Report "New oil frontiers: Investors’ guide to the oil sector in Sub-Saharan Africa"

Executive summary
Africa is on the move, and so is the flow of oil unearthed on the continent. In recent years, the region has become a hot spot on the global map of oil discoveries, with dozens of investors rushing to tap into the crude wealth which is now estimated at 130 billion barrels. This is still not very much compared to the Middle East, but the recent frenzy clearly shows that Africa has certain virtues that investors worldwide cannot resist. The region is called an oil frontier for a reason, and, like a classic frontier, it remains relatively unexplored and unexploited, with opportunities abounding. The oil industry believes that at least another 100 billion barrels are only waiting to be discovered; to some experts this is only a conservative estimate. In recent years, licence-awarding rounds have been announced more frequently, with more acreage to take than anywhere in the world.

Oil has been flowing in Africa for decades, but recent events have shifted the petroleum sector’s development trajectory in many ways. Firstly, whereas West African oil used to be the regions hallmark, now the tables have turned, and with recent oil discoveries in Uganda and Kenya, an oil bonanza is increasingly felt in the East. Having said that, as this report demonstrates, nearly half of Sub-Saharan Africa is now either producing oil or about to start production soon. Secondly, in historical terms it was oil super majors, such as Shell or ExxonMobil, which set the rules of the game and regarded the region as their own exclusive playground. Today the majors are stepping back – both from upstream and downstream – and numerous “independents” such as Tullow Oil and Anadarko have joined the race, with plenty of projects to go around. Also, indigenous host National Oil Companies (NOCs) are lining up to secure a larger share of the pie, and some, such as Sonangol, have become true heavy-weights. The industry itself has become increasingly more diverse in terms of nationality. Chinese, Indian, Malaysian, Brazilian and Russian companies are making inroads into the region in ways which make some Western companies’efforts look rather pale. Things have changed dramatically on a technological front, as well. Whereas onshore and shallow water production were dominant modes of extraction in the past, now the industry has been constantly pushing frontiers further, with offshore deep and ultra-deep water, tarsands and heavy oil.

This report seeks to show these and other symptomatic trends which have become part and parcel of the African oil industry reality today. To this end, the report is structured as follows. The first part presents a comprehensive overview of the recent oil boom in Africa, pinpointing the most important highlights and structural changes that the continent has been going through in recent years. Most importantly, it proposes three categories of oil-producing countries: old-school countries, where the production has been going on for decades, rookies, which are relatively new to the oil industry, but have some, yet limited experience, and greenhorns, where oil development is in nascent – planned or exploratory – phases and/or has so far failed to build the critical mass needed to become a full-scale oil-producer. For the sake of better focus and clarity, the analysis includes Sub-Saharan Africa, leaving out the countries of North Africa and South Africa.

Authors:
PhD Dominik Kopiński
Phd Andrzej Polus
Wojciech Tycholiz.

Research Team PCSA:
Anna Cichecka
Phd Karol Chwedczuk-Szulc
Monika Różalska
Urszula Róg
Rafał Rudźko
Michał Szczurek
Aleksandra Tor

 

You can dowload the full report here www.ceedinstitute.org.