Sub-Saharan Africa’s oil production aspirations could be hindered by lack of investment and new projects

Sub-Saharan African nations are keen to rebound and ramp up investment in the oil and gas sector after a difficult 2020. However, the largest producers in the region – Nigeria and Angola – are forecast to see declining crude oil and condensate production from 2021, and have a relatively small number of projects coming online within the next five years, according to GlobalData.

Conor Ward, Oil and Gas Analyst at the consultancy, comments: ‘Sub-Saharan Africa has so much potential. It could easily overtake Europe in regional oil and gas production if utilised properly. However, companies have been more cautious than ever over their investments. Some of the huge discoveries made over the past decade have seen significant delays with no final investment decision (FID) in sight, as is the case with Shell’s Bonga Southwest/Aparo, which was discovered over 20 years ago.’

European majors are gravitating towards an increasingly gas-heavy portfolio to reduce their carbon emissions. This is forcing them to reallocate capital away from oil heavy developments to lower carbon projects, explains the market analyst. The forecast for Sub-Saharan Africa’s total boe/d output is forecast to grow to 2025 as the production of natural gas will begin to outweigh crude oil and condensate. Gas currently makes up 22% of the region’s production and is forecast to grow to approximately 30% by 2025. However, this forecast hinges upon multiple developments that have not yet received FID.

Ward continues: ‘Sub-Saharan Africa is seeing a shift of investment away from the more developed countries in the region, most notably Nigeria, and more towards frontier countries such as Mauritania, Senegal, Mozambique and Uganda as the fiscal terms offered by the host countries are far more appealing and have a large untapped resource base. If Nigeria wishes to continue to attract investment and achieve a plateau in production, it will need to tackle the above ground risks which companies face.’

Figure 1: Production outlook from producing, planned and announced project (in mn boe/d) in Sub-Saharan Africa, 2019–2025
Source: GlobalData