The
initial investments sparked by the discovery of oil on Ghana’s
coastline in 2007, plus finds in Uganda, Kenya, Mozambique and
Tanzania, have been dashed in recent times. The low cost of oil has
slowed the previously seen, enthusiastic rush to invest. It’s no
surprise, investment has faded, with oil prices plummeting to more
than half the initial value. From a lofty $100 per barrel, the
current price of oil is $45.70, as stated by http://oil-price.net.
Can Africa’s Governments Turn Things Around?
Recently
improved political stability, successful oil and gas explorations,
inclusion of local companies and industry workers, provide a
foundation for positive, long-term, economic development.
Africa’s
oil and gas sector now competes for investment dollars with other
sectors, such as the growing consumer market and technology sector.
This results in the sector lacking capital at a time when,
ironically, investment capital has never been so readily available.
This competition is forcing African governments to be as
investor-friendly as possible.
Today,
governments, policy makers, leaders and influencers understand how
important it is for projects to go ahead as soon as possible. As a
result, African governments are more likely to introduce
investment-friendly policies, regulations and incentives. All of
which could boost the growth potential of the oil and gas sector,
creating a more collaborative, and investment-friendly landscape.
It
is clear that once this slump in oil prices recovers, the real
winners will be those countries that were successful in attracting
overseas investment. The losers will be the countries sticking to the
old rules of the $100-a-barrel-world.
In an
interview about private equity opportunities, Chris Sim, director of investment banking at
Investec, said
“Africa is important. Some private equity companies have seen some big successes in the oilfield service sector,” he says, “so there is still a willingness to invest further.”
PriceWaterhouseCoopers
Africa in the report titled "From fragile to agile Africa oil & gas review" noted that
from a proven oil reserve totaling 129.2 billion barrels, Africa
produced 8.2 million barrels of crude oil per day (bbl/d) in 2014.
Over 76 percent of this production came from Nigeria, Algeria, Egypt
and Angola in 2014.
As of the
end of 2014, Africa has proven natural gas reserves of just fewer
than 500 trillion cubic feet (Tcf) with 90 percent of the continent's
annual natural gas production still coming from Nigeria, Libya,
Algeria and Egypt.
"This is a slight drop in reserves compared to 2013, and production also decreased slightly over the period. Consequently, the continent still has nearly 70 years of natural gas production available given current production rates." it said.
For the
world, the report said,
"Global discoveries of new oil and gas reserves dropped to their lowest level in at least two decades in 2014, if shale oil and gas reserves in North America are excluded. In 2013, nine of the largest 20 discoveries were in Africa, whereas in 2014 this had risen to 11".
The
PwC report noted that the worldwide slowdown appears to be less
alarming in Africa, than in the rest of the world. This annual
decline is the first, while the global number and size of discoveries
has decreased for four years running.
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