Investment in new oil production has been stagnating since 2014. This has led many to believe that in key jurisdictions where the largest private oil producers are located, oil prices may rise for a longer period of time, supported by anti-oil industry energy policies.
However, some might say that although investment in the oil sector has declined over the past decade, it has become more targeted and more likely to discover new oil fields. Either this is the case, or they have become luckier than usual, and this is most evident in Africa.
Earlier this month, France's Total Energy said it would buy a 33% stake in an exploration block off the coast of South Africa. Its partner Qatar Energy also participated in the acquisition of the 3B/4B block, holding a 24% interest. The acquisition is part of the French oil giant's exploration activities in South Africa's neighboring country Namibia, which shares the Orange Basin with South Africa.
The Orange Basin has recently become a hotspot comparable to Guyana. A series of discoveries over the past few years suggest that up to now, reserves are estimated at around 5 billion barrels. According to reports, out of 17 exploration wells, 15 have been confirmed to have discovered hydrocarbons with commercial reserves since February 2022.
The biggest discovery to date was made by Total Energy's Venus oil field off the coast of Namibia, with estimated reserves of 3 billion barrels. No wonder the company is expanding in the region, even as predictions of spikes in oil demand persist.
Kevin McLachlan, senior vice president of exploration at the French company, said after news of the investment in South Africa last week: “Following the success of the Venus project in Namibia, Total Energy will continue to advance its exploration work in the Orange Basin.”
Jonathan Salomo, chief geologist on the west coast of South Africa at the South African Petroleum Agency, said, “The South African side of the Orange Basin is similar to the Namibian side. There are at least two exploration areas in the northern part of the basin, which may contain millions of barrels of oil and gas.”
Total Energy and Qatar Energy are not the only companies seeking oil and gas resources that have not been exploited in Africa until now. In January of this year, Africa Oil Corp, a Canadian company that specializes in Africa, completed an additional acquisition of the Orange Basin area, and Total Energy and Qatar State Oil Company are planning to expand into this block.
According to a report by Offshore Energy in January this year, the block is expected to hold about 4 billion barrels of oil equivalent potential resources, and the probability of success of the block's 24 exploration areas is between 11% and 39%.
Southern Africa is a hot spot, but it's not the only one. Offshore Energy reported again this month that a Houston-based energy company has reached an agreement to acquire a Swedish exploration company to obtain mining rights for the Ivory Coast offshore block.
The target company, Svenska Petroleum Exploration, holds 27% of the shares in the Baobab oil field offshore of West African countries. The Baobab oil field is currently in production. The daily output is about 4,500 barrels of oil equivalent, and plans are to expand production and extend the production life of the oil field.
Nor is oil the sole focus of international investors' attention. As Europe joined the Big Buyers Club two years ago, liquefied natural gas has become a priority for many countries, which has greatly boosted exploration activities, including in Africa. Africa already produces some liquefied natural gas, but it is likely to produce more.
For example, the GTA LNG project will be put into operation in the third quarter of this year. The project is located on the border between Senegal and Mauritania, led by British Petroleum, in collaboration with Kosmos Energy and the two countries' state-owned energy companies. The initial annual production capacity of GTA liquefied natural gas was 2.3 million tons, and will be expanded to 10 million tons in three stages.
Next year, an initial investment decision for the Tanzania LNG terminal, which aims to develop the country's offshore natural gas resources, may also come out. The project is worth $42 billion and is being developed by an all-star team including Equinor, Shell, and Exxon. Its production capacity is at least 10 million tons per year, which has the potential to make Tanzania a sizeable player in the LNG market.
Oil and gas exploration in Africa is booming, partly because the continent has large reserves of hitherto undiscovered global hydrocarbons, and partly because local governments seem more willing to accept the idea than the governments of the oil giant's home countries and nearby jurisdictions.
Wood Mackenzie calculated last year that the energy industry's total investment in the oil and gas sector in Africa was 800 billion US dollars. The company's head of upstream research said at an industry event in October that the investment cycle began in 2010 and will end as Africa becomes a major producer of floating-terminal liquefied natural gas and a growing source of deep-water oil.
Brent crude oil continuous daily chart source: Easy Huitong
Brent crude oil was continuously reported at $82.45 per barrel at 13:52 Beijing time on March 12