Key Highlights of Africa Assembly 2016

WBC’s Angus Warren and David Finlayson attended the superb Africa Assembly, run by the Oil and Gas Council, in London this week.  The event was well attended by industry and there was lively debate on the state of oil and gas in Africa in 2016.  Below is a summary of the key take-aways from the conference:

  • E&P capex is very likely to decline for a third straight year in 2017.
  • As a result of the capex reductions, big declines in production are expected from 2018.
  • Some evidence that shale oil supply is not as elastic as first thought and this could add further upward pressure to oil price.
  • Iran has already added >0.5mmbd production and is performing better than many thought possible.
  • Demand is holding up better than expected, especially in China and India.
  • Security issues in Nigeria adding significantly to cost of production.
  • Cost of production in Nigeria $12-20/bbl.
  • Gas exploration currently is not popular, the focus is on oil.
  • Exploration hotspots seen to be offshore, e.g. Mauritania, Senegal and Namibia.  Angola and Nigeria hardly mentioned for exploration.
  • IOC/Gov’t alignment seen as getting better, especially around gas monetisation (e.g. gas to power).
  • Capital markets: finance for E&P projects continues to be very difficult.  The implied cost of capital is very high.
  • Capital markets: benchmark for oil finance is onshore U.S. onshore and projects in Africa are measured against this.

If you would like further details, please contact us directly at info@warrenbusinessconsulting.com.

The Africa Assembly 2016 was organised by the Oil and Gas Council, more details can be found here:  www.oilandgascouncil.com/

Comments

  1. Colin Marshall says:

    Any evidence of any African country governments adjusting fiscal terms to encourage investment / activity?

    • This did come up a few times, but only in general high level terms. In the sessions I attended there were no specific examples of changes. There was plenty of discussion on Nigeria, but this mainly rekated to general politocs, industry structure and regulations, nothing on fiscal terms.

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