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Capital Expenditures in Africa’s Oil and Gas Industry Record Impressive Growth in 2022

Although global capital spending has decreased between 2014 and 2020 – largely due to the COVID-19 pandemic spending trend and divestment related to the energy transition in Africa – the African Energy Chamber (AEC) (www.EnergyChamber.org) projects capital spending in Africa’s oil and gas industry to increase in 2022 and beyond. According to the organization’s Q1 2022 report, The State of African Energy, capital expenditures in Africa’s oil and gas sector will reach $30 billion by 2022 after falling from $60 billion in 2014 to $22.5 billion in 2020. New hydrocarbon producers to build investor-friendly regimes to attract capital and accelerate project development across continents.

At the current expected level of project sanctions, upstream spending towards 2025 is expected to increase. The deferred projects and those originally planned for investment from 2022 onwards will together have the potential to contribute to significant growth potential. If the project materializes, the potential expenditure could increase to nearly US$49 billion by 2024. Investment related to onshore projects is the largest single category with investments reaching over US$68 billion over the period 2022 – 2025. Large investments are also expected in Uganda and Kenya associated with the onshore greenfield development of the Lokichar basin. This green field development may be one of, if not the last, major conventional onshore projects in the world. Undersea tiebacks will take second place in cumulative spending from 2022 to 2025 and are likely to become increasingly common as it makes commercial sense to piggyback on smaller hydrocarbon accumulations on existing infrastructure. This category also includes the offshore related part of Liquefied Natural Gas (LNG) development which further enhances this category with respect to the mega-projects expected in Mozambique.

The years 2020 and 2021 show that Africa’s oil and gas industry is one of the hardest hit after being spurred on by the COVID-19 outbreak. The initial after-effect of the demand vacuum and falling prices caused by the pandemic led to production sanctions being imposed on African OPEC member countries. Initial reactions from operators included project delays with high break-even prices, reduced capital and operating expenditures, and a neutral cash flow forecast on a lower oil price curve. However, as the region sees some project sanctions, the 2022 – 2025 forecast now shows relatively increased spending. For information, the comparison of Q4-2020 versus Q4-2021 capital expenditure shows a contraction of around US$33.5 billion during the same period.

“Africa’s oil and gas industry will see an influx of investment in 2022. Despite the COVID-19 pandemic and financial restrictions related to the energy transition in 2020 and 2021, the sector will see an increase in 2022, with capital spending expected to increase. to $30 billion this year. This marks an important opportunity for African producers to increase production, spur exploration and complete sizeable projects,” said Sergio Pugliese, President of Angola at the African Energy Chamber.

Meanwhile, a number of upcoming major projects in Africa are driving the bulk of greenfield spending in the short term. Most volumes should be penalized

and developed is natural gas with projects such as the LNG Area 1 project in Mozambique and the Ahemyim Greater Tortue Floating LNG project off the coast of Senegal-Mauritania leading the list. Other projects include the TotalEnergies-led Tilenga project in Uganda; Sonatrach’s AT (Isarene) project in Angola; TotalEnergies-led Cameia-Golfinho project in Angola; and Eni’s Quiluma/Maboqueiro project in Angola.

Despite the anticipated increase in capital spending in Africa’s oil and gas industry by 2022, the continent’s full energy potential is yet to be harnessed. In this regard, and with the aim of ensuring the continent is well positioned to develop all of its resources, the AEC’s annual conference, African Energy Week (AEW) 2022 – which runs from October 18 to 21 in Cape Town – represents the most suitable platform. for a discussion on Africa’s energy future. Through collaborative panel discussions and industry-advancing investor summits, AEW 2022 will host conversations on how African hydrocarbon-producing countries can increase investment to unlock the continent’s full oil and gas energy potential.

Distributed by the APO Group on behalf of the African Energy Chamber.

For more information and market-based data on the global and African energy landscape in 2022, download the AEC Q1 2022 Outlook at www.EnergyChamber.org.

AEW 2022 is AEC’s annual conference, exhibition and networking event. AEW 2022 brings together African energy stakeholders with international investors and partners to drive industrial growth and development and promote Africa as an energy investment destination.

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This Press Release has been issued by APO. Content is not monitored by the Business Africa editorial team and is not content that has been vetted or validated by our editorial team, evidence readers or fact checkers. The publisher is fully responsible for the contents of this announcement.

Capital Expenditures in Africa’s Oil and Gas Industry Record Impressive Growth in 2022

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