The African continent accounts for 16% (490) of active offshore fields and 17% (535) of offshore fields that are either under development or are potential developments globally. It is also home to key offshore exploration frontiers. However, the nature of E&P activity varies widely across the continent, as is clear from analysing the offshore areas into which Africa can be divided: North, South, East and West Africa.
North Africa: Old Fields?
A total of 217 oil or gas fields are located offshore North Africa, of which 112 are in production (95% in shallow waters). In this mature area, offshore oil production is projected to stand at 0.34m bpd in 2016, down 37% on the area’s peak of 0.54m bpd in 1991. Bar the possible restoration of offshore oil production lost in the “Arab Spring”, decline is set to continue. However, North African offshore gas production still has significant growth potential, forecast as it is to grow with a CAGR of 8.4% from 4.29bn cfd in 2016 to stand at 8.86bn cfd in 2025. This projected growth is driven by gas projects such as Zohr Ph.1 ($3.5bn; 1bn cfd) and Ph.2 ($10bn; 7bn cfd). The Zohr field, a frontier find in a water depth of 1,450m in the Levantine Basin, exemplifies the ongoing rise of deepwater E&P in the area.
South Africa: Few Fields
South African offshore production is minute in a global context. The area is home to just 17 offshore fields (only seven active, two having shut down in 2013). Although not without potential, E&P in the area has stalled in the downturn, as IOCs have cut and reprioritised E&P spending.
East Africa: New Fields
Unlike North and West Africa, East Africa has little history of offshore E&P: 88% of the area’s 41 offshore fields were discovered after 2009. The average water depth of these “frontier” finds is 1,570m and 92% are gas fields (with total reserves of more than 168 tcf). Offshore gas production in the area is projected to hit 2.82bn cfd in 2025 (from 0.13bn cfd in 2016) as fields are developed as part of LNG projects such as Coral FLNG Ph.1 ($7bn; 0.433bn cfd). However, further FID slippage at these frontier projects is a risk in the weaker energy price environment.
West Africa: Costly Fields?
West Africa constitutes one corner of the ‘Golden Triangle’ of deepwater E&P: of the 368 active fields in the area, 83% are in shallow waters (in the Gulf of Guinea and Angola) but 43% of 364 potential developments are in depths of more than 500m. The area has major deepwater production growth potential, even though it already accounted for 17% (4.35m bpd) of global offshore oil production in 2015. However, West Africa is a key offshore ‘swing’ region in terms of CAPEX and production: planned FPSO hubs such as MDA (Angola) tend to have high breakevens (c.$70/bbl+), so project FIDs have been scant since 2014. Frontier finds from Ghana up to Mauritania (39 since 2009) could yield more viable production growth though, and exploration in these waters has continued in the downturn.
In conclusion then, the African continent is home to a range of offshore field and project trends. Although there are some similarities across the continent in terms of “frontier” E&P, water depths and other factors, to get a grip on African offshore E&P, it is necessary to take the full range of available data and “drill down” into it.
Source: Clarkson Research Services Limited