Africa is likely to experience continued oil and gas investment over the next three to five years as the stabilization of crude prices above US$ 60 a barrel, coupled with the continent’s rapidly expanding population, lure both major and independent oil producers to invest in the continent.
This view was expressed by Dele Kati, Head, Oil and Gas, at the Standard Bank Group.
According to him, a string of successful exploration projects over the last decade had seen the number of African countries with proven oil and gas reserves rise to 28.
He said this could be linked to new discoveries in Ghana, Niger, Mozambique, Uganda, Kenya, Senegal, Mauritania and South Africa.
He added that the investment required to bring these countries on stream would add further impetus to Africa’s oil consumption, which at four million barrels a day already significantly exceeds the continent’s output.
“An expanding population, rapid urbanisation and accelerating economic growth are causing the gap between Africa’s demand for gas and petroleum products, and its ability to supply them, to incrementally widen over time.
“This will serve to attract further investment from both major and independent oil producers, which in itself will exert further pressure on the demand side of the equation as the resulting infrastructure investment in refineries, roads, pipelines and housing drives energy consumption,” he said.
Kuti, noted that after a slump in oil prices which saw price of crude oil dropped to as low as $30 a barrel, Africa’s oil and gas sector was once again attracting investment from exploration companies and refiners.
“In 2018, the International Energy Agency (IEA) projected global energy demand would grow by more than 24 per cent to 2040, requiring more than US$ 2 trillion a year in investment to bring new energy supply on stream. Given Africa’s burgeoning population and economic growth, it is likely that a portion of this investment will be directed towards the continent’s relatively untapped energy market.
“All of these investment activities will in turn spur demand for lending, deal structuring and transacting capabilities across the continent,” Kuti said, adding that institutions with deep knowledge of the continent stand to benefit from those initiatives.”
He explained that Standard Bank was one of the largest oil and gas lenders in Sub-Saharan Africa given its on-the-ground presence in 20 countries across the continent.
He added that it’s Corporate and Investment Banking (CIB) division has a deep specialisation in Africa’s natural resources sector, where it has built up an enviable track record across the full spectrum of the mining, oil and gas value chain.