{"id":7226,"date":"2018-11-06T12:33:02","date_gmt":"2018-11-06T12:33:02","guid":{"rendered":"http:\/\/www.oilnewskenya.com\/?p=7226"},"modified":"2018-11-06T12:33:02","modified_gmt":"2018-11-06T12:33:02","slug":"outlook-africas-oil-gas-industry-improves-pwc-report","status":"publish","type":"post","link":"https:\/\/www.oilnewskenya.com\/index.php\/outlook-africas-oil-gas-industry-improves-pwc-report\/","title":{"rendered":"Outlook for Africa\u2019s oil & gas industry improves \u2013 PwC report"},"content":{"rendered":"

The outlook for Africa\u2019s oil & gas industry is positive amid difficult operating and economic headwinds. Tough economic and external conditions have placed pressure on oil & gas companies to be more cost-effective and efficient. Companies have adopted to a low-cost environment, which promises to be even more beneficial given the current recovering oil price. These are some of the highlights from PwC\u2019s annual\u00a0Africa Oil & Gas Review<\/em>\u00a0released today at the 25th<\/sup>\u00a0Africa Oil Week conference, 2018 held in Cape Town.<\/p>\n

\u201cAfrica\u2019s oil & gas companies have weathered the downturns and capitalised on the upswings focusing their efforts on new ways of working, reducing costs and utilising new technology,\u201d Chris Bredenhann PwC Africa Oil & Gas Advisory Leader says.<\/p>\n

Companies have taken to restructuring their portfolios with a focus on established regions, less exploration, higher value plays with low break-even-cost, and projects with shorter lead times and lower risk. The industry has also renewed its focus on delivering projects on-time and on-budget.<\/p>\n

As the oil price is steadily rising towards pre-collapse levels, the outlook for the industry is hopeful. \u201cIt is, however, important for companies to avoid falling into the cost inflation trap that could eat into the profitability gains that should follow from the rising oil price. Keeping up capital discipline and further improving productivity will yield sustained results for the industry,\u201d Bredenhann adds.<\/p>\n

Despite positive developments, the oil & gas industry still faces numerous and persistent challenges around talent shortages, regulatory uncertainty, political instability, corruption and fraud, and a lack of infrastructure.<\/p>\n

Notwithstanding the challenges, Africa does offer plenty of opportunities in the form of unexplored hydrocarbon demand fuelled by population growth, urbanisation and the emergence of a growing middle class.<\/p>\n

PwC\u2019s\u00a0Africa Oil & Gas Review, 2018<\/em>\u00a0analyses what has happened in the last 12 months in the oil & gas industry within the major and emerging markets. This edition focuses on the expert opinions of a panel of industry players from across the value chain who share their views of oil & gas in Africa.<\/p>\n

At the end of 2017, Africa is reported to have 487.8 tcf of proven gas reserves, 7.1% of global proven reserves, only marginal changes to the prior year. Africa\u2019s share of global oil production has slightly increased by 0. 3% since last year to 8.7% standing at 8.1 million bbl\/d. The main contributors continue to be Nigeria, Angola, Algeria and Egypt. Libya also increased its production by 102.9% in 2017, placing it as the fourth-largest oil producer in Africa with an 11% share moving Egypt into fifth position.<\/p>\n

Regulatory developments in Africa<\/strong><\/p>\n

Regulatory uncertainty continues to be a major barrier to the development of the oil & gas industry in Africa. Overall, there are some positive developments that demonstrate that governments are reacting to the new environment. Despite some notable improvements around regulation, there is still a high level of uncertainty in a number of jurisdictions.<\/p>\n

In South Africa, the proposed Amendment Bill to the Mineral and Petroleum Resources Development Act (MPRDA) may be withdrawn, and there are plans to split oil & gas from mining formulating separate legislation.<\/p>\n

Growth and development<\/strong><\/p>\n

The outlook for the oil & gas industry is looking more optimistic with the Brent oil price having broken through the US$80 mark at the time of compiling our report. Although there has been a significant increase in the number and size of final investment decisions (FIDs) in 2018, the industry is not what it was. New finds are much smaller and leaner than they were in prior years. Deepwater oil has been given preference over gas, and oil fields offering the highest rates of return are attracting investment. There is also a preference for brownfield over greenfield developments.<\/p>\n

The current oil price recovery reflects a tight supply and demand balance, as well as an indication that we are heading towards a potential global supply crunch in the early 2020s. Exploration spend in Africa and globally is starting to pick up as well. It is safe to assume that this trend will continue if the current higher price environment is sustained.<\/p>\n

Digital disruption in Africa<\/strong><\/p>\n

There have been a number of developments in digital transformation in the oil & gas industry, not only globally, but also in Africa. A number of new technologies have been deployed by the industry across the value chain. Some examples include: the use of drones to inspect remote facilities thereby reducing safety and health risks; the use of robots to undertake monitoring and safety checks, which also reduces the safety risks for human operators; and the use of virtual reality to simulate the drilling of wells remarkably reducing drilling costs. Digital disruption is here to stay, and African companies must embrace this to reap the rewards.<\/p>\n

Looking to the future<\/strong><\/p>\n

Africa is the world\u2019s fastest economic region with a growing population that is becoming more urbanised. According to PwC\u2019s Strategy& estimates, Africa\u2019s total energy demand is forecast to increase by 60% to 28 000 trillion btu by 2030.<\/p>\n

Based on different potential trajectories for economic development, energy access policy and climate mitigation strategies, researchers have put forward various alternative scenarios for energy production and consumption on the continent in the years ahead.<\/p>\n

Hydrocarbons are expected to continue to play a major role in the energy mix that will satisfy Africa\u2019s growing energy needs. Major gas resources on the continent including Mozambique, Nigeria, Angola, Tanzania, Senegal and Mauritania, could augment the key position of gas as an energy source for Africans. In the low-carbon context, gas also plays the role of a transition fuel before a wider switch to renewables, a development which is likely to take longer in Africa than on other continents.<\/p>\n

The increase in population and the demand for freight transport will also see an increased demand for liquid fuels. Many African countries are \u2018thinking refineries\u2019 at various scales. Countries that are considering new refineries or upgrades include Angola, Equatorial Guinea, Uganda, Nigeria, Republic of Congo, Ghana, S\u00e3o Tom\u00e9 & Pr\u00edncipe, and Zambia. Given projected population growth and refined fuels consumption, an estimated additional 3.4 bbl\/d of refined fuels will be needed to meet Africa\u2019s needs by 2030.<\/p>\n

The role of National Oil Companies (NOCs)<\/strong><\/p>\n

The role that NOCs play as operators and custodians of the orderly development of the hydrocarbon industry in their respective countries cannot be underestimated. Almost 30 of Africa\u2019s NOCs are involved at various points of the value chain and at different levels of maturity.<\/p>\n

Our analysis delves deeper into the NOC landscape to provide a perspective on the future that NOCs could face. We have identified four potential scenarios along two axes: the level of regulatory stability and the level of diversification within a country\u2019s economy.<\/p>\n

These scenarios depict a number of possible future pathways and provide industry players with some options with regard to how they might respond to these potential outcomes and their impact on operations.<\/p>\n

NOCs should consider these scenarios to enable them to design strategies that avoid the pitfalls identified.<\/p>\n

The African oil & gas industry has been through some difficult years in the wake of the oil price crash. However, the industry has restructured itself and is more competitively placed in terms of operational performance.<\/p>\n

\u201cIt is critical that the sector retains its capital discipline and adopts digital technologies if the hard-earned wins in cost savings are to be retained. Progress in addressing corruption and improving corporate governance will also need to be maintained. Moreover, in the longer term, the energy transition will continue to impact the sector\u2019s dynamics with implications for oil demand,\u201d Bredenhann concludes.<\/p>\n","protected":false},"excerpt":{"rendered":"

The outlook for Africa\u2019s oil & gas industry is positive amid difficult operating and economic headwinds. Tough economic and external conditions have placed pressure on oil & gas companies to … Read More<\/a><\/p>\n","protected":false},"author":24,"featured_media":7227,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[11],"tags":[63,160,465,7009,789,3183,997,1535,7008,1636,1749,3438,1828,1881,7006,7007,2140,7010,2283,2371,2466,2603,2762],"class_list":["post-7226","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-top-news","tag-africa","tag-angola","tag-chris-bredenhann","tag-deepwater-oil","tag-equatorial-guinea","tag-final-investment-decision","tag-ghana","tag-mauritania","tag-mineral-and-petroleum-resources-development-act","tag-mozambique","tag-nigeria","tag-noc","tag-oil-gas","tag-oil-price","tag-pwc-africa","tag-regulatory","tag-republic-of-congo","tag-sao-tome-principe","tag-senegal","tag-south-africa","tag-tanzania","tag-uganda","tag-zambia","entry"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2018\/11\/PwC-Oil-and-Gas-outlook-2018.png?fit=559%2C394&ssl=1","jetpack_shortlink":"https:\/\/wp.me\/p5JWkQ-1Sy","jetpack-related-posts":[{"id":1492,"url":"https:\/\/www.oilnewskenya.com\/index.php\/infrastructure-regulatory-uncertainty-and-corruption-remain-hurdles-in-africas-oil-gas-sector-pwc-review\/","url_meta":{"origin":7226,"position":0},"title":"Infrastructure, regulatory uncertainty and corruption remain hurdles in Africa\u2019s oil & gas sector – PwC Review","author":"Samuel Kamau Mbote","date":"July 23, 2014","format":false,"excerpt":"[twitter-follow screen_name='oilnewskenya'] The challenges facing oil & gas companies operating in Africa continue to be diverse and numerous fuelled by fraud, corruption, theft, poor infrastructure and a lack of skilled resources, among others. Regulatory uncertainty and delays in passing laws are severely inhibiting sector development in many countries around the\u2026","rel":"","context":"In "Elsewhere in Africa"","block_context":{"text":"Elsewhere in Africa","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/elsewhere-in-africa\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2014\/07\/pwc-logo-2010.jpg?fit=709%2C600&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2014\/07\/pwc-logo-2010.jpg?fit=709%2C600&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2014\/07\/pwc-logo-2010.jpg?fit=709%2C600&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2014\/07\/pwc-logo-2010.jpg?fit=709%2C600&ssl=1&resize=700%2C400 2x"},"classes":[]},{"id":6468,"url":"https:\/\/www.oilnewskenya.com\/index.php\/africas-oil-gas-industry-needs-innovate-embrace-technology-to-remain-competitive\/","url_meta":{"origin":7226,"position":1},"title":"Africa\u2019s Oil & Gas Industry Needs To Innovate & Embrace Technology To Remain Competitive","author":"","date":"November 1, 2017","format":false,"excerpt":"The time is opportune for oil & gas companies to take up and utilise advances in technology as an enabler in meeting some of the challenges faced The oil & gas industry in Africa continues to face market challenges arising from the low oil price, competition for revenue growth and\u2026","rel":"","context":"In "Top News"","block_context":{"text":"Top News","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/top-news\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2014\/01\/oil_sudan.jpg?fit=750%2C499&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2014\/01\/oil_sudan.jpg?fit=750%2C499&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2014\/01\/oil_sudan.jpg?fit=750%2C499&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2014\/01\/oil_sudan.jpg?fit=750%2C499&ssl=1&resize=700%2C400 2x"},"classes":[]},{"id":3213,"url":"https:\/\/www.oilnewskenya.com\/index.php\/african-oil-gas-organisations-plan-upturn-oil-price-pwc-survey\/","url_meta":{"origin":7226,"position":2},"title":"African oil & gas organisations plan for an upturn in the oil price: PwC survey","author":"","date":"August 5, 2015","format":false,"excerpt":"Overall, activity in the oil & gas industry across the African continent has slowed in the wake of the declining oil price in late 2014. \u201cWhile the oil price has caused activity to drop, it has also served as a wake-up call to many African governments, which are working hard\u2026","rel":"","context":"In "Top News"","block_context":{"text":"Top News","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/top-news\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2015\/02\/offshore-rig.jpg?fit=1024%2C574&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2015\/02\/offshore-rig.jpg?fit=1024%2C574&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2015\/02\/offshore-rig.jpg?fit=1024%2C574&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2015\/02\/offshore-rig.jpg?fit=1024%2C574&ssl=1&resize=700%2C400 2x"},"classes":[]},{"id":5066,"url":"https:\/\/www.oilnewskenya.com\/index.php\/opportune-time-for-africa-oil-gas-industry-to-consider-change-pwc-oil-gas-review\/","url_meta":{"origin":7226,"position":3},"title":"Opportune Time for Africa Oil & Gas Industry to consider Change: PwC Oil & Gas Review","author":"","date":"August 22, 2016","format":false,"excerpt":"The decline in the global oil price has led to a reduced level of activity across the African continent and had an impact on countries that traditionally depend on oil & gas revenue The decline in the global oil price has led to a reduced level of activity across the\u2026","rel":"","context":"In \"Africa\"","block_context":{"text":"Africa","link":"https:\/\/www.oilnewskenya.com\/index.php\/tag\/africa\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2014\/11\/tullow-oil-jubilee.jpg?fit=600%2C400&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2014\/11\/tullow-oil-jubilee.jpg?fit=600%2C400&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2014\/11\/tullow-oil-jubilee.jpg?fit=600%2C400&ssl=1&resize=525%2C300 1.5x"},"classes":[]},{"id":5870,"url":"https:\/\/www.oilnewskenya.com\/index.php\/16th-africa-independents-forum-set-for-london-in-may\/","url_meta":{"origin":7226,"position":4},"title":"16th Africa Independents Forum Set For London in May","author":"","date":"April 19, 2017","format":false,"excerpt":"As one of the foremost events on the international Oil and Gas calendar, the 16th Africa Independents Forum, which will take place on 24th and 25th May in London, brings together all stakeholders in Africa\u2019s upstream oil and gas to review the state of the industry and exchange ideas on\u2026","rel":"","context":"In "Events"","block_context":{"text":"Events","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/events\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2017\/04\/16th_AIF_logo_darkmint.jpg?fit=1200%2C480&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2017\/04\/16th_AIF_logo_darkmint.jpg?fit=1200%2C480&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2017\/04\/16th_AIF_logo_darkmint.jpg?fit=1200%2C480&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2017\/04\/16th_AIF_logo_darkmint.jpg?fit=1200%2C480&ssl=1&resize=700%2C400 2x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2017\/04\/16th_AIF_logo_darkmint.jpg?fit=1200%2C480&ssl=1&resize=1050%2C600 3x"},"classes":[]},{"id":8429,"url":"https:\/\/www.oilnewskenya.com\/index.php\/fifth-africas-energy-conference-set-for-october-2021\/","url_meta":{"origin":7226,"position":5},"title":"Fifth Africa\u2019s Energy Conference Set For October 2021","author":"","date":"June 25, 2020","format":false,"excerpt":"Africa Oil & Power (AOP) 2021 highlights African integration across borders throughout the entire energy value chain and examines the African investment environment post COVID-19; AOP 2021 welcomes presidents, ministers, national oil companies and utility heads, IPP and renewables executives and more for the fifth edition of Africa\u2019s Energy Conference;\u2026","rel":"","context":"In "Countries"","block_context":{"text":"Countries","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/06\/Africa-Oil-Power.jpg?fit=489%2C352&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]}],"jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/posts\/7226","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/users\/24"}],"replies":[{"embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/comments?post=7226"}],"version-history":[{"count":1,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/posts\/7226\/revisions"}],"predecessor-version":[{"id":7228,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/posts\/7226\/revisions\/7228"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/media\/7227"}],"wp:attachment":[{"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/media?parent=7226"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/categories?post=7226"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/tags?post=7226"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}