PricewaterhouseCoopers, one of the world’s leading research and consulting companies, today projected that the outlook for Africa’s oil and gas industry remained positive amid difficult operating and economic headwinds.
In its annual Africa Oil & Gas Review released today at the 25th Africa Oil Week conference, 2018 held in Cape Town, South Africa, the global consulting outfit reported that tough economic and external conditions had placed pressure on oil and gas companies to be more cost-effective and efficient in their operations.
It noted that as a survival strategy, oil and gas companies operating in the continent had adopted to a low-cost environment, which promises to be even more beneficial given the current recovering oil price.
Commenting on the report’s findings, PwC Africa Oil & Gas Advisory Leader, Chris Bredenhann noted that “Africa’s oil and gas companies have weathered the downturns and capitalised on the upswings focusing their efforts on new ways of working, reducing costs and utilising new technology.”
The report showed that companies elected also to restructure their portfolios with a focus on established regions, less exploration, higher value plays with low break-even-cost, and projects with shorter lead times and lower risk.
While noting that the industry has also renewed its focus on delivering projects on-time and on-budget, PwC predicted that as the oil price continued steadily rising towards pre-collapse levels, the outlook for the industry is hopeful.
Despite this bright outlook, Bredenhann pointed out that “it is, however, important for companies to avoid falling into the cost inflation trap that could eat into the profitability gains that should follow from the rising oil price.”
According to him, “keeping up capital discipline and further improving productivity will yield sustained results for the industry,”
PwC stated further that despite positive developments, the oil and gas industry still faced numerous and persistent challenges around talent shortages, regulatory uncertainty, political instability, corruption and fraud, and a lack of infrastructure.
But then, the company reported that notwithstanding the challenges, Africa did offer plenty of opportunities in the form of unexplored hydrocarbon demand fuelled by population growth, urbanisation and the emergence of a growing middle class.
The PwC’s Africa Oil & Gas Review, 2018 analyses what has happened in the last 12 months in the oil and gas industry within the major and emerging markets. This edition focuses on the expert opinions of a panel of industry players from across the value chain who share their views of oil & gas in Africa.
At the end of 2017, Africa is reported to have 487.8 tcf of proven gas reserves, 7.1% of global proven reserves, only marginal changes to the prior year. Africa’s share of global oil production has slightly increased by 0. 3% since last year to 8.7% standing at 8.1 million bbl/d.
The main contributors continue to be Nigeria, Angola, Algeria and Egypt. Libya also increased its production by 102.9% in 2017, placing it as the fourth-largest oil producer in Africa with an 11% share moving Egypt into fifth position.
