Oil & Gas in Africa, What You Should Know

The history of oil in Africa spans several decades, and Africa’s proven oil reserves have continued to grow. In addition, it is estimated that billions of barrels are offshore, waiting to be discovered. In turn, Africa’s gas reserves continue to grow, with regular new discoveries pointing to significant upward potential.

The emergence of a wealthier middle class on the continent, will surely see the potential for oil and gas, to grow significantly over the next 20 years. More than half of the top global discoveries in the oil and gas sector in 2013, were made in Africa. Hundreds of companies are currently exploring deposits there, with millions of barrels of crude oil produced daily. Great news for Africa, but is the story more about gas than oil?

Image source: Bolloré

Is Africa Potentially a Major Exporter of Oil?

The potential for further oil and gas finds in Africa, remain exceedingly positive. If prospects are as favourable as projected, Africa can be a major oil exporter for decades to come.

For years, Africa has been seen as a diverse way, to be less dependent on oil from the Middle East. Massive demands from India and China, have created growth in economies, radically changing Africa’s economic landscape and export profile.

It is expected that Africa’soil exports to China will increase, as China is expected to become the world’s largest importer of oil by 2020. There is no doubt that Africa is a growing source of oil to world markets.

Overall, Africa’s oil reserves and production, are expected to increase over the medium to the long-term time period. The region has world class potential, onshore and off-shore, in terms of its reserves, unexplored territories and the obvious potential in the Red Sea.

However, there are challenges. Refining capacity on the continent, remains limited. Resulting in the need to export crude oil, then importing it as refined oil. The refining industry itself has issues, which include, poor upkeep, theft, and other operational problems.

Many African countries have gas reserves, and exploration for them continues on the continent. Recent, substantial finds, have lifted the prospects of these countries becoming major exporters of LNG. Here is a list of the 10 Highest Oil Producing African Countries.

North Africa remains the continent’s leading region for natural gas production. With most of the current gas reserves being found when searching for oil. Many African countries create incentives for energy companies to explore for gas, in an effort to ‘decouple’ from oil in terms of investment.

Is there Still Potential for Oil & Gas in Africa?

Under Explored

Well, Africa still very much remains underexplored by oil and gas companies. The cautious approach is mainly due to the challenges of corruption, lack of infrastructure and regulation. However, if you look carefully, you can see the industry responding positively to more scrutiny.

Inexpensive, but Long Term

It can be inexpensive finding oil and gas in Africa but developing it needs a long-term commitment. With the onset of better regulatory and business environments, Africa is sure to attract investment needed to unlock their natural resources, which in turn generate revenue and change economic landscapes.