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Africa’s Energy Industry Seeing Promising M&A Deals, Discouraging Project Delays Going Into 2024

Mergers and acquisitions (M&A) activity in Africa’s oil and gas industry has been a bit of a good-news/bad-news situation in 2023.

By NJ Ayuk, Executive Chairman, African Energy Chamber

Mergers and acquisitions (M&A) activity in Africa’s oil and gas industry has been a bit of a good-news/bad-news situation in 2023.

The good news is that we are continuing to see independents and indigenous oil companies capitalize on opportunities to acquire African assets from divesting majors.

The downside — which is covered in the African Energy Chamber’s (AEC) recent “The State of African Energy 2024 Outlook” report — is that some of the buyers in these deals are hesitating to take the next step after purchase: They’re not moving forward with exploration and production activities.

That is a problem. As I’ve said many times, African countries’ window of opportunity to capitalize on the socioeconomic benefits that fossil fuels can deliver — from economic growth to energy security — is finite.

Interest in African assets is always encouraging, but our oil and gas projects must move forward.

Majors Narrow Their Focus

In some ways, M&A activity in Africa’s energy industry this year resembled the pattern we observed in 2022. In response to challenges associated with specific assets and locations, majors continued to divest African assets to focus on renewable energy projects and pursue opportunities in other regions.

Of the USD3.233 billion in announced and closed deals that took place as of the completion of our 2024 Outlook, only one involved an oil and gas major acquiring African assets. That was Italy-based Eni’s USD4.9 billion deal with London-headquartered independent, Neptune Energy, in conjunction with Eni-controlled Norwegian company Vår Energi AS, in June 2023. The deal calls for the acquisition of all of Neptune Energy’s oil and gas assets except its German and Norwegian operations. With onshore and offshore oil and gas interests in Egypt, Neptune Energy is the joint operator of the Touat gas plant in Algeria with state-owned Sonatrach and French multinational utility company Engie.

I will say that, despite other deals involving majors divesting African assets, Africa still has its share of high-interest areas where majors remain active. One example is exploration hotspot Namibia: Drilling has been on the upswing there since Shell (UK) and TotalEnergies (France) announced major discoveries there in 2022. Namibia’s Orange Basin alone is believed to hold up to 3 billion barrels of oil and 5.5 trillion cubic feet of natural gas. Namibia’s government, meanwhile, has made it a priority to create a fiscal regime that’s attractive to investors.

The frenzied activity we’re seeing in Namibia shows that companies — including majors — are indeed willing to invest in African assets in areas known for tremendous opportunities and reasonable risks.

More Notable Deals

In addition to Eni’s Neptune acquisition with Vår Energi, Africa’s energy sector saw multiple transactions valued at more USD500 million, our report notes.

  • Africa Finance Corporation (AFC) Equity Investment, headquartered in Nigeria, announced plans to acquire E&P company Aker Energy in Ghana. Following the completion of the USD605 million transaction, AFC will have a 50% stake in the deepwater Tano Cape Three Points block offshore Ghana, which includes the Pecan oil field. The Pecan Field project is expected to produce 80,000 barrels per day (bpd) of oil beginning in 2025-2026.
  • In August, Paris-based oil and gas exploration company Maurel & Prom announced the acquisition of Gabon-focused oil and gas company Assala Energy (United Kingdom) from global investment firm The Carlyle Group, based in Washington, DC. The USD730 million transaction includes all of Assala Energy’s Gabon-focused assets and subsidiaries.
  • Portuguese oil company Galp Energia (Galp) sold its upstream assets in Angola’s Block 14 to local independent Somoil. Galp has announced plans to focus on its upstream operations in Brazil and work on renewable operations in South America. Somoil is already active in the block and paid USD655 million for the mature upstream asset.

Additional acquisitions by independents included UK energy company Afentra signing a sale and purchase agreement with independent equity producer Azule Energy in July to acquire a 12% interest in Block 3/05 and a 16% interest in Block 3/05A, both in Angola, for approximately USD48 million.

Angola also approved Afentra’s acquisition of two oil blocks from state-owned Sonangol. That deal, scheduled to be finalized by the end of 2023, includes a 14% non-operating interest in Block 3/05 and a 40% non-operating interest in Block 23.

And in Egypt, US-based independent Apex Energy acquired six concessions from International Egyptian Oil Company, an Eni subsidiary, in January. The deal includes all of the company’s interests in the Ras Qattara, West El Razzak, East Kanayis, and West Abu Gharadig concessions, along with a 25% interest in the East Obaiyed and South West Meleiha concessions.

I look forward to hearing announcements about exploration and production activities at each of these assets.

And I hope to see project delays in Africa come to an end.

No Time for Delays

As International Energy Fellow Gawie Kanjemba wrote for the AEC earlier this year, project delays are not uncommon in the oil and gas industry due to project complexity, significant capital requirements, and the multi-faceted nature of developments.

But delays between discoveries and final investment decisions (FID) only result in lost revenue, lost opportunity, and lost progress.

African countries need their fossil fuels, particularly natural gas, to meet domestic energy needs. Our countries need the jobs, revenue, and technology-transfer opportunities that oil and gas operations can provide.

We must do everything possible to make exploration and production feasible sooner, rather than later, for companies with African assets.

That’s why I’m calling upon the leaders of Africa’s oil- and gas-bearing nations to minimize companies’ risks by offering business-friendly fiscal policies, being transparent, and eliminating red tape. Now is not the time to hesitate or allow the demands of Western environmentalists who decry African oil and gas production to distract us. We need to stand firm in our resolution that promoting Africa’s oil and gas industry will foster a stronger Africa.

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