Abuja — The African Energy Chamber (AEC) has projected a delay in upstream gas development projects to supply feedgas to the Nigerian Liquefied Natural Gas, NLNG, Train 7 project, as well as other gas projects in the country.
The AEC, in its African Energy Outlook 2021, obtained weekend, stated that the delay would be occasioned by the COVID-19 pandemic, which had negatively affected the global petroleum industry.
The AEC noted that upcoming gas projects would take a hit and run a risk of delays, adding that already, some oil majors operating in the country had already started shifting the timelines for their gas projects.
It said: “The majority of the projects in Africa that were up for sanctioning were planned assuming an oil price of between $55 and $60 per barrel, bbl. The oil price currently hovering around $40/bbl therefore spells bad news, especially as the top upcoming Final Investment Decisions, FID, in Africa have a breakeven crude price of over $45/bbl, with some even close to $60/bbl.
“ENI and ExxonMobil have both stated that they will focus on developing projects with a breakeven crude price of less than $35/bbl.
“In its latest announcement, Shell distanced itself from deep-water mega-projects off the coast of Nigeria, placing the Bonga Southwest-Aparo, a 150,000 barrels of oil per day, bpd, Floating, Production, Storage and Offloading, FPSO, development that was soon coming up for FID, on the backburner for now.
“Upcoming gas projects will also take a hit and run a risk of delays. Although Nigeria approved the development of NLNG train 7 last year, the upstream gas developments that were planned to supply feedgas to this development might now take a back seat.”
The AEC further stated that the effects of the COVID-19 pandemic would cause the Nigerian oil and gas industry to lose investments totaling $24 billion between 2020 and 2025, representing 30 per cent of the $80 billion loss that would be recorded in the petroleum industry across Africa.
The AEC said: “The detrimental impact of COVID-19 on global energy markets is also expected to have an impact on African activity. Compared to pre-COVID19 expectation, about $80 billion less investments are expected in Africa towards 2025, with the years 2020 to 2022 carrying the brunt of the difference.
“Out of these $80 billions, Nigeria is by far the most adverse impacted country with about $24 billion moving out of the 2020-2025 window.”
However, the AEC stated that: “From a spend perspective, that is, all money spent on investments and operations, we can expect a more stable outlook for Africa’s share. While Africa is projected to consistently represent about 8-9 per cent of the global spend between 2012 and 2025, its share of global production is also expected to decline over the same period.
“Unfortunately, the only conclusion to be drawn from such facts is once again that of a deteriorating competitive position for African petroleum resources. With the exception of a few jurisdictions, producing a barrel of oil from African soil remains less competitive than producing the same barrel elsewhere.”