August 25, 2016/PricewaterhouseCoopers
Reserves and production
Africa’s share of global oil production dropped again slightly since last year, moving it from 9.3% to 9.1% of global output. Proven oil reserves on the continent are still estimated to be 7.6% of the global total, which is the same as the previous year. This comes as no surprise as much of the exploration and appraisal activity has been put on hold with the global oil price downturn. Despite this, Africa boasts eight of the top-20 discoveries in 2015 and already 9 out of the top-20 discoveries at the time of writing in 2016. That said, average discovery sizes are on the decline worldwide.
From a proven oil reserve totalling 129.1 billion barrels, Africa produced 8.4 million barrels of crude oil per day (bbl/d) in 2015 with over 77% of this oil production coming from Nigeria, Algeria, Egypt and Angola.
Despite what may seem like a time to shut-in producing assets to wait out the oil prices storm, many oil & gas companies see production to be their only route to a continuous stream of income. In many cases, production has actually increased!
The emergence of ISIS as well as the civil war in Libya has meant that production levels in North Africa continue to be low, though they have increased slightly due to increased production in Egypt.
Libya saw another decline of 13.4%, though there is speculation that production levels there will soon be on the rise. After the newly formed national oil company of the east failed to export crude (thus temporarily further slashing countrywide production), there has been an accord between the rival Tobruk-led Government and the Government of National Accord to combine the two national oil companies (NOCs) under the National Oil Company of Libya and relocate the headquarters to Benghazi in the east. This seems like a sign of positive things to come for Libya though it may flood the market with additional crude, which is the last thing needed for an oil price rebound.
As of the end of 2015, Africa has a proven natural gas reserve base of 496.7 trillion cubic feet (Tcf), down marginally from 2014. More than 90% of the continent’s natural gas production is being driven by Nigeria, Libya, Algeria and Egypt. This is a slight uptick in production (4.5%) compared to 2014.
Africa has dropped from nearly 70 years of natural gas production available down to 66.4 years, given higher current production rates and a slow rate of reserves replacement.
With six of the nine largest African discoveries being gas in 2016, we are likely to see growth in the continent’s overall proven natural gas reserves. Since gas is positioned to be a bridging fuel in the eventual transition to a lower-carbon economy, this could prove a lucrative natural resource to fuel the emerging economies on the continent.
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