Oil and Gas Reserves to Boost Africa Economy: Africa gateway

Africa is endowed with abundant riches, and significant among them is its oil and gas reserves. Africa’s oil and gas reserves have become a significant component of world’s hydrocarbon supply. About 57% of Africa’s export earnings comes from hydrocarbons. The continent accounts for 11% of world’s oil production and its consumption account for only 4% of total world’s consumption. According to the recent statistical report, Africa’s technically recoverable oil reserves have grown by 150% since 1980’s- increasing from 53 bn barrels to 130 bn barrels in 2013. With this Africa’s share in the global oil reserves has also risen to 7.7%. North and West Africa are the renowned producers of oil. However, in recent years even East Africa’s has become among the attractive prospects for the international companies to explore the market. Africa’s major oil producers are concentrated in four countries namely, Libya, Angola, Algeria and Nigeria. These countries accounted 85% of Africa’s reserves. However, other countries such as Ghana, Uganda and Kenya are also emerging as an attractive prospect. In spite of the rise in oil reserves in the recent years, there is scope for further exploration. It is estimated according to some research study that, around 100bn barrels of oil reserves in Africa are still waiting to be discovered. These untapped reserves are a kind of economic silver lining for the continent, as billion dollar investment is needed to commercialize the hydrocarbon reserves. Government is taking steps to bring in investment opportunity for foreign investors by commissioning tenders reflecting opportunities in oil exploration segments. This will help giving a competitive edge to international companies trying to access the market.

Natural gas is like a child with the silver spoon of the energy world, promising great future. Africa at present occupies a very small chunk of Natural Gas production but is expected to lead the world in next few decades. over the last few decades series of major gas reserve discoveries in Mozambique and Tanzania have a relight the interest in the expansion of continent’s gas reserves. It is worth noting that these regions were previously not notable for their contribution to oil and gas industry. Africa’s main gas producers are Algeria, Nigeria and Egypt. these countries account for 90% of continent’s gas production. Regionally North Africa holds the lion share in the gas production and consumption. With Algeria,Egypt and Libya having the largest gas reserves. Over the years, East Africa has become most attractive gas exploration hot spot. Mozambique and Tanzania’s substantial offshore gas reserves offer the potential to become prominent LNG( Liquefied Natural Gas) exporters in the coming decades. The East Africa Gas market is expected to attract investment worth 10 billion$ in coming decades. Notably, the government is taking steps to create incentives for energy companies to explore specifically the natural gas segment. Africa Financial Corporation has commissioned to disburse an initial investment of 75 million US$ in NewAge Ltd- a privately held oil and gas exploration company, to enable it to develop projects in Nigeria, Republic of Congo and similar other African countries. And the corporation is also taking initiatives to mobilize around 2bn$ of investment as a sponsor, advisor or lender to natural resource projects. Similarly steadily rising offshore exploration is giving an indication that the continent is becoming and attractive natural resource investment destination among the international companies. African government who are well managing their regulatory and business environment are expected to attract more of such investment in near future.

Oil refining is another segment where investments are seen to be floating. Being the among the biggest oil reserve countries, Africa’s refining capacity is limited. Investments in this segment is seen to be floating across construction of new refineries and refurbishment of the existing one. African government has promised to revive four major state-owned refineries and also to increase their capacity in the coming decades. These things point towards bigger opportunities for construction of oil refineries in countries like Angola and Nigeria. Many of the private companies are stepping in to build and operate their own private refineries. Dangote- an oil refining company has received an investment of 99.7 million US$ to increase the domestic capacity of the refineries in Nigeria. The company has also signed a loan agreement with both Local and International banks to tune in 3.3bn $ for construction of biggest Petroleum oil refinery and Petrochemicals and Fertilizer plants in Nigeria. Similarly many oil refineries construction tenders are floated by the government from time to time reflecting opportunities for high-tech capital intensive projects that may give competitive edge to the foreign companies looking to tap the market.

The sources of Oil and Gas are evolving and will continue to. The countries leading the oil and Gas production should continue to offer both National and International companies attractive investment opportunities which may help foster competition, efficiency and capabilities. Government must also find new ways to leverage its resource sector to capitalize on GDP growth.

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