*Projects led by Nigeria & Angola
*Investment delays anticipated
27 July 2016, Sweetcrude, London — A total of 43 crude and natural gas projects are expected to start operations in Sub-Saharan Africa by 2025, of which 31 are crude and 12 are natural gas, according to research and consulting firm GlobalData.
The company’s latest report* states that Nigeria is set to lead the region in terms of number of planned projects, with 11, followed by Angola with eight.
Joseph Gatdula, GlobalData’s Senior Upstream Analyst, explains: “The region will experience investment delays across a wide scope of projects. However, developments will continue to come online in the mid-term, including fields which started development prior to the downturn in prices and those which demonstrate break evens at or below today’s current oil prices.”
Tullow Oil plc and Total S.A. will lead the region in terms of operatorship with five planned projects each. Of the 10 projects the two companies are expected to operate, nine are crude and one is natural gas, with Chevron Corporation occupying third place in terms of development with its three planned projects.
Key planned projects in the Sub-Saharan region are expected to contribute 1.1 million barrels of oil per day (bd) to global crude production in 2025, and 7.7 billion cubic feet per day to global gas production.
In regards to capital expenditure (capex), around US$153.5 billion is expected to be spent between 2016 and 2025, with Mozambique leading the region with a capex of US$70.4 billion. Almost all of this will be spent on the Rovuma Area 1 Complex and Rovuma Area 4 Complex projects.
Jonathan Markham, GlobalData’s Upstream Analyst, notes: “Progress on the liquefied natural gas (LNG) projects in Mozambique has slowed over the last few years due to financing issues and regulatory uncertainty. The operators are expected to start with relatively small scale developments, such as Eni’s 3.4 million metric tonnes per annum (mmtpa) floating liquefied natural gas (FLNG) solution.
“Reduced investment is likely to lead to a slower build-up of the projects than initially planned, only reaching an estimated combined capacity of 30 mmtpa by 2025. A final investment decision (FID) for the FLNG development is expected in 2016, while approval for the onshore facilities is likely to be delayed until 2017 and LNG exports from Mozambique are projected to start at the end 2021.”
Among companies in the Sub-Saharan region, Eni SpA will have the highest capex spending, with US$21.3 billion on key planned projects over the next 10 years.
Major undeveloped discoveries in the Sub-Saharan region include Zabazaba-Etan and Nsiko, both located in the Niger Delta Basin. Young Okunna, GlobalData’s Upstream Analyst, says: “Although Nigeria is expected to add over 510,000 bd of additional oil production capacity by 2025, the likelihood of this happening is dependent on fiscal certainty and relative peace in the Niger Delta region. Almost half of the expected additional capacity still lacks an FID, with the field operators expected to make a decision by 2020. This will be greatly influenced by prevailing market conditions and security around the planned projects.”