West Africa’s gas sector investment prospects still on the high

The potential for West Africa’s gas industry is huge. From Nigeria to Ghana and all the way to Cote D’Ivorie, the region is blessed with abundant, underdeveloped resources.

Recent occurrences like the global drop in oil prices could hardly slow West Africa‘s energy development.

Industry watchers observed that despite the huge challenges the region grapples with, a lot of capital is getting prepped for West Africa going forward. While activity should intensify with the recovery in the oil price, there is a lot for sector professionals to sink their teeth into there at the moment.

One of such capital investment is Kosmos Energy’s blocks off the coast of Senegal. BP and Kosmos are bringing billions in investment to the Cayara Offshore Profond block. Now, their first major activities are paying off. BP struck gas at Cayara’s Yakkar-1 well last year.

Exploratory drilling will continue in the Cayara block, and the Tortue field as a whole, going forward. Together, Kosmos and BP control 33,000 square km of acreage off West Africa.

According to a latest insight conducted by offshore publication, with several capital intensive field developments sanctioned prior to the oil price decline, West Africa is anticipated to see robust demand growth through to 2018.

From all indication, the highest growth rates are anticipated for emerging countries of hydrocarbon production, in particular Côte d’Ivoire and the more established Equatorial Guinea.

The report indicates that Nigeria is expected to hold a 22 percent share of offshore expenditure demand over the 2016-2020 timeframe, a slight increase from the 18 percent market share seen over the previous five years.

Altogether, Infield Systems expects for 54 potential fields offshore Nigeria to require CAPEX spend over the forecast timeframe, with Total-led developments anticipated to form 38 percent of demand during the period. The giant Egina project is expected to remain key to Total’s investment, with 60 percent of the French international oil company’s forecast demand offshore Nigeria expected to be attributable to the development.

In terms of new project sanctions however, the uncertainty surrounding Nigeria’s Petroleum Industry Bill (PIB) has discouraged foreign investment. Now, the PIB, which has thus far been six years in the making, has been taken back to the drawing board with new proposals expected to include a greater level of consultation with IOCs in light of oil price declines.

The report further indicated that Ghana is forecast to remain the third-largest destination for operator CAPEX offshore West Africa going toward 2020, driven by the TEN (Deepwater Tano) developments. Tullow’s Mahogany East and the Eni-operated Sankofa OTCP are also anticipated to require substantial investment during the next five years.

As a relatively young country in terms of hydrocarbon development, Ghana has looked to introduce new industry regulations since the giant Jubilee came onstream in 2010.

Local content regulations have focused on adding value through the supply chain and developing human capital through the transfer of skills and expertise.

Equatorial Guinea is expected to undergo a CAPEX demand CAGR of 13 percent over the next five years to 2020. A total of 28 fields may require CAPEX during the period; an increase from the 15 fields invested in over the previous five years. Key to Equatorial Guinea’s demand growth is expected to be Ophir’s Fortuna FLNG project, which is forecast to comprise 28 percent of the country’s offshore CAPEX demand during the 2016-2020 period.

The project, which sees the independent partnered with Golar, is anticipated to see its final investment decision (FID) with Infield Systems currently forecasting installation to be completed by 2019.

KELECHI EWUZIE