The major players on the world energy production stage are well known, and particularly in the field of oil and gas, where most of them have been in the game for a long time.In Africa, countries like Algeria, Nigeria, Libya, Egypt, and Angola have been in the business for decades, though much of their resource wealth remains untapped. When new discoveries come to light in nations previously unexplored or underexplored, one would think these more experienced countries would be able to out-hustle and out-muscle them when it comes to attracting investment dollars.
However, recent experience shows that this is not always the case. If there was a Rookie of the Year award in the energy business, it would go to the South American country of Guyana, hands down. Despite being the next-door neighbor of founding OPEC member Venezuela, most of Guyana’s potential 11 Bbbl bonanza has only been discovered since 2015. Less than five years after its initial Stabroek Block discovery, U.S. oil giant ExxonMobil began producing oil through its Liza Phase 1 project — remarkably fast by industry standards. By April of this year, ExxonMobil had already approved its sixth oil development in Guyana, putting the country of just 800,000 people on track to someday surpass Venezuela in total crude production. The Latin American country is now one of the world’s fastest-growing economies.
This is not the first time I’ve brought up Guyana in discussions about Africa, and there’s a reason for that. Namibia is currently in the same position Guyana was in just a few short years ago, poised to choose its road ahead. Recent discoveries in Namibia’s Orange basin suggest it could hold up to 3 Bbpe of oil and 8.7 Tcfg, and the country’s total oil reserves could be nearly equal to Guyana’s at around 11 Bbbl. Excitement around the newly discovered resources is high, and though oil and gas production still lie ahead, Namibia has become a leader in African oil and gas investment.
Shell (UK) and TotalEnergies (France), which made the major discoveries in the Orange basin with partnering companies, have both committed substantial portions of their 2024 exploration budgets to ongoing activity in Namibia. Offshore exploration plans also have been announced by Chevron (U.S.), Azule Energy (a joint venture between Italy’s Eni and the UK’s bp), and Portuguese energy group Galp. Meanwhile, Reconnaissance Energy Africa (Canada) and Namibian state oil company NAMCOR have begun drilling an onshore oil and gas exploration well in northeast Namibia. What not to do. The excitement about Guyana and Namibia’s resources is notably different than what we’re seeing in some of Africa’s other resource-rich nations. Take Nigeria, Africa’s largest oil producer by far.
Despite colossal proven reserves of almost 37 Bbbl (the world’s total is 1.73 trillion), Nigeria is currently struggling to attract the $25 billion annual investment necessary just to keep its output at around 2 MMbpd. Oil majors are divesting from Nigerian assets and diverting future investments to other countries, as TotalEnergies did when it announced $6 billion in new projects in Angola. A new exploration well hasn’t been drilled in Nigeria in more than 12 years. Why? The most obvious reason is security. Nigeria is notorious for its environmentally disastrous spills caused by rampant oil theft, vandalism, and sabotage. The country’s inability to protect its most valuable economic asset — responsible for almost two-thirds of Nigeria’s revenue — is a constant threat to employee safety as well as the bottom line for oil producers, and it doesn’t help with public relations either. There may be a ton of money still beneath Nigerian soil, but it’s not going anywhere, so it simply makes more sense to go extract it somewhere safer until those problems get resolved.
Source: worldoil.com