Search
Close this search box.

Why We’re Optimistic About African O&G Exploration

While some analysts propose that existing discoveries hold enough oil and gas to meet global demand for the foreseeable future, others argue that the remaining supply will not sustain us beyond the next quarter century.

While some analysts propose that existing discoveries hold enough oil and gas to meet global demand for the foreseeable future, others argue that the remaining supply will not sustain us beyond the next quarter century.

Regardless of which prediction eventually proves more accurate, since its founding, the African Energy Chamber (AEC) has asserted that Africa’s fossil fuel resources will play a crucial role in support of humanity as we power along our journey to the next massive technological breakthrough in terms of energy.

For Africa to realize its undeniable potential as Earth’s next energy frontier, the hydrocarbon resources held on this continent must be leveraged and utilized in ways that offer the most benefit to not only the nations that bear them but also to the operators who extract them and the market itself.

For this process to play out in an order equally advantageous for all parties involved, African nations must create business-friendly environments that are attractive to foreign investment and conducive to fair negotiations and prompt production schedules. International oil companies (IOCs) with the means to erect the necessary infrastructure for fully developing African discoveries must also commit to long-term relationships and meaningful employment and service opportunities for host communities. But ahead of any of this, to ensure that Africans and all associated stakeholders reap the rewards that our resources promise, we must see extensive and ongoing exploration.

Besides attracting further investment, creating new jobs, and strengthening local economies, successful exploration and sizeable discoveries also support production operations already underway. To secure and maintain a robust oil and gas sector, as well as a thriving economic future for Africa, we must monitor and encourage exploratory activities both on and offshore and in every corner of the continent.

Promising Signs on the Horizon

Findings from our most recent evaluation of Africa’s energy industry highlight several key factors that the AEC regards with optimism. As our newly released report “The State of African Energy 2024 Outlook” forecasts, exploration drilling in Africa should soon show a considerable spike in frequency, at least for the near future.

Following the successful Shell and TotalEnergies discoveries in the Orange Basin offshore southern Namibia in 2022 and early 2023, national and regional exploration immediately increased. 

The other positive we see is the number of planned drilling sites remaining relatively constant for 2024 and 2025. While the well count for 2023 is 132, we expect to see 120 new wells drilled in Africa in 2024 and 123 new wells in 2025.

Onshore drilling accounts for the bulk of this activity, as national oil companies (NOCs) and majors have selected inland sites for nearly two-thirds of the total planned wells. Algeria and Egypt will share a similar percentage of these operations as these two countries will host roughly two-thirds of all onshore drilling planned for this timeframe.

More than one-fifth of the total planned drilling will take place at other deepwater wells with a majority of these off the coasts of Namibia, Nigeria, and Egypt.

High-Impact Prospects

Adding to our positive outlook for the short-term future, another factor covered in our 2024 report is the healthy percentage of exploration sites that we can classify as high-impact wells (HIWs).

The oil and gas industry defines HIWs as wells with characteristics that meet one or more benchmarks from a list of five. HIWs must either be located in frontier or emerging basins, meaning they can be the very first wells in a region or among other exploratory wells that have yet to see production. A well can also receive HIW classification if it is a “play opener” or the first well to target a specific geologic setting or play in either a mature or frontier area. Additionally, a site will earn HIW status if it is a specific focal point for the company drilling it or if pre-drill estimates suggest its resources are of a comparatively large volume.

At present, both active and planned HIWs practically encircle the African continent. Shell’s site in Mauritania plus its Jonker-1 well offshore Namibia, Eni’s site in Egypt, Eni’s Raia-1 well offshore Mozambique, China National Offshore Oil Corporation’s (CNOOC) well in Gabon along with the TotalEnergies Venus-1A well account for the six HIWs drilled thus far in 2023.

Eni, Shell, TotalEnergies, and Eco Atlantic have other drilling operations confirmed for the remainder of 2023 in Morocco, Egypt, Congo, and Namibia, respectively. With seven more HIWs slated for drilling in 2024, Africa should see a total of 11 new, high-impact explorations begun over the next 15 months.

Diverse Licensing Rounds

Also detailed in our outlook report are the encouraging indicators brought forth by the licensing rounds scheduled for the next five quarters.

In a relatively even distribution across the continent, a total of 177 separate blocks in Africa are open for licensing. At present, 48 of them are currently under evaluation, 56 more are scheduled for the auction block, and 73 remain open for bidding.

Only time will reveal the level of interest that these blocks generate among the IOCs financially equipped to explore and develop them, but their volume alone is a promising figure for the time being.

We encourage African countries to implement every tool at their disposal – including digital solutions like informative data rooms – when conducting upcoming licensing rounds to ensure that prospective developers have a thorough understanding of the territories available.

While we are well aware that detailed geological surveys and digital enhancements ahead of licensing rounds call for significant upfront investments, we stand by the notion that the potential rewards for such preparations outweigh the initial costs.

As advocates for a flourishing African oil and gas industry, which will deliver extensive socioeconomic benefits to nations throughout the continent, the AEC recommends that all stakeholders with influence implement the best practices when seeking to attract investment and promote continued exploration.

While our evaluations of the African oil and gas trade have seemingly shifted into a slightly more positive light, we must remember to continue slashing away at any remaining red tape and strike while the iron is hot. Although we have found several reasons to look toward the next few years with a reinvigorated sense of hope, they only reaffirm our stance that now is most certainly not the time to become complacent.

To read our 2024 outlook report, visit https://energychamber.org/report/the-state-of-the-african-energy-2024-outlook-report/

Share This Post

Subscribe To The Newsletter

More Posts

African Energy Chamber Releases Q1 2022 Oil and Gas Outlook

The African Energy Chamber (AEC), is proud to announce the release of the AEC Q1 2022 Outlook, “The State of African Energy” – a comprehensive report analyzing the trends shaping both the global and African oil and gas market in 2022

APPLY FOR THE INTERNSHIP PROGRAM