TO BOLDLY GO

The overarching narrative for Africa’s oil and gas sector in recent years has been retreat and retrenchment. As international oil companies slim down their portfolios, they have generally sought to divest assets across Africa.

– BP, Exxon, Shell and many others – have not generally been in the business of seeking out new opportunities, but rather in downsizing. For example, Shell is pursuing divestments averaging $4bn annually as it pursues net zero targets. That means selling assets such as its 30% interest in the SPDC joint venture onshore Nigeria.

In the case of the Eni-BP Azule Energy joint venture, this has seen them doubling up to secure economies of scale in one of Africa’s largest producers, Angola.

This trend has coincided with Africa’s share of global oil output declining from 12.3% in 2010, down to just 8.1% in 2021, according to BP’s Statistical Review of World Energy

But talk to any international oil executive about the most exciting exploration prospects worldwide and many will identify one new hydrocarbons province above all others: Namibia. In this new oil and gas province, TotalEnergies and Shell are pushing forward with ambitious drilling camwhere resources are measured in the multiple billions of barrels.

In the words of Africa Oil CEO Keith Hill, whose company is partnered with TotalEnergies, the Orange Basin is “probably the most soughtafter new petroleum region globally”. Meanwhile, the indications are that pressive and have more than matched expectations, pointing towards very advantaged resources.

And as the consultancy Westwood Energy notes, TotalEnergies’ Venus discovery and opening of the Orange Basin coincides with a short-term revival in frontier exploration. It said frontier exploration commercial success rates were at record highs in 2022, reaching 25%.

Shell started 2023 with a third light oil discovery on PEL 39 at the Jonker-1X well, following on from drilling which led other operators to farm into neighbouring blocks, including Chevron and Woodside Energy.

Among the most acquisitive oil companies has been state-owned Gulf oil company QatarEnergy (QE), which has been expanding its overseas footprint with M&A forays in the past year. According to Wood Mackenzie, QE has accrued 2.5bn of barrels in Namibia on account of its non-operating partnerships with Shell and TotalEnergies across four blocks, providing further vindication of its strategy to partner with the majors in high-impact frontier exploration acreage.

“There is certainly increased interest in the Orange basin area in Namibia, however, this is linked to incredibly large forecast STOIIP (stock tank oil initially in place) which is a key driver for the interest,” said George Maxwell, CEO of US-headquartered Vaalco Energy, which has producing assets in Africa. “The impact of this on other established resource holders our perspective near-term production opportunities that can then self-fund exploration prospects remain the key opportunities, both for the host counand for investors.”

Such frontier acreage opportunities indicate how IOCs retain a strong interest in Africa, even if they are continuing to sell their mature assets – which is in turn providing opportunities for smaller, nimbler independents to come in. That means more majors entering the basin, albeit with higher entry costs.

The potential scale of Namibia’s resource is found in the fact that whereas Guyana, another recent frontier province, saw 15 discoveries before it reached 7bn bbl of reserves, Namibia took just three discoveries to get to that level.

Exploration success is continuing with major deep water oil discoveries was Côte d’Ivoire’s largest-ever discovery and is already under develop- the type of low-cost, low carbon-intensive barrels that the world needs, notes WoodMac.

One clear theme that has emerged from recent E&P activity in Africa is that oil company capex is no longer dominated by the established giants such as Angola and Nigeria, but that investment will be spread across a variety of plays – among them Senegal, Namibia and even Uganda, where plans envisage the building of a major new export pipeline to Tanzania.

According to S&P Commodity Insights, new licensing in Africa remains certain international oil companies and foreign national oil companies nancial advantages. Although political volatility may constrain E&P progress, some governments are improving

Timing is of the essence, said S&P. Mindful that the window to capture foreign upstream investment may soon close, host governments have enacted or are considering how to terms. In the coming year Angola, Nigeria, and Tanzania may try to bolster attractive terms.

This is not a foregone conclusion. Although current elevated crude prices are likely to be sustained, attracting IOC capital remains challenging owing to the region’s high above-ground risks and operational challenges.

Following in neighbouring Namibia’s slipstream, South Africa is another emergent new hydrocarbons province catching IOC attention. Africa Oil Corp, operator of Block 3B/4B, is partnering with Eco Atlantic Oil & 3D seismic data and preparing for a two-well drilling campaign this year. And in Zimbabwe, the Australian independent Invictus Energy has identizones, with drilling planned for later this year.

Liberia is another promising prospect. In April, ExxonMobil applied to before negotiating a petroleum sharing agreement for Blocks 15, 16, 22 and 24 in the Liberia Basin. The US supermajor is pursuing a direct negotiation policy that was put in place after the Liberian government withdrew a bid round focused on the Harper ba- territories where there are existing export facilities, such as export pipelines and production platforms – as enabling companies to tie in and monetise discoveries quickly. This lower development.

“To be able to tie back and utilise key infrastructure such as pipeline and LNG facilities is becoming increasingly attractive in the sector, allowing trapped reserves to be utilised or commercialised,” said Maxwell. “Being able to bring production into existing systems provides for faster cycle times and potentially lower cap- sin, in Liberia’s eastern waters.

Interest in Liberia has been triggered in part by Guyana’s exploration success, with a coastline that can be with the Guyana basin, said TGS, a geophysical data company.

Sierra Leone is another exciting new play where the geology is similar to that of Guyana. London-listed independent oil company Wildcat Petroleum recently completed its own assessment of the potential of Sierra Leone’s

TGS, which is working on the licensing round, suggests that “studies of the extensive seismic coverage in the area indicate potential multibillion-barrel prospects, presenting an exceptional exploration opportunity”.

That said, there remains a focus on infrastructure-led investments in Africa. Analysts see infrastructure-led exploration – which is focused on more economic. Blue water or greenproduction.”

But that doesn’t mean that fronplans looking ahead.

Large-scale frontier exploration will continue to attract IOC interest, best, most advantaged barrels, to improve their reserves positions.

As Italy’s Eni proved with its multi-

Egypt in the last decade, it is frontier pect of adding to resources. With billion-barrel reserves still showing up in previously undeveloped regions such as Namibia, the focus on newer oil and gas provinces will continue to drive companies towards Africa.