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    Sub-Saharan Africa Still Hit by 2014 Price Slump: Correction


UK-based global consultancy Wood Mackenzie has updated its estimate of how much upstream capex in the region has been cut.

by: Mark Smedley

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Natural Gas & LNG News, Africa, Corporate, Exploration & Production, Investments, Infrastructure, Liquefied Natural Gas (LNG), News By Country, Equatorial Guinea, Ghana, Mauritania, Mozambique, Senegal,

Sub-Saharan Africa Still Hit by 2014 Price Slump: Correction

Correction: NGW earlier wrongly reported that WoodMac had estimated 87% of upstream projects in Angola and Nigeria had been downgraded, deferred or cancelled. The correct information is that a total of US$133bn has been cut from sub-Saharan Africa’s upstream capex, and 87% of that capex cut has occurred in Angola and Nigeria. A corrected version follows.


In its newly-released report ‘Sub-Saharan Africa Investment and Cost trends: Have Costs Fallen Far Enough?’, UK based global consultancy Wood Mackenzie estimates that a total of US$133bn has been cut from the entire region’s capital expenditure (capex) in 2015-20.

Of that figure, 87% was in Angola and Nigeria. That represents upstream oil and gas projects either downgraded, deferred or cancelled in 2015-20. It indicated that capex is down by $67bn in Angola and by $50bn in Nigeria -- representing respectively 50% and 37% of the $133bn total reduction.

Notwithstanding that, it foresees Final Investment Decisions (FIDs) being taken on development of 13bn barrels of oil equivalent (boe) of reserves in sub-Saharan Africa before 2020: including Fortuna floating LNG off Equatorial Guinea (FID expected next month), Greater Jubilee oil and gas offshore Ghana (January 2018), Tortue floating LNG, offshore Senegal and Mauritania (December 2018), SNE oil with later associated gas offshore Senegal (also December 2018) and the Mamba LNG complex onshore Mozambique pegged to deepwater gas (Anadarko/Eni, FID July 2019).

Cheaper services, improved optimisation, and deferred project start-ups have helped realise savings to fit a US$50/b world, the report says. But WoodMac says that means that 2017 oil output across the region is down by 700,000 b/d on its pre-oil crisis forecast, while exploration is at a historic low despite cheaper rigs, with only three projects reaching FID (one having been Coral FLNG offshore Mozambique) in the last three years.

“With exploration at historic lows and pre-FID projects still requiring lower costs, sub-Saharan Africa is not out of the woods yet,” the consultancy concluded.


Mark Smedley