Several energy firms have developed oil and gas projects in Africa in recent

Durrant Pate/Contributor

The oil industry on the African continent is set to take off this year, given investments that have been made in the sector in the not-too-distant past.

The expected boom will arise from a combination of factors ranging from growing global demand to supply uncertainty and the need for low-carbon oil operations. This means that 2023 could be a big year for Africa’s oil industry.

At the recent COP27 climate summit, African governments made it clear that they would be developing their natural resources in order to battle energy poverty. With government support and the potential to use new low-carbon production methods and carbon capture technology, there is plenty of potential for African oil nations to gain big time going forward.

OilPrice.com reports that several energy firms have developed oil and gas projects in Africa and the Caribbean, as they shift to focus on low-carbon oil and future-proofing their operations. With mounting pressure to decarbonise, many oil and gas majors have moved away from aging, carbon-intensive operating sites in favour of developing new projects in non-traditional oil regions.

African countries want in

In the meanwhile, African countries are determined to claim their piece of the global energy pie by continuing to develop their oil industries, as the demand for oil and natural gas keeps on rising in the post-pandemic period. Most of the low-carbon operations are being developed in regions with recent discoveries of huge reserves, such as the Caribbean and Africa, where oil majors are using low-carbon production methods and carbon capture technology to ensure crude output is less harmful to the environment.

At the COP27 climate summit, held last November in Egypt, African government representatives made it clear that countries across Africa should be allowed to develop their fossil fuel resources to help lift their people out of poverty. As the US and Europe moved away from Russian energy, African leaders spotted the opportunity to promote the development of low-carbon oil across the continent.

Developing African oil industry

It was disclosed recently that more than 70 oil and gas projects on the continent are slated to come online by 2025, which could provide as much as 2.3 million barrels per day (bpd) of crude, according to analysts. TotalEnergies announced it would be investing in Angola’s Begonia field last year, which adds to its other projects in the region.

This could boost its production in the area by 30,000 bpd. Operations are expected to commence towards the end of 2024, following an investment of US$850 million. According to OilPrice.com, “one of Africa’s biggest oil producers, Nigeria, also has big plans to diversify its oil operations by developing new projects outside the Niger Delta in the north of the country. After years of delays, Shell is going ahead with its Bonga North Project this year, to be followed by the $10-billion Bonga South West field in 2024″.

Bonga North is believed to hold as much as 525 million barrels of crude, which could support Nigeria’s goal of boosting production to pre-pandemic levels, having repeatedly failed to achieve OPEC quotas in recent months. Uganda has plans to continue expanding its oil industry through its TotalEnergies-operated Lake Albert Development.

The project has seen an investment of US$10 billion to date. Uganda has major plans for the development of the Tilenga and Kingfisher upstream oil projects, and the construction of the long-anticipated 1,500-km East African Crude Oil Pipeline, which have seen years of delays.

If completed, Uganda could see an output of 230,000 bpd from Lake Albert. Ghana is focusing on its domestic production, which it hopes to double by the end of the year, from under 200,000 bpd to around 420,000 bpd.

Recent discoveries in the Tano Cape Three Points Block have attracted greater foreign investment in the region, with Norway’s Aker Energy running operations.

To the benefit of the African continent, new oil powers are emerging, as Africa Oil Corp (AOC) announced two production-sharing contracts with the Republic of Equatorial Guinea last month.

AOC is expected to hold 80 percent of operated interests in the offshore Blocks EG-18 and EG-31 if government approval is achieved with state-owned, GEPetrol holding the remaining 20 percent. The companies plan to spend US$7 million on the initial exploration period. AOC expects the developments to offer “low-cost, low-risk gas development opportunities”.

While long-established oil powers, like Nigeria, are expanding their industries, newcomers, like Ghana and Equatorial Guinea, are encouraging greater exploration for the development of new projects that could provide low-carbon oil and gas to fill the gap in the green transition.