. “Piracy in the production increased by 2.7 million
introduction of tariffs. Data from the struggles to leverage on regional barrels during the May to June period.
EIA shows that exports of crude and cooperation to execute critical energy
Latin America petroleum products have fallen by and infrastructure projects, the Nigeria Pipeline Breaks and Total Montly Crude & Condensate Production
19% more than 60 percent year-on-year industry hopes that the AfCTA can (million barrels)
in the period from January to July. provide a boost to multi-billion-dollar 63
62 62 264 63
At the same time, in October 2018 opportunities that could be unlocked 230
204 59 219 197 61
174 60 60
3% Northwest Europe Chinese refiners bought around 1.71 by transnational energy cooperation 57 59
137
125 125
million barrels of west African crude and projects, such as Equatorial 56 111 106
Total 3% Pacific 53
86 54
60
461,000 bpb per day, the highest level since 2011. Guinea’s African LNG network
3% Other
and the proposed Trans-Saharan
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Dec-18
Jan-19
Feb-19
Mar-19
Apr-19
May-19
Jun-19
DAWN OF AfCTA Gas Pipeline.
72%
West Africa In July, Nigeria formally joined the
African Continental Free Trade Source: NPPC Pipeline Breaks Oil Production (million barrels)
Area (AfCTA) paving the way for
the creation of the world’s largest
Source: Clipper Data free trade area. The agreement will 3. S&P Global Platts – August 2019
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Regulatory Outlook
WITH CORRUPTION AND POOR by the same legislation used for the new investment in 2020. Benin has content policies. Senegal, Gabon,
GOVERNANCE STILL PLAGUING mining sector6. They argue that a new seen very little exploration activity in Cameroon and Equatorial Guinea
AFRICA’S HYDROCARBON SECTOR legislative framework is necessary recent years. In January, it adopted a have all taken important action in
AND PROFITABILITY SQUEEZED BY and should focus on providing new petroleum code which, among this area. South Sudan could be
LOWER PRICES, GOVERNMENTS greater transparency, especially in the other things, provides a research next. In June, South Africa-based
HAVE STARTED TO RECOGNIZE licencing regime. In August 2018, the authorisation period of up to 11 years. Centurion Law Group led a review of
THE IMPORTANCE OF PROVIDING government stated its intention to Senegal also implemented its localisation policies, with a view
INVESTORS WITH MORE STABLE develop a separate legal framework substantial reforms of its to replicating regional best practice.
AND COMPETITIVE REGULATORY for the hydrocarbons sector, following hydrocarbons code in January. And in Nigeria, Simbi Wabote,
ENVIRONMENTS, COMBINED WITH consultations with industry. As Total The new code promotes public Executive Secretary of the Nigerian
EFFICIENT MARKET OVERSIGHT. moves ahead with a potential billion- interest in the sector, with increased Content Development & Monitoring
FROM MAJOR PRODUCERS TO barrel project, the need for regulatory participation rights for the NOC, Board is pushing to expand the
FRONTIER MARKETS, SYSTEMATIC clarity will only grow. higher royalty rates, and provisions to Local Content Act into new sectors
REFORMS ARE RE-SHAPING grant exploration rights exclusively to of the economy, including power,
AFRICA’S ENERGY SECTOR FOR ANPG TAKES CONTROL Senegalese-incorporated entities. A construction and ICT, which could
2020 AND BEYOND. In Angola, 2020 will see President new campaign to promote offshore affect businesses further down the
Lourenço’s energetic reform agenda exploration blocks available for hydrocarbons value chain7.
move into a new implementation tender is expected in 2020.
THE PIB IS MAKE OR BREAK the February election, President investment. Analysis from KPMG phase. The National Agency for Gabon is a more established
Senegal, Benin, Cameroon &
FOR NIGERIA Buhari’s allies have assumed shows that replacing investment tax Petroleum, Gas and Biofuels (ANPG) market but there has been virtually Gabon have all reformed their
In Nigeria, focus remains on the leadership of both the Senate and credits with a graduated production was created in December 2018 to no new investment since 2014. In hydrocarbons codes since 2018,
implementation of the the Petroleum House of Representatives. Mele allowance would lead to a significant take over Sonangol’s mission as July, the country enacted significant with a particular emphasis on
Industry Bill (PIB). Multiple versions Kyari, Group MD of NNPC, believes increase in the short-run tax liabilities market regulator. CEO of the ANPG reforms to the fiscal code, including encouraging local content.
of the bill have been developed and that this political alignment ensures of E&P companies, especially those Paulino Jerónimo has said that his eliminating corporate tax and
abandoned since 2008. However, it that passing the PIB “will not be with large deep-water acreage. organisation will be focusing on reducing state profit and royalties.
has now been disaggregated into four difficult,” according to a recent Furthermore, they point out that optimisation throughout 2020. And in August, Malaysia’s Petronas
parts, including a Petroleum Industry Reuters interview.4 With operators incentives related to upstream gas That will include offering ten blocks acquired the first exploration licence
Fiscal Bill [PIFB]. In July, Ahmed Lawan, and investors becoming impatient, operations are less generous in the in the Congo and Kwanza basins awarded in the country for five
the new Senate President, promised the African Energy Chamber new fiscal bill5. through public tender as well as years (offshore Blocks F12 and F13),
that Senate committees would re- supports the industry view that taking on new responsibilities, such which have the potential to increase
start consultation work on the PIB the passing of the PIB will make or BRULPADDA TO SPARK as managing abandonment funds. output by 200,000bpd, according
before the end of the year. Following break future investment in Nigeria’s REFORM IN SOUTH AFRICA? to government estimates. In total,
hydrocarbons sector. Systematic reform is also on the FRONTIER MARKETS REFORMED Gabon stood out by signing as many
IOCs will be paying special agenda in South Africa following Total’s AND READY as 9 PSCs in 2019 alone..
Following the election, President attention to the final provisions of Brulpadda offshore gas discovery in Frontier countries, like Senegal,
Buhari now has key allies in place the PIFB, specifically tax credits February. Industry watchers point out Benin and Cameroon, have already LOCALISATION AGENDA
to help deliver the PIB in 2020. and allowances for exploration that oil and gas are currently regulated implemented structural reforms in Many countries have also focused
2018/19 which they hope will attract on introducing more robust local
4. Reuters – August 2019
5. Bloomberg Tax – June 2019 (Ayo Luqman Salami & Funke Oladoke, KPMG)
6. Herbert Smith Freehills – June 2019 (Peter Leon, Paul Morton and Patrick Leyden) 7. The Guardian (Nigeria) – August 201918 | African Energy Chamber African Energy Outlook - Business Environment | 19
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Finance & Trading IOCs RATIONALISE NIGERIA
PORTFOLIOS
Nigeria Yearly Crude Oil Production by Contractual Arrangement
(million barrels)
Nigeria is a multifaceted
21.9
hydrocarbons market with a range
of local, regional and global firms
THERE HAS BEEN A LOW LEVEL OF UPSTREAM Key Deals adjusting their posture based on 92.7
MERGERS AND ACQUISITION (M&A) ACTIVITY ACROSS & Developments in 2019 unique strategic priorities as well 19.4
as wider trends. In 2020, there is 19.7 23.3 22.2
THE AFRICAN OIL AND GAS SECTOR SINCE THE
OIL PRICE DOWNTURN. YET, AS MAJOR IOCs SLOW COUNTRY NEWS likely to be a continuation of major 18.1 64.6
DOWN, THERE ARE EMERGENT OPPORTUNITIES IOCs rationalising their footprint in 58.4
Angola Maurel & Prom acquires 54.8 56.5
Nigeria, in some cases as part of a 8.1
FOR SMALLER, MORE FOCUSED COMPANIES TO Angola Japan Oil Co 3.9 3.8 16.9
44.5 46.3
ACQUIRE PERIPHERAL AND MARGINAL ASSETS AND 20% stake in Blocks 3/05 broader divestment strategy or as 41.4 42.0
& 3/05A for $80m
INCREASE THEIR FOOTPRINT. THESE ARE SOME OF a more limited portfolio adjustment 32.1
THE KEY FACTORS DRIVING THAT TREND. Chad Glencore has puts based on project economics or
its Chad oilfields up specific risk assessments.
for sale. Currently
producing 7,700 bpd
In October 2018, semi-
nationalised Brazilian firm Petrobras 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Congo Lukoil acquires 25% agreed a $1.5 billion sale of its
Brazzaville stake in Marine XII from Independent/Sole Risk Marginal Fields
NewAge for $800m minority stakes in OML 127 and Source: NNPC
OML 130 to Canadian firm Africa
Equatorial Medco Energi acquires
Oil Corp. That was followed by
Guinea Ophir Energy for $512m
STREAMLINING NOCs its new Incorporated Joint Venture following Fortuna widespread reports in April 2019
The Nigerian government is (IJV) model in 2020, this could FLNG disappointment that Exxon Mobil is exploring a $3 cost infrastructures to acquire For potential investors,
seeking to encourage more foreign encourage greater participation Kenya Qatar Petroleum farms
billion divestment from several valuable licences. However, with Nigeria’s independent sector can
investment in the upstream sector from IOCs. The IJV model will create into Eni deep offshore fields it partially owns through its the NNPC looking to reduce its demonstrate a strong track record
by reducing its stake in joint ventures independent entities which can raise blocks JV with NNPC. Analysis from Wood cost exposure, these smaller of production growth averaging
with IOCs, such as Shell, Exxon and capital through debt or equity, with Mozambique Total completes $3.9bn Mackenzie suggests that Exxon’s firms will have significant financing 15 percent a year since 2009.
Chevron. The NNPC currently holds dividends paid to shareholders. acquisition of Anadarko sell-off is likely to be focused on needs in order to move projects Over the same period, output
26.5% interest in
majority positions in these entities In Angola, 2020 will see Sonangol small to medium-sized fields that forward. They could prove to be from international majors including
Mozambique LNG project
(ranging from 55 to 60 percent) which push ahead with its reform agenda the company is unwilling to develop an attractive prospect for regional Shell, Chevron, Eni and Total and
it wants to reduce to 40 percent. as the company divests from a Qatar Petroleum due to a lack of JV funding or banks and finance corporations; others has fallen by an average
Namibia farms into Total’s
Such a move could be advantageous large number of joint ventures and deepwater blocks
unfavourable project economics. or joint venture options with other of 4 percent per annum due in
for all parties. For the government, investments that are extraneous to Currently, Petrobras and Exxon are international independents and part to a lack of new projects
it would lower its share of the cash its new core mission being a high Nigeria Panora Energy sells offloading global assets worth a even international private equity. coming on stream.
Nigerian assets to Petro
cost in upstream operations. Nearly impact E&P company. Sonangol Nor E& P for up to $35m
combined $36 billion. For example, in July, Norwegian
60 percent of total crude oil and gas plans to sell 50 subsidiaries across Shell could seek to adjust its upstream independent firm, Aker
sales revenue in 2018 was directed the globe, from Cape Verde to Seplat acquires UK Nigerian portfolio to focus on Energy secured $100 million in
independent Eland for Exxon is reportedly exploring
toward Joint Venture (JV) cash calls Singapore and back home, in sectors deep offshore, away from the convertible bond notes from
$486m a $3 billion divestment
and the government is in arrears as diverse as real estate, health and operational risks associated with Africa Finance Corporation to help programme in Nigeria
Lekoil acquires 45%
on some payments. For the IOCs, banking. Chairman Sebastião Gaspar the Delta region following a renewal develop its ultra-deepwater Pecan
stake from- Newcross in
it would mean increased control. Martins believes that the move will OPL 276 of these licences over the summer. field offshore Ghana. Further, Boru
However, the extra responsibility make the company “financially more And Chevron could also offload Energy, a new London-based
Savannah Petroleum (UK)
may not be desirable at a time of robust”8 – potentially enabling it completes acquires 80%
assets, according to analysis from venture backed by global private
regulatory uncertainty and capital to be a more effective upstream stake in Seven Energy Wood Mackenzie. equity giant Carlyle Group, is
rationing. If NNPC can implement partner for IOCs. Whatever the reason, looking to build a portfolio of non-
these divestments create operated stakes in producing oil
opportunities for specialised and gas assets across sub-Saharan
8. Macau Hub – September 2019 indigenous companies with lower Africa, in deals worth up to $1 billion.20 | African Energy Chamber African Energy Outlook - Business Environment | 21
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In Focus
SSA ENERGY FOOTPRINT
China’s Africa
shift away from coal to natural gas. a full spectrum of investments. This with top-tier partners. These include
Domestic gas production increased Sub-Saharan Africa has been a includes full ownership of the 20,000 CNOOC/Sinopec’s joint agreement
Energy Strategy
by nearly 25 percent in the five years prominent focus of Chinese foreign bpd Soraz refinery in Niger, where it with Marathon Oil to enter Angola’s
to 2018, while imports are also rising direct investment (FDI) into the is also involved in the construction ultra-deepwater sector back in 2009
fast. In 2017, the government allowed global oil and gas industry since of a new 1,829-kilometre pipeline for $1.2 billion (Block 32, operated
third parties to access LNG terminals 2009. According to data from the (capacity 90,000 bpd) that will enable by Total) and CNPC’s acquisition of
and gas pipelines with privately China Global Investment Tracker the landlocked country to export its oil a non-operated 20 percent stake
acquired feedstock. LNG imports (CGIT), produced by the American through Benin. In South Sudan, CNPC in Eni’s Area-4 licence offshore
increased by 39 percent in 20189. Enterprise Institute (AEI), total operates two JV’s that are responsible Mozambique for $4.2 billion in 2013.
African exports are an important investment is valued at $17 billion, for producing all of the country’s oil. In More recently, CNPC unsuccessfully
CHINA IS A HIGHLY INFLUENTIAL oil demand growth expected by component of China’s diversified which is just under 12 percent Chad, in addition to producing fields, tried to increase its acreage in the
PLAYER ACROSS AFRICA’S 2024. On its own, China will account energy acquisition strategy. In 2017, of China’s global total12. That is it also owns a 60 percent stake in very promising Lake Albert basin in
HYDROCARBONS VALUE CHAIN, ON for about 40 percent of total gas African countries supplied around 20 a comparable share to other the N’Djamena oil refinery (capacity Uganda through a $1 billion joint-bid
BOTH THE DEMAND AND SUPPLY demand increase to 2024. percent of Chinese crude imports, geographically distant regions such 2.5 mtpa). Beijing’s engagement with Total. According to CGIT data,
SIDES. THIS SECTION EXPLORES China will rely on foreign energy behind only the Middle East. as South America (15 percent) and with African governments enables Chinese entities have completed 11
CHINA’S EVOLVING ENERGY imports for the foreseeable future Gas is still a relatively regional MENA (13 percent). Chinese NOCs to manage the political farm-in agreements over the last
NEEDS AND HOW THIS SHAPE ITS due to its domestic sector having commodity. Thus, in 2018, China Chinese NOCs have acquired a risks in these countries in a way their decade with an average value of $1.3
INVESTMENT ON THE CONTINENT. performed poorly over the last accounted for just 8.7 percent of range of energy assets across the international peers cannot match. billion. Overall, Chinese engagement
decade. Between 2008 and 2018, sub-Saharan African LNG exports, value chain in at least 10 SSA countries. By contrast, in Angola, there with the African energy sector
crude production fell from 3.8 mmb/d though it was the fastest growing Most of the upstream assets were are no concessions operated by (including coal and renewables) is
CHINA’S ENERGY FUTURE to 3.7 mmb/d. The government has destination (223 percent year-on- acquired in the boom period from Chinese ventures14 despite the fact predominantly executed through
The urbanisation and industrialisation liberalised the upstream sector in year increase)10. In February, China 2003 to 2009. Though managed in China consumes at least 65 percent M&A activity and project financing
of Chinese society will continue to order to attract CAPEX investment National Offshore Oil Corporation different ways, all these investments of the country’s crude exports. rather than greenfield investment,
shape the global natural resources and replace depleting reserves. (CNOOC) agreed a 13 year offtake are underpinned by a common Chinese NOCs have consistently as analysts at European think-tank
market over the next decade. Since July, foreign firms can operate agreement for 1.5 million tons per geostrategic aim: securing resources. proven their willingness to complete Bruegel point out. Nearly 60 percent
According to forecasts by the IEA, independently, whereas previously annum (mtpa) of LNG from the In higher-risk frontier markets like multi-billion-dollar deals to acquire of Chinese M&A activity in Africa
China and India will consume 44 they required a Chinese partner or JV. Area 1 Mozambique development South Sudan, Chad and Niger, CNPC non-operated stakes in ready-to- is focused in the energy sector
percent of the 7.1 mmbpd in global The government is driving a rapid (capacity 12.8 mtpa)11. dominates the entire industry with produce licences in premium basins compared with just 13 percent of
greenfield investment14.
Chinese Global FDI in Oil & Gas (USD billion) China Greenfield Investment in Africa by Sector Chinese M&A in Africa by Sector
Other
23.2
22.3 Real Estate Transportation 3% Materials & Metals
43% 11% 7%
19.9 19.5
Energy* Energy
11.1
11.7
10.3
2.9 11.5 10.2 Total Global 13% 59%
O&G FDI Infrastructure
8.9 1.3 9.6 Chinese investment
7.9 5.1 South America predominantly 31%
0.3 6.2 executed through M&A.
1.0 1.2
3.7 3.0 1.2 MENA Light operational
4.0 2.0 1.0 0.1 footprint compared to
0.5 1.1 0.2 2.7 2.8 1.1
0.6 0.1 SSA peers, especially
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 33% upstream.
Other
Source: China Global Investment Tracker (AEI) Source: Bruegel * Includes coal, oil, gas, alternative & renewable
9. BP Statistical Review 2019 12. China Global Investment Track data retrieved 14/10/2019
10. International Gas Union – Wholesale Gas Survey 2019 13. http://www.sonangol.co.ao/English/AreasOfActivity/Concessionary/Documents/GAD201901-DMC0001-I.pdf
11. Offshore Energy Today – February 2019 14. Bruegel – China’s investment in Africa: What the data really says, and the implications for Europe, by Alicia García Herrero and Jianwei Xu (July 2019)22 | African Energy Chamber African Energy Outlook - Business Environment | 23
www.energychamber.org
State of Play
JESS YU
China in Africa
China is a critical export market and Africa’s role in Chinese
important upstream investor energy imports
China Share of Crude Exports (by value US$, 2017)
South Sudan 95% China Crude Imports by Value (2017)
Source: Observatory of Economic Complexity
Congo Brazzaville 82%
Angola 67%
Ghana 51% 21% Africa
Gabon 47% 17% Europe
Sudan 42% 11% South America
Congo (DRC) 42% 3% North America
South Africa 34% 48% Asia
EQ Guinea 29%
Chad 25%
Cameroon 17%
Ivory Coast 10% Chinese LNG Imports by volume (2018)
Source: International Gas Union
Nigeria 1% Source: Observatory of Economic Complexity
7% Africa
China’s Africa Oil Spend
National companies to invest over $15 billion in five years
58% Australia
15% Malaysia
$4Bn
CNPC 6% Papa New Guinea
$3Bn 11% Indonesia
Sinopec
$2Bn
CNOOC 4% Other
$1Bn
$0Bn Africa supplies around 21% and 6% of Chinese
crude and LNG imports respectively. Imports of
2019 2020 2021 2022 2023 Source: Global Data
African LNG increased by 223% in 2018.
On average, China consumes around 42 % of crude exports by value across the sub-Saharan Africa region. South Sudan and Congo
Brazzaville are most dependent on China, while Angola exports the largest volume of crude to China. Chinese NOCs are forecasted to
invest $15 billion in African oil & gas by 2023.
Outlook 2020
mtpa LNG facility. With continued Guinea-Bissau with the acquisition of
WHERE NEXT? exploration of the basin, they expect a 55 percent stake of Svenska’s share
Poly-GCL (a JV between state- that to increase to 10 mtpa within 10 in the Sinapa (Block 2) and Esperança
owned China POLY Group years. The company is financing a $4 (Blocks 4A/5A) concessions. Svenska
Corporation and privately-owned billion 700km gas pipeline that will run will drill exploration wells scheduled for U.S. Sanctions on Chinese Shipowners Strategic Petroleum Reserve New pipelines for new exporters
Hong Kong-based Golden Concord to a new Chinese-built port in Djibouti. early 2020 but CNOOC could assume In late September, the U.S. introduced sanctions on In September, Chinese officials announced that Chinese NOCs are behind the
Chinese shipowners who were transporting Iranian oil. The the country has around 80 days of oil in storage, development of two new pipelines that
Group) is heavily involved in In west Africa, CNOOC is operatorship after that. In Congo, move caused a sharp rise in the price of super tanker close to the IEA-recommended level of 90 days. will enable Niger and Ethiopia to
developing Ethiopia’s nascent gas increasing its exposure in the MSGBC Southernpec, a subsidiary of Sinopec, chartering rates as traders tried to find alternatives to Analysts estimate that China has been adding become exporters of crude oil and
Chinese vessels. The price of shipping west African crude to around 630,000 bpd to its reserve since July natural gas respectively. These projects
sector. Poly-GCL has three gas fields Basin. The offshore specialist owns is operating the $4 billion Banga China increased from around $2.50/bbl to $10, according 2017*. Depending on how much further officials will lay a combined 2,500 km of pipeline
(Dohar, Calub and Hilala) in the eastern a 65 percent operating stake in the Kayo field, which is expected to come to Bloomberg. These extra costs are squeezing profits and decide to go and at what speed, this could have to provide export routes via Benin (for
could have a medium-term impact on demand from negative implications for future demand. Niger) and Djibouti (for Ethiopia).
Ogaden Basin which it believes are AGC Profond Block offshore Senegal. on-stream early 2020, with peak
Chinese refineries. Unravelling the sanctions could become
ready to provide feedstock for a 3 In August, the company moved into production forecast at 50,000 bpd by part of wider trade negotiations.
*
Reuters (Tom Daly) – September 20th 2019
2023, according to Global Data.Africa Energy Outlook | 24
PRODUCTION
OUTLOOK
2019 - 202526 | African Energy Chamber Production Outlook | 27
www.energychamber.org
Outlook West Africa West Africa Total Oil & Gas
Production Outllook
(boe/d)
6M
WEST AFRICAN PRODUCERS, SPECIFICALLY proven reserves. Converting this potential NIGERIA ANGOLA
NIGERIA AND ANGOLA, WILL DOMINATE into increased capacity, however, will require Nigerian energy production is Current forecasts estimate that
THE SUB-SAHARAN AFRICAN [SSA] ENERGY a more stable policy environment and the forecasted to grow by 4.71 percent Angola’s oil and gas output will fall by
LANDSCAPE OVER THE NEXT FIVE YEARS. development of key infrastructure projects, between 2019 and 2025. That period nearly 6 percent between 2019 and
including the Dangote Refinery and Train 7 includes a fall of nearly 6 percent 2025. The low oil price, combined with
5M
However, these two countries’ share of total LNG plant. Current forecasts suggest a 4.71 between 2019 and 2021, from Angola’s high cost environment and
SSA daily production will fall from 73.9 percent percent growth in oil and gas daily production 3.09 million boe/d to 2.90 million challenging business environment,
in 2019 to 58 percent in 2025. That represents between 2019 and 2025. boe/d, before recovering to 3.23 led to a steep decline in upstream
more than a one-fifth loss of market share. Senegal and Mauritania (gas) and Kenya (oil) million boe/d in 2025. Total’s Egina investment in recent years, with
Mozambique’s growth is the key driving are small but noteworthy growth markets that deepwater field came on stream production falling by more than
force behind this shift. The south-eastern should see commercial levels of production at the beginning of 2019 and has 300,000 bpd. However, President 4M
African nation is one of the least economically come online in the next few years. Ghana and boosted crude production by nearly Lourenço’s new administration is
developed on the continent. However, it also South Africa will also see increased levels of 10 percent (just over 200,000 bpd). implementing an ambitious reform
holds nearly 3 trillion cubic feet of gas reserves exploration activity. The development of the offshore agenda which is rekindling interest.
– the third largest on the continent, behind only Anyala (OML 83) and Madu (OML BP is expected to start drilling wells in
Nigeria and Algeria. Over the next five years, 85) fields has been slower than its deepwater Platina field (Block 18) 3M
IOCs, including Eni and Total, will be working to expected – they will come on-stream by mid-2020 with first oil expected
bring more than 30 million metric tons of annual in 2020. At their peak, the fields are in 2021/2022. The government
gas production online, catapulting Mozambique expected to yield 50,000 bpd and plans to award 50 blocks over the
Nigeria and Angola’s share of
into a significant global LNG supplier. total SSA daily production will fall 120 million standard cubic feet per next five years.
Nigeria is still the pre-eminent SSA oil and from 73.9% in 2019 to 58% in 2025. day respectively. FID for the Bonga 2M
gas market, both in terms of production and South West project is expected by SENEGAL
2022, with production starting in Senegal could establish itself as
2024. The field could add 225,000 an important rival to west African
bpd at peak flow. markets like Ghana, Equatorial
There is growing momentum in Guinea and the Ivory Coast. Total
1M
Sub-Saharan Africa Total Oil & Gas Production Outllook 2019-2015 (thousand boe/d) Nigerian gas but delays in the FID energy production is forecast
on the Train 7 liquefaction facility is to reach 181,000 boe/d by 2025.
3,237 holding up other projects which could Offshore LNG will underpin this
provide feedstock to the facility, for growth. BP’s ultra-deepwater
example Shell’s offshore OML-77. Greater Tortue Ahmeyim
1,506 0
However, following FID in December development (which straddles
1,066
901
2018, Shell’s onshore Assa North Gas Senegal and Mauritania) is expected
2019
2020
2021
2022
2023
2024
2025
318 246 238 196
2025 161 148 81 49 Project could add up to 600 million to produce first gas by 2022, with
2019 85 217 117 154 50 87 47 scf/d once fully developed, with the at least 15 trillion cubic feet of gas Angola
256 383 253
Cameroon
capacity to expand to 1.2 billion scf/d resource. Cairn Energy and partners
Equatorial Guinea
(around 200,000 boe/d). will also be aiming to get the SNE
1,600 Ghana
Deepwater Oil Field onstream by Nigeria
2022; initial production is forecast Senegal
3,091 Total’s deepwater Egina field adds
at 100,000 bpd15. The project is
200,000 bpd in 2019
Other
currently awaiting FID. Source: Global Data
ria
a
ue
a
n
ic
a
n
ad
r
re
r
ge
e
da
oo
ol
n
ne
bl
oi
th
q
ha
ge
Ch
g
Ni
pu
bi
ui
Iv
Su
er
O
An
G
Ni
lG
d'
am
Re
m
h
Ca
te
ia
ut
oz
o
or
Co
So
ng
M
t
ua
Co
Eq
Source: Global Data 15. Woodside Energy | Oil Review Africa – February 201928 | African Energy Chamber African Energy Outlook - Production Outlook | 29
www.energychamber.org
IAN SIMMONDS
East & Central Africa East & Central Africa Total Oil KENYA
& Gas Production Outllook Kenya is currently producing around
(boe/d) 2,000 bpd from the South Lokichar
REPUBLIC OF CONGO basin under its Early Oil Pilot Scheme,
(BRAZZAVILLE) led by Tullow Oil. In August, the country
The Republic of the Congo is the third achieved an important landmark in
1.2M
largest oil producer in SSA. Claiming exporting its first consignment of
a production of over 380,000 bopd crude oil (around 200,000 barrels)
in October 2019, the Government is to ChemChina. FID on the Turkana
expecting to raise output to 400,000 development is expected in the
bpd in the near future. And, there is second half of 2020, with commercial
1.0M
an optimistic mood in the country as production scheduled to begin in
investments from China and Russia 2023, once a $1 billion pipeline to the
flow in. The $4.3 billion Banga Kayo Port of Lamu is completed. Current
project is under construction – led forecasts suggest that production will
by Wing Wah Petrochemical – and is 0.8M
reach around 90,000 bpd by 2025.
expected to yield 50,000 bpd by 2023. Successful engagement between IOCs
Looking offshore, the Marine XII licence and local communities will be essential
has significant medium-term upside. to ensuring that Kenya is able to
In September 2019, Russian energy maintain this timeline.
company Lukoil completed a $800 0.6M
million farm-in to the Eni-operated UGANDA
asset which holds 3.5 billion boe in Uganda is facing a challenging road
subsalt reservoirs. The licence currently to reach first oil by 2022 due to
has two producing fields (Nene and disagreements between project
Litchendjili) which yield 28,000 barrels 0.4M partners. In August, a proposed
of oil and gas condensate per day. $900 million farmout by Tullow Oil
With further development, these to Total and CNOOC in the stalled
assets could yield over 140,000 boe/d Lake Albert development broke-
according to Eni. Maixent Raoul down due to a tax dispute with the
Ominga, head of the SNPC, expects to 0.2M government. Total subsequently
see a new cycle of exploration drilling announced that it was stopping
in 2020, following the award of offshore technical work on the field and
PSCs to Total, Kosmos Energy and pipeline. In a September statement
GHANA Perenco. As a relatively small producer, to the Financial Times, the company
There is a positive outlook for the Pecan Field in March 2019. The it is unlikely that Congo will be asked 0 said it was waiting for a “clear and
Ghana’s energy sector with firm is currently evaluating options to contribute to any future OPEC stable legal framework and clarity on
2019
2020
2021
2022
2023
2024
2025
forecasted growth of nearly 25 for the FPSO ahead of an FID. First production cuts. the project shareholders”16. However,
percent by 2025, to 317,000 boe/d. oil is expected 35 months after FID. Uganda Ugandan officials are keen to maintain
In February, Norwegian independent Tullow Oil has experienced technical Tanzania progress and reach FID in Q4-19. A
firm Aker Energy confirmed a challenges in completing production South Sudan lack of regional cooperation combined
Kenya
significant offshore resource in the wells in the Enyenra field, leading to a Nene and Litchendjili fields with President Museveni’s disputes
Ethiopia
Deepwater Tano Cape Three Points 10 percent decline in its forecast for (Marine XII) could yield over with IOCs, particularly over domestic
140,000 boe/d
Congo Republic
block, with potential recoverable 2019 daily production (from around refineries, have also slowed the
reserves of nearly one billion barrels, 100,000 bpd to 90,000). However, at peak production (Eni) Source: Global Data development of Lake Albert.
according to the country’s Ministry CEO Paul McDade insists that the
of Finance. Aker Energy submitted 2020 outlook will be more positive,
a $4 billion development plan for with several new wells planned. 16. World Oil – July 201930 | African Energy Chamber African Energy Outlook - Production Outlook | 31
www.energychamber.org
LIFE OF PIX
Southern Africa Southern Africa Total Oil &
Gas Production Outlook
(boe/d)
1.0M
IAN SIMMONDS
0.8M
MOZAMBIQUE SOUTH AFRICA 0.6M
Mozambique is poised to realise Total’s Brulpadda gas discovery
the potential of its estimated 3 in February has sparked interest
trillion cubic meters of natural gas in South Africa’s upstream sector.
reserves17. In June, then operator, Early reports claimed that there
Anadarko Petroleum Corp and its could be up to 1 billion barrels of oil
partners reached FID on the onshore equivalent in the play, though IHS 0.4M
Area 1 LNG project, which has a analysts subsequently suggested
production capacity of 12.88 million that the figure could be closer to
tons per annum (mtpa). While FID is 200 to 250 million boe. This would
expected on the 15.2 million mt/year still represent an unprecedented
Eni-Exxon Rovuma LNG project in discovery for South Africa, according
early 2020, Eni’s Coral South FLNG to Nial Kramer, CEO of the South
0.2M
project is expected to come on African Oil & Gas Alliance19. However,
stream by 2022, with production analyst Heidi Vella points out that
capacity of 3.4 mtpa. At full capacity, development costs are likely to be
these three projects alone would high, due to Brulpadda’s location in
represent 81 percent of total African extreme water depths amidst strong
LNG exports in 201818. currents that could make using an
FPSO unfeasible20. Africa Energy, one 0
of the project partners, says that the
2019
2020
2021
2022
2023
2024
2025
minimum commercial field size would
be 350 million barrels (priced at $60 South Africa
per barrel). There are plans to drill up Mozambique
to four more wells before the Madagascar
end of the year. Source: Global Data
17. S&P Global Platts – 18 June 2019
18. S&P Global Platts – 18 June 2019
19. Bloomberg – February 2019
20. Offshore Technology – May 201932 | African Energy Chamber African Energy Outlook - Production Outlook | 33
www.energychamber.org
State of Play Facilities
African LNG Status:
Proposed Projects Under construction Operational
LIQUEFACTION REGASIFICATION
Regional Share Global LNG Exports (2018)
Angola Mauritania/ Nigeria Benin
4% 29% 38% 7% 13% 9.1% Senegal
Angola LNG (Soyo) Bonny Island FSRU
Capacity: 5.2 mtpa Tortue Ahmeyim LNG Facility Capacity: 0.5 mtpa
2018 Utili sation: 80% FLNG Capacity: 22 mtpa Start: 2021
Capacity: 2.5 mtpa 2018 Utilisation: 94%
20.5 mt Nigeria
Cost: $1.3bn
4.1 mt Angola Cameroon EQ Guinea
Start: 2022 Bonny Island
3.5 mt Eq. Guinea Hilli Episeyo FLNG Train 7 Akonikien Terminal
Capacity: 2.4 mtpa Capacity: 8 mtpa
0.6 mt Cameroon 2018 Utilisation: 43%
Mozambique Cost: $7bn
Ghana
Mozambique LNG Start: 2024
Capacity: 12.9 mtpa Tema FSRU
Congo Brazzaville Cost: $20bn Capacity: 2 mtpa
Tanzania
North Middle Asia U.S. Other SSA Congo FLNG Start: 2024 Cost: $0.35bn
Africa East Pacific Capacity: 1 mtpa Tanzania LNG Start: 2020
Coral South FLNG Capacity: 10 mtpa
Capacity: 3.4 mtpa Cost: $30bn
IGU World LNG Report 2019
Djibouti Cost: $9.9bn Start: 2028
Ivory Coast
Damerjog LNG Start: 2022 FSRU
Capacity: 3 mtpa Capacity: 3 mtpa
Key SSA LNG Export Markets 2018 by MT Cost: $4bn Rovuma LNG Start: 2021
Start: 2021 Capacity: 15.2 mtpa
Cost: $30bn
Start: 2025
Namibia
EQ Guinea Walvis Bay FSRU
EQ Guinea LNG
2.52 1.82 (Bioko Island)
South Africa
3.17 China +223% YoY Portugal Capacity: 3.7 mtpa
2018 Utilisation: 96%
Mozambique LNG Offtakers
OFFTAKERS SALES* PERIOD Richards Bay FSRU
Spain Tokyo Gas 2.60 Until early
Capacity: 1 mtpa
& Centrica 2040s
Start: 2024
IGU World LNG Report (2018/2019)
Shell 2.00 13 years
CNOOC 1.50 13 years
1.21 EDF 1.20 15 years
1.70 Pakistan
Tohoku 0.28 15 years
Bahrat 1.00 15 years
5.98
Turkey +63% YoY
2.76 1.82
Pertamina 1.00 20 years
JERA & CPC 1.60 17 years
Total Volume 11.18
India France Poland
+17% YoY Kuwait 1.03 *(million mt/year)
Source: “S&P Global Platts”34 | African Energy Chamber African Energy Outlook - Production Outlook | 35
www.energychamber.org
In Focus: African Gas
The Rise of African Gas
African LNG Supply Growth
(mtpa)
2018 2025
Supply Capacity
Angola 4 5 Sub-Saharan Africa (SSA) has investment, two-thirds of which will FLNG operations have country has tremendous resource payment problems.
plentiful gas resources. Over the go to Mozambique. proved popular in Africa for early potential with some 50 tcf of gas As a result, some countries
last decade, huge discoveries in In part, that investment has monetisation of large resource. For discovered the coutry’s offshore in Africa without substantial gas
Cameroon 1 2 Mozambique, Tanzania, Senegal been made possible due to the example, in Senegal/Mauritania, by majors including Exxon, resources are turning to LNG
and Mauritania have delivered a availability of competitive project BP and Kosmos sanctioned the Shell and Equinor but political imports. Ghana, for example, will
combined total of around 200 trillion financing. There was a dearth of new Tortue FLNG project (in December mismanagement has slowed the install a new floating regasification
cubic feet of recoverable gas. That major SSA projects after Angola 2018) less than four years after development of these projects. unit in 2020 . Other countries such
Equatorial
Guinea
4 6 Is enough to provide two thirds of LNG in 2007. Since 2018, however, the 15 tcf discovery. Phase 1 of In Mozambique, both the as Ivory Coast, Morocco and
current global supply for around a significant number have been the development involved a 2.5 Rovuma (Exxon) and Afungi (Total) South Africa have also looked at
twenty years. On top of this, Nigeria pushed forward. The oil supermajors mtpa facility. There are plans to projects have the capacity to installing such units. In the power
alone has 200 tcf of proven reserves. are big believers in African LNG, green light a further two vessels double annual production from sector, there is also great potential
Currently, SSA has the capacity with Exxon, Shell and Total as the in 2020 at a total cost of $10 the huge resources available, to substitute gas for burning fuel
to produce 34 million tonnes of key equity sponsors of the largest billion. This would increase output adding a further 30 mtpa of supply. oils – Nigeria, for example, spends
Nigeria 20 29 LNG per annum. In 2018, throughput projects. Despite higher costs, these capacity to 10 mtpa. Mauritania has the potential to an estimated $30 billion on diesel-
was at 28 million tonnes (or an 83 firms are committing capital to In frontier markets, operators develop its own 10 mtpa FLNG generated power.
percent utilisation rate), which was Africa at a time when there are huge are using FLNG to exploit smaller project at the Birallah Hub. While in
around 10 percent of global supply. opportunities in the United States. plays that do not justify investment Senegal, the Yakaar and Teranga
By 2025, Akap Energy expect African projects, especially on the in an onshore plant. Cameroon is a discoveries could be developed
capacity to increase by 150 percent, east coast, have the advantage prime example and this trend is set through a 10 mtpa onshore plant. Ghana will install a floating
to 84 mtpa, with global market share of proximity to key Asian LNG to continue in 2020. In Ethiopia, a Nigeria has strong growth potential regasification unit in 2020 to
rising to 15–20 percent, depending import markets. Chinese-sponsored 3 mtpa near- but the Brass (10 mtpa) and Olokola increase LNG imports
on demand growth. Assuming the In December 2017, the Coral shore FLNG project is expected (10 mtpa) LNG projects do not look
utilisation rate can increase to 90 FLNG Project was Africa’s largest to commence in 2020. While the likely to progress.
Mozambique - 32 percent, achieving this extra market ever project financing (at $5 billion). 2 mtpa Fortuna FLNG project in There are also opportunities in
share will require regional production Since then, Anadarko (whose Equatorial Guinea – which was the mid and downstream sectors. FLNG DEPLOYMENT
of 10 billion cubic feet per day. That stake is being acquired by Total) FID-ready before Ophir Energy Plans for a Nigeria-to-Morocco IN AFRICA
will require $75 billion worth of sanctioned the $15 billion Afungi failed to secure financing – could be gas pipeline would increase
• Rapid monetisation of large
mega project in mid-2019. And sanctioned in 2020. Similar floating interconnectivity between west and
resources (e.g. Senegal/
Exxon is due to sanction an even solutions are being mooted for north Africa. However, the political Mauritania)
bigger LNG plant by year end. These projects in Gabon, the Republic and financing challenges of such • Exploiting smaller gas plays
Mauritania/ - 10 Mozambique’s LNG export
Senegal
capacity will reach 30 mtpa projects will see Mozambique’s LNG of Congo and Nigeria, to develop a project could be prohibitive. The in markets without existing
by 2025, with $50 billion of export capacity reach 30 mtpa by smaller stranded gas fields instead. existing West Africa Gas Pipeline liquefaction plants
investment 2025, with total investment upward Looking out to the long-term, (Nigeria-Benin-Togo-Ghana) (e.g. Cameroon)
Source: AKap Energy of $50 billion. Tanzania is one to watch. The has been plagued by supply andYou can also read
