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5 of 2017's biggest African oil & gas projects

The potential for Africa’s oil and gas industry is huge - as huge as the continent itself. From head to heel, Africa is blessed with abundant, underdeveloped resources. Majors and governments are collaborating closely on huge projects, representing billions in capex.

Not even the global drop in oil prices could slow Africa’s energy development. Transaction values in the continents upstream have actually risen since June 2014’s price collapse. $1.6 billion worth of deals were inked that year. In 2016, contract totals clocked in at $4.6 billion.

Plenty of capital is getting prepped for Africa going forward. While activity should intensify with the recovery in the oil price, there’s a lot for sector professionals to sink their teeth into there at the moment. 

With Africa Oil Week returning to Cape Town for its 17th edition in October 2017, we’ve put together this guide to 5 of Africa’s biggest oil and gas projects. Take a look to get insight the kind of exploration, construction activity, and deal-making taking place on a continental scale to see how the future of Africa’s energy industries are taking shape.


Africa's biggest oil & gas projects



South Africa Offshore Exploration

Cost: Varies
Timescale: 2012 – onwards
Location: Offshore South Africa

“What we are seeing is that there might be a future giant discovery in this basin,” Dr Anongporn Intawong, seismic survey providers Spectrum’s Geoscientist Team Leader said at a conference in London in February 2017. Indeed, offshore South Africa might contain as much as 314 million barrels of oil.

Offshore exploration is subsequently heating up. ExxonMobil is spreading its influence throughout the region, acquiring a 75% interest in the Tugela South Exploration Right block and a permit for technical cooperation in the Deepwater Durban Basin. Norway’s Statoil subsequently bought a 35% stake in Tugela South in 2015, leaving the block’s other developmental partner, Impact Africa, with a 25% share.

The government is expected to pass measures on regulating the petroleum industry in 2017. Despite Exxon’s storming ahead in exploring South Africa’s offshore acreage, other majors are waiting for the legislative picture to become clearer before committing. But the potential is certainly there – hence Statoil and Exxon’s expensive exploratory efforts.

South Africa also sits on massive banks of recoverable shale gas – as much as 390 trillion cubic feet. Areas such as the Karoo basin in the Whitehill, or the Prince Albert and Collingham formations, are waiting to be exploited. As shale gas is a controversial subject, and South Africa is yet to award shale exploration licenses, it relies on the government to put legislature in place regarding this sector’s future.


Cayara Offshore Profond Exploration

Cost: $1 billion +
Timescale: 2017-onwards
Location: Cayara Offshore Profond, Senegal

After partnering in 2016 to develop Kosmos Energy’s blocks off the coast of Senegal, BP and Kosmos are bringing billions in investment to the Cayara Offshore Profond block. Now, their first major activities are paying off. BP struck gas at Cayara’s Yakkar-1 well in May 2017.

BP itself owns a 32.49% working interest in Cayara. The remaining share is owned by Kosmos Energy. 
Exploratory results will confirm the scale of the petroleum system off the coast of Senegal and neighbouring Mauritania. BP should certainly hope so. It has invested in excess of $1 billion in West Africa since December 2016. This was after Kosmos’ discovery of the Tortue gas field, which holds as much as 15 trillion cubic feet of recoverable gas.

Kosmos believes drilling at Yakkar-1 has uncovered the real potential of Senegal’s offshore. The well itself was drilled for a total depth of 4,700m in 2,500m of water. Drilling bisected a gross hydrocarbon column of 120m in three pools, result in 45m of net pay.

Exploratory drilling will continue in the Cayara block, and the Tortue field as a whole, going forward. Together, Kosmos and BP control 33,000 square km of acreage off West Africa. Three further drill ops are scheduled for 2017.


Zohr Field Explortaion

Cost: $8 billion +
Timescale: Ongoing
Location: Zohr Field, Egypt

Off Egypt’s northern coast lies the monumental Zohr Field, part of the equally enormous Shorouk concession. It became one of Egypt’s biggest natural gas discoveries when it was located in 2015. Total gas in place around Zohr is estimated at 850 billion cubic metres. If this figure is accurate, Zohr can double Egyptian gas reserves in one stroke.

Italian major ENI is pioneering Zohr’s development. It holds the majority operating share of the field, while BP owns a 10% interest. 

So far, six wells have been drilled at the field, revealing early indicators of those many billion cubic metres of reserves.

$8 billion total investment has been sunk into developing Zohr thus far – and a further $8 billion is expected to makes it way there by the end of FY 2017/2018. More money should result in earlier production. BP has even suggested that first gas could be recovered as early as 2017.

Russia’s Rosneft is preparing to buy a 30% stake in Zohr too. Igor Sechin, Rosneft’s President, has said his firm will take control of around 9 billion cubic metres of Zohr gas once the deal is finalised in Q2 2016. Rosneft’s total investment? $4.5 billion. 


Kenya Crude Oil Pipeline

Cost: $2.1 – 5 billion
Timescale: 2017 - 2021
Location: South Lokichar Basin to Port Lamu, Kenya

Kenya’s energy industry is firmly in the developmental phase, but it’s gaining traction fast. Exploration work by Tullow in the Lokichar Basin uncovered 25 metres of net oil pay early in January 2017 – hinting at Kenya’s true recoverable levels: 750 million barrels of oil.

The drive to get this crude out and exported is getting stronger. Kenyan authorities and their partners are pioneering some huge projects - projects like Kenya’s first ever crude pipeline.
 
The Kenya Crude Oil Pipeline has its genesis in the aborted Uganda-Kenya Crude Oil Pipeline project. It will follow much of the same route, for example – stretching 892km from its starting point in South Lokichar before terminating at the Port Lamu on the Indian Ocean.

Tullow, which holds a 50% interest in Lokichar exploration, said it will be forging ahead with construction groundwork in 2017. Construction is set to conclude in 2021 after starting proper in 2018. As much as 100,000 Bpd will be transported via this pipeline was fully operational. Life-of-field development costs are expected to float around $25-30 per barrel.

Total costs were estimated at an initial $2.1 billion – although capex could shift up or down. Some estimates put the pipeline’s final cost at $5 billion. Either way, outlay such as this suggests only one thing: Kenya’s oil sector is one of the continent’s most exciting and opportunity rich business environments.


Coral South FLNG Project

Cost: $7 billion
Timescale: 2017-2021
Location: Rovuma Basin, Mozambique

Eni might just be Africa’s busiest energy firm. It has interests across the length and breadth of the continent – including Mozambique’s Rovuma Basin. At the Coral South field, discovered in 2012, 16 trillion cubic feet of gas is waiting to be extracted. Hence the Italian major’s $7 billion Coral South FLNG development taking shape there.

This offshore facility will be the first of its kind in Mozambique. Production is expected to kick off in 2021, where its peak capacity is expected to top out at 3.2 million tons a year. But right now, project work is concentrated on the necessary FEED requirements, and getting technical deals in place too.

GE, for example, has expanded its relationship with Eni East Africa (EEA) by signing a long-term agreement to supply subsea services at Coral South. This includes ancillary equipment and subsea production systems for the FLNG site’s first phase. Elsewhere, KBR and Daewoo Shipbuilding & Marine Engineering designed, and are building, the project’s topsides, hull, and subsea facilities too.

Mozambique is amongst the poorest countries in the world – but holds abundant mineral reserves. Projects like Coral South are set to be a huge financial boon for the nation, and will more than likely result in greater expenditure and investment in its energy sector going forward.


Africa Oil Week: your connection to Africa's oil & gas industry



Remember: to get the inside scoop on all these projects, and more insights on the continent’s biggest plays, you should be at Africa Oil Week 2017

Drop us a line to discuss the ways you can participate in this year’s event and conference programme.

 

Related Events

Event05 Nov

Africa Oil Week ..

5-9 November, 2018
SOUTH AFRICA

CAPE TOWN, SOUTH AFRICA
Venue: CAPE TOWN INTERNATIONAL CONVENTION CENTRE

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