Business
International oil companies look to East Africa for growth
As companies develop new oil and gas fields in East Africa – from Mozambique in the south up to Tanzania, Kenya and Somalia – governments will be working hard to get the most they can out of their resources. In fact, analysts suggest that the licensing environment is becoming more difficult in Africa, due to governments establishing ever more onerous requirements for international companies and discouraging independent operators.
Top 10 Oil Companies- The Africa Report
However, with the United States getting closer to energy independence, the global energy landscape appears to also be changing and new producers will be looking East to get the most out of their reserves. In The Africa Business Report’s Top 500 Ranking (Refer to Top 10 chart above), there are 65 oil and gas companies with a total turnover based on year-end 2012 results of $171bn which represents 23.2% of the total turnover, making it the largest sector by quite a margin.
Despite these high numbers, oil and gas revenue has stagnated, only increasing 1.2% on the previous year. There has been stability in the oil price, which averaged $110 per barrel during the past three years, but some analysts are predicting a gradual downward movement in prices for 2014.
Regardless, 2013 was a great year for Algeria’s Sonatrach (#1), Africa’s largest company, who announced, in late October, that it made its largest discovery in 20 years. The field is situated in Tamguid Messaoud, 112km from the Hassi Messaoud field, the largest in Algeria, holding an estimated 1.3bn barrels. But recovering them will apparently require unconventional methods that could prove costly.
On November 2013 at Cape Town’s Africa Oil Week, Lúmen Sebastião, from Angolan oil giant Sonangol’s (#2) exploration division, indicated to The Africa Report that the state-owned company was re-evaluating its ultra-deep regions and the Kwanza onshore and offshore fields using new 3-D technology. Furthermore, he also stated that this had already revealed “lots of new prospects”.
World-class gas
Sebastião said Sonangol planned a great deal more offshore drilling, particularly in blocks that had been neglected by the major players. He also said that the government’s plan is to boost production from to 1.8 million barrels per day (bpd) to 2 million barrels per day and to sustain that level for 10 years at least.
In December 2013, Sonangol, Cobalt and BP announced that they had discovered world-class gas reserves in the Lontra deepwater well. Currently in Nigeria, local oil companies are set to take advantage as multinational oil companies shed some of their onshore oil blocks. In fact Nigeria’s Oando (#35) aims to complete its $1.7 billionn acquisition of US company ConocoPhillips’ Nigerian assets by the end of January 2014. If successful, the deal will boost Oando’s oil output from just 4,000 bpd currently to more than 43,000 bpd.
Oando’s chief executive, Adewale Tinubu, told the Africa Oil Week in Cape Town that ongoing disinvestment from Nigeria by major international companies was creating “valuable new opportunities” for Nigerian companies which would ultimately boost national oil production. Prior to now, Oando has been predominantly a downstream company, but Tinubu said that after the acquisition, three-quarters of the company’s assets would be in the upstream sector.
Total eclipse
Total (#37) is set to become not only South Africa’s largest fuel company but also one of its main producers of solar energy. In November 2013, South Africa’s Department of Energy selected US photovoltaic manufacturer Sun-Power, which is majority-owned by Total, as the preferred bidder for a $200m project to build an 86MW solar farm in Prieska in Northern Cape Province.
Egypt’s minister of petroleum also announced, in November 2013, that it is considering selling a 20% stake in Middle East Oil Refineries (#40), known as MIDOR. He stated the government expects to make $1-1.5 billion from the sale. As Egypt owes at least $6.2bn to foreign creditors in the petroleum sector, revenue from the sale of the MIDOR stake will go towards settling these debts.
Another company with cash flow problems is South Africa’s state owned PetroSA (#63), which is at an advanced stage in talks to buy Engen’s petrol stations in the country for R11-18bn ($1-1.7bn). If PetroSA cannot find the money by then, it expects to ask the government to make up the difference. However, PetroSA urgently needs to find new sources of gas for its Mossel Bay gas-to-liquid refinery, as the nearby offshore well it has used is nearly exhausted.
Currently, it is feverishly drilling at the nearby F-O field in the hope of a major find but has had in the meantime to import liquefied natural gas from the Middle East to keep the refinery ticking, which has put additional strains on its cash reserves.
Source: The Africa Report