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Exploration Spending to Rise Modestly by 2028, Says AEC-S&P Global Webinar

The African Energy Chamber hosted a webinar with global market intelligence first S&P Global Commodity Insights on ‘Exploring the Future of Oil & Gas Financing in Africa.’

Exploration spending is expected to rise modestly through 2028, a webinar hosted by S&P Global Commodity Insights and the African Energy Chamber (AEC) underscored. While spending is expected to measure significantly less than peak levels ten years ago, global spending by energy companies has seen a sharp recovery from COVID-19 lows.

According to Lysle Brinker, Executive Director: Equity Research and Analysis, S&P Global Commodity Insights, “A lot of exploration spending is in offshore, deepwater and frontier areas. Many companies are also spending a lot on unconventional assets. Deepwater [projects] play a large percentage of their overall spending, and certainly Africa factors into that.”

Global fossil fuel financing has been on the decline owing to climate-related policies, economic impacts and the shift towards renewable energy solutions. Investment from the world’s 60 largest banks, for example, declined from $778 billion in 2022 to $705 billion in 2023. For Africa, this represents a rising challenge, with reduced foreign capital having a direct impact on the development of untapped oil and gas resources.

Providing insight into spending trends by the global energy majors, Brinker stated that on a whole, the group is “trying to be capital-disciplined. Total organic upstream capital spending by the group this year will be under $100 billion – the same as 2023. Compared to ten years ago, the group was spending a total of $200 billion at peak. Now that companies have resigned themselves to a much more rational and disciplined budget, this has an impact [on projects].”

Unpacking methods of raising capital, Oscar Abbink, Director: Energy Technology and Innovation, Upstream Solutions, S&P Global Commodity Insights, believes that “technology and innovation are at the heart of raising capital for upstream projects. New technologies and digitalization capabilities incorporated into early project designs can drive improved capital efficiency and enable new operating models.”

He added that “from a high-level perspective, there are three things you can do as a company to reduce pay-back times. First is to reduce capital expenditures, the second is to reduce operational expenditures, and the third is to increase production – which is complex.”

For African based project developers, raising finance is a challenge, but innovative solutions are being implemented.

Angolan energy company Etu Energias, for example, secured a $190 million debt facility for the acquisition of oil and gas reserves co-owned by TotalEnergies and INPEX Corporation in 2023. Fernando Hermes, CFO of Angolan oil company Etu Energies, explained that in raising finance for its projects, utilizing regional and local financial institutions is not always an option.

He said, “For the regional and local financial institutions, liquidity was low so they would not help. ESG also matters, so it made it tough. We were lucky with our approach in our partners of choice in that we could count on bankers such as Afreximbank and the African Finance Corporation to help us. We worked with them and were able to integrate local banks in the capacity that they could.”

Going forward, Hermes stated that, “We have a plan for 2030 to [increase production] to 90,000 bpd. We are looking at profitable opportunities and are a partner of choice.”  

Meanwhile, on the production front, while Africa’s output showed a 1.5 million barrel per day (bpd) decline from 2023 levels of 6.5 million bpd, Kallol Saha, Director: Transaction Research, S&P Global Commodity Insights, stated that “The big five producers are trying to address production declines and maintain production levels by bringing smaller projects on the market.”

He believes that the outlook for production in Africa is positive, and that “all big five countries are expected to maintain and increase production beyond 2030. Nigeria and Angola have increased their focus on gas development and infrastructure, while in 2024, Congo, Senegal and Mauritania will become new gas exporters.”

The webinar served as a form of prelude to the African Energy Week (AEW): Invest in African Energy conference this November (4-8). Representing the premier event for the continent’s energy sector, AEW: Invest in African Energy unites African governments, national oil companies and service providers with global investors and project developers under a common goal of eradicating energy poverty.

Concluding the webinar, Verner Ayukegba, Senior VP of the AEC, added that “We look forward to having these discussions again at AEW, specifically at the finance summit, where we will speak about how we can finance more assets on the continent.”

AEW: Invest in African Energy is the platform of choice for project operators, financiers, technology providers and government, and has emerged as the official place to sign deals in African energy. Visit for more information about this exciting event.

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