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Africa's deepwater boom: A critical source of new supply in the decade to come
Africa’s deepwater segment has always played a key role in terms of adding significant discovered volumes, which has helped Africa sustain its hydrocarbon production. The contribution of this segment in Africa’s hydrocarbon production mix was between 20- 25% last decade and is expected to increase between 35-40% by 2035.
From the under-construction and pre-FID projects, Rystad Energy estimates that there will be about 3.5 million boepd of new deepwater supply (pre-FID and under-construction projects) in Africa by 2035. Success in countries such as Namibia and Cote d’Ivoire have triggered substantial interest in exploring the deep waters, and many more countries such as Sao Tome & Principe, Liberia and Sierra Leone are also becoming important countries for companies to secure acreages for exploration efforts in the medium and long term.
In terms of deepwater resource sanctioning, Africa saw a surge in sanctioning between 2015 and 2019 on a rolling 5-year period, as various discoveries, such as Eni’s Zohr in Egypt and TotalEnergies’ Mozambique LNG project, expected to produce from Golfinho and Atum discoveries in Area 1, in Mozambique were sanctioned. Post-COVID-19, the continent has had a muted period of deepwater sanctioning activity, with the average annual deepwater resources sanctioned between 2015-19 dropping to about 330 million boe, compared to an annual average of close to 1890 million boe in 2015-19. However, thanks to the recent success in Namibia and progress in other discovered projects such as Area 4 in Mozambique, further phases of Baleine development in Cote d’Ivoire, and several projects in Nigeria, Africa is at the cusp of a new wave of deepwater sanctioning activity.
If project timelines follow through, Africa could see annual average deepwater resource sanctioning activity surpassing 2 billion boe in the 2025-29 period. The continent hosts the potential to take the number above 3 billion boe. However, such projects would probably need more fiscal incentives and, in some cases, an improvement in the security situation for associated facilities onshore. Further, prioritization by Majors of the most lucrative projects in their portfolios, as they plan for an uncertain future, would also define the trajectory of such projects. However, some of the gas projects can be secured further by advancing various gas-to-power projects within the continent, such that electricity access rates also improve significantly.
Authors:
Pranav Joshi
Vice President Upstream Research
pranav.joshi@rystadenergy.com
(The data and/or forecasts in this column are Rystad Energy's, and the opinions are of the authors.)