Following a knowledge-sharing partnership between energy market research firm IHS Markit and the African Energy Chamber (AEC), the partners hosted a webinar on May 31, investigating Africa’s upstream sector and what needs to be done to ensure accelerated massive industrial development. scale discovery. Serving as a prelude to the continent’s premier energy event, African Energy Week (AEW) (AECWeek.com), which runs from 18 – 21 October 2022, in Cape Town, this webinar is the first of many hosted by partners.
Under the theme, ‘Africa – What Could Happen? The Billion Dollar Question,’ speakers included Justin Cochrane, Regional Director, Africa Upstream, S&P Global Commodity Insights; Roderick Bruce, Research and Analysis Associate Director, E&P Terms and Above-Ground Risk, S&P Global Commodity Insights; Ismini Katsimpardi, Senior Technical Analyst, Upstream Energy, S&P Global Commodity Insights; Thea Fourie, Associate Director, Sub-Saharan Africa Economics, S&P Global Market Intelligence; Verner Ayukegba, Senior Vice President, African Energy Chamber and Robert Flanagan, Director of Economic Consulting, S&P Global Market Insights.
Africa is one of the last frontiers for hydrocarbon exploration, and, according to Cochrane, “offers hope and possibility. Africa offers explorers the opportunity to make giant and super-giant discoveries. Africa has long been producing oil. Discoveries were originally made in the 1950s and this trend continues with discoveries made in 2022. The largest discoveries made in Africa since 2019 have been in border basins including in Ivory Coast by Eni, Graff Shell, and Venus TotalEnergies in Namibia.”
So how can the continent begin further exploration? Bruce added that fiscal requirements and frameworks are critical to attract investment and to encourage exploration. “What drives and hinders exploration by international oil companies (IOCs) are politics, regulations, operational risks and geological structures. In terms of political and economic risks as well as operational shocks, South Africa, Ivory Coast and Namibia score very well above risk and because of the unproven borders of these and other emerging hydrocarbon nations in Africa, tax reductions are critical. to attract investors. African countries need to take a balanced approach that will allow governments to increase revenues while ensuring a profit for the IOC.”
With discoveries made in Namibia, South Africa and Ivory Coast the largest in Africa recently, the webinar provides further insight into these discoveries, their development value and what macroeconomic benefits are for the countries concerned. For Ivory Coast, Katsimpardi shared that, “this is the first commercial invention in the last 20 years and is important for the country. Based on the ENI announcement, we expect about 2 billion barrels of oil to be available. The field will be developed through offloading production, and they are looking at ways to accelerate development. The gas is expected to be processed onshore and they expect the project to be Africa’s first net zero. The fiscal regime in the region suggests the government takes around 60% which translates into significant revenue for the country at $1.5 billion per year once the project is in full production.
Regarding the Namibian discovery, Katsimpardi emphasized that, “The success of these two projects is very important for Namibia. With these two developments having an expected peak rate of over 500,000 barrels per day, Namibia has the potential to become one of the top six or seven producing countries in Africa by 2030, leaving behind the more traditional players in the region.”
Finally, with two major discoveries made in South Africa in 2019 – the Brulpadda and Luiperd discoveries – the country is well positioned to increase production to meet regional demand. Katsimpardi shared that, “this invention has the advantage of being strapped to an existing ground platform. The advantage of this concept is that gas commercialization will start immediately, and we minimize CAPEX and project risk. Luiperd could revive gas production in South Africa. In terms of revenue generated, we estimate that by mid-2030 the government could take in $700 million per year, this is based solely on the development of Luiperd. If the decision is made to develop Brulpadda it could be even higher.”
Fourie added that, “Regarding the macroeconomic implications of Luiperd’s hydrocarbon development on the South African economy, the project is likely to increase South Africa’s real GDP by 0.1-0.2 percentage points in the long term. Given what is happening in the South African region and the electricity deficit in South Africa, with these projects, South African countries can become more self-sufficient.”
“As more and more investments are made in the project, this leads to additional economic activity and prosperity for the countries involved. As more and more local content is used to cater to the OPEX game, this can help stimulate economic development and growth,” said Flanagan.
Distributed by APO Group on behalf of African Energy Week (AEW).
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IHS Markit and African Energy Week Exploring African Exploration in 2022 and Beyond
Source link IHS Markit and African Energy Week Exploring African Exploration in 2022 and Beyond