| As output from legacy projects diminishes, African hydrocarbon producing nations are boosting oil and gas licensing rounds in order to stabilize hydrocarbon supply in the coming years and satisfy growing energy demand. This is coming after Saudi Arabia and other members of the Organization of Petroleum Exporting Countries (OPEC+) agreed to bring forward oil production rises to offset Russian output losses, easing rising oil prices and inflation. OPEC+ said it had decided to increase output by 648,000 barrels per day (bpd) in July, or 0.7% of global demand, and a similar amount in August, compared to an initial plan to increase output by 432,000 bpd per month over three months until September. Despite the fact that African oil and gas production has increased over the last two decades, declines are expected in the coming years due to legacy project output reductions, a lack of new exploration in recent years, and insufficient investments across the value chain in leading hydrocarbon producing countries such as Nigeria, Algeria, Libya, Angola, and Egypt. On the gas front, despite new projects such as the Mozambique Coral Floating Liquefied Natural Gas (LNG) and Nigeria’s LNG Train 7 coming online, production declines in Algeria, Nigeria, Libya and Egypt will strain the supply chain from 2025 onwards. Egypt’s output is predicted to drop from 74 billion cubic meters (Bcm) in 2022 to 50 Bcm by 2030 unless major discoveries are made and brought online quickly. The oil industry, on the other hand, will see production drops, with Algeria, one of Africa’s biggest oil producers, already seeing output declines. Nigeria, Africa’s largest crude oil producer, will see a drop in output starting in 2023, while production in Sudan, South Sudan, and other west African nations would also be impacted. According to industry estimates, sanctions on Russia, the world’s second largest oil exporter, may restrict output by as much as 2 million to 3 million barrels per day. In April, Russia’s output was operating at around 9.3 million bpd, much below its OPEC+ target of 10.44 million bpd. Riyadh says it plans to increase its nameplate capacity to 13.4 million bpd by 2027, up from the present 12.4 million. The UAE is the only other OPEC member with considerable capability to produce extra oil, despite the fact that OPEC’s overall spare capacity is projected to be less than 2 million bpd. In order to fully attain her potential in the global petroleum market, Africa will need to increase investments in the upstream sector to mitigate declines. The introduction of more oil and gas exploration and production licensing rounds across Africa will enable the continent to make new and significant discoveries, increase the production of hydrocarbons, as well as fully utilize the continent’s vast array of energy resources to address energy, poverty and accelerate economic growth. |
Source: Oriental News, World Oil
