Emerging Players Contribute to 'New Day' for Oil Activity in West Africa

Africa is a land known for its abundance of natural resources— as evidenced by how many African nations comprise the top oil producers in the world. In the West African region, countries such as Nigeria and Angola are bastions for the continent's oil production. But the playing field seems to be leveling as new energy players emerge in West Africa.

“When we look at activities that we expect to happen over the next five years, it's more like a brand-new day, like a sunrise in West Africa,” Mark Adeosun, Western Hemisphere offshore manager at Westwood, said. “Over the next few years, we anticipate that the need for gas will drive offshore field development in West Africa, especially offshore Mauritania and Senegal. BP’s Tortue project, which straddles Senegal and Mauritania, will drive a lot of investment going forward, as well as ENI’s investment in its Marine XII Block offshore the Republic of Congo.”

“When we look at activities that we expect to happen over the next five years, it's more like a brand new day, like a sunrise in West Africa.” Mark Adeosun, Westwood

Engineering, procurement and construction (EPC) opportunities offshore of West Africa have gradually been trending away from the traditional West African basins of Nigeria, Angola and Ghana and moving toward new horizons in offshore Mauritania, Senegal, Ivory Coast and Namibia. Production in the more traditional basins have begun to slow down due to a myriad of reasons.

The older powerhouses are more mature. With Nigeria in particular, security concerns and political uncertainties have played a part in slowing some of the production. The country has faced a steep production decline over the last 10 years, going from producing over 2 MMbbl/d in 2012 to around 1.3 MMbbl/d in 2022, according to Adeosun. This decline has opened the door for other nations looking to throw their hat in the oil and gas ring.

“Some of these countries are relatively new to the oil and gas industry and are quite keen for international E&P companies to bring investment into the country and explore the hydrocarbons within their maritime boundaries so as to benefit from their oil and gas resources and help boost their economy,” Adeosun said.

The increase in activity offshore of West Africa evokes images of the 2012 to 2014 period when the region saw a boom in investments, Adeosun said

In Mauritania, BP indicated that the next phase in the Tortue development will now double what they originally anticipated, with capacity going from 2.5 million tonnes per annum (mtpa) to 5 mtpa.

With a majority of the industry returning to pre-pandemic form, potential issues such as project delays begin to happen, as West Africa generally experiences those. Regardless of potential delays, projects are expected to move forward as long as oil prices continue to hold over $70/bbl, in ine with price forecasts. The number of subsea trees expected to be sanctioned could increase by a 150% increase between 2022 and 2026 compared to the preceding five-year period, Adeosun said.

“At the moment, what is driving EPC spending is the desire of E&Ps to develop their most prolific reservoir to meet the growing demand for oil and gas,” Adeosun said. “To do that, they need to concentrate on areas and regions where the reservoirs are large, which is the case with most deepwater hydrocarbon reservoirs in West Africa.”

Major IOCs have taken advantage of the EPC opportunities in Africa,  including activity by top operators such as BP, Eni, TotalEnergies and Shell.      

BP and Eni have formed a 50:50 joint venture in Angola called Azule Energy, which is now poised to develop the Agogo Field, previously operated by Eni. Azule is also over the 10-well Palas-Astraea-Juno project offshore Angola, which was previously operated by BP. That deepwater project, which is in its design phase, has a depth of 5,255 ft.

In Namibia, Total and Shell are appraising newly discovered reserves. Despite Nigeria being a more mature basin, Chevron and ExxonMobil are still very active in the area, with Chevron operating the Agbami Oilfield and ExxonMobil involved with the Erha deepwater developments and owning a few oil mining licenses in the region.

“I think overall we’ll see a very buoyant market in West Africa going forward due to some of the operator plans, as well as the potential for other developments from places that were considered to be undeveloped over that time period,” Adeosun said. “It’s more or less a dream for the supply chain in West Africa over the next three to five years, very similar to what we’re seeing in Brazil, where massive projects could be sanctioned over the next few years should oil prices hold above $70/bbl and operators proceed with their current development plans.”