Outlook for Africa’s Oil & Gas Industry Improves – PwC report
The outlook for Africa’s oil & gas industry is positive amid difficult operating and economic headwinds. Tough economic and external conditions have placed pressure on oil & gas companies to be more cost-effective and efficient. Companies have adopted to a low-cost environment, which promises to be even more beneficial given the current recovering oil price. These are some of the highlights from PwC’s (www.PwC.com) annual Africa Oil & Gas Review released today at the 25th Africa Oil Week conference, 2018 held in Cape Town.
“Africa’s oil & gas companies have weathered the downturns and capitalised on the upswings focusing their efforts on new ways of working, reducing costs and utilising new technology,” Chris Bredenhann PwC Africa Oil & Gas Advisory Leader says.
Companies have taken to restructuring their portfolios with a focus on established regions, less exploration, higher value plays with low break-even-cost, and projects with shorter lead times and lower risk. The industry has also renewed its focus on delivering projects on-time and on-budget.
As the oil price is steadily rising towards pre-collapse levels, the outlook for the industry is hopeful. “It is, however, important for companies to avoid falling into the cost inflation trap that could eat into the profitability gains that should follow from the rising oil price. Keeping up capital discipline and further improving productivity will yield sustained results for the industry,” Bredenhann adds.
Despite positive developments, the oil & gas industry still faces numerous and persistent challenges around talent shortages, regulatory uncertainty, political instability, corruption and fraud, and a lack of infrastructure.
Notwithstanding the challenges, Africa does offer plenty of opportunities in the form of unexplored hydrocarbon demand fuelled by population growth, urbanisation and the emergence of a growing middle class.
PwC’s Africa Oil & Gas Review, 2018 analyses what has happened in the last 12 months in the oil & gas industry within the major and emerging markets. This edition focuses on the expert opinions of a panel of industry players from across the value chain who share their views of oil & gas in Africa.
At the end of 2017, Africa is reported to have 487.8 tcf of proven gas reserves, 7.1 per cent of global proven reserves, only marginal changes to the prior year. Africa’s share of global oil production has slightly increased by 0. 3 per cent since last year to 8.7 per cent standing at 8.1 million bbl/d. The main contributors continue to be Nigeria, Angola, Algeria and Egypt. Libya also increased its production by 102.9 per cent in 2017, placing it as the fourth-largest oil producer in Africa with an 11 per cent share moving Egypt into fifth position.
You can download the report here: bit.ly/2JIMRaV
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