Wood Mackenzie: East African Upstream Investment to Hit $7B by 2018

Wood Mackenzie: East African Upstream Investment to Hit $7B by 2018

Upstream investment in East Africa will hit a record level of $7 billion per year by 2018, according to energy research firm Wood Mackenzie.

East Africa has attracted considerable interest from majors and independents in recent years. In 2012 Royal Dutch Shell fought and lost a lengthy takeover battle with Thailand's PTT Exploration and Production for Cove Energy – owner a significant slice of the Anadarko-operated Rovuma offshore basin frontier exploration area in Mozambique, which holds large resources of natural gas. Meanwhile BG Group entered Kenya in 2011, while independents Premier Oil, Tullow Oil and Ophir Energy also hold interests in East African blocks.

Presenting Wednesday at a conference on East African oil and gas in London, Martin Kelly – head of Sub Sahara Africa upstream research for Wood Mackenzie – predicted that a "fascinating" 12 to 18 months lies ahead in East Africa as exploration continues, development plans unfold and a number of high-profile deals are completed.

Kelly noted that 2012 was "an exceptional year" for East Africa with more than 50 wells completed, meaning that the region accounted for nearly half the total volumes discovered around the world through conventional exploration.

"Overall, the outlook for East Africa is a positive one, with a great deal of upstream activity over the next year or so. Onshore developments in Kenya look very promising at this stage; Tullow has discovered over 350 million barrels of oil, which we believe is enough for a commercial development to proceed. Neighboring Uganda is also poised to become a major exporter of oil, as the 1.2 billion-barrel Lake Albert project moves forward," Kelly said.

"Upstream capital investment in East Africa has averaged about $1 billion a year since 2010, excluding exploration investment. As these discoveries are developed, we expect to see levels of investment grow at an average of around 60 percent per year until 2018.  We see the highest levels of investment in Tanzania, Mozambique and Uganda. The surge in investment will also cause East Africa's oil and gas production to triple from around 500,000 barrels of oil equivalent per day, to 1.5 million barrel of oil equivalent.
"For many of the industry's major players the lure of yet-to-find volumes may not be enough. In order to realize this level of investment, it is key that the right incentives are in place as companies will be looking for attractive rates of return and a stable fiscal environment. Striking a balance between investors and governments will not be straightforward, but East Africa appears to be off to good start."

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com


Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Related Companies
 Company: Shellmore info

 - Shell Suspends Pacific Northwest Crude-By-Rail Project (Oct 7)
 - Norway Gas Plant Workers Agree Wage Deal, Avoid Strike (Oct 7)
 - Oil Industry Teams Up to Fight Cyber-Crime (Sep 29)
 Company: BG Groupmore info
 - Despite Cuts, Big Oil to Expand Production into the 2020s (Sep 5)
 - Sound Energy Appoints Ex-BG Exploration Lead (Aug 24)
 - Shell Misses Expectations As Earnings Plunge On Oil, BG Costs (Jul 28)
 Company: PTTEPmore info

 - Thai PTTEP to Invest At Least $1.7B in 2017 to Maintain Output (Oct 3)
 - Thailand's Decom Sector Will Need Workers, Government Policy (Sep 21)
 - Thai Oil firm PTTEP Says May Cut $3.4B Investment Plan this Year (Jan 12)
 Company: Tullow Oilmore info

 - Tullow Oil Confirms Turret Bearing Cover (Sep 23)
 - Tullow Oil: Discovery Made in Cara Prospect Offshore Norway (Sep 16)
 - Statoil Increases NCS Equity Through Tullow Deals (Sep 7)
 Company: Premier Oilmore info

 - Trade Group Oil & Gas UK Makes 4 Board Appointments (Oct 4)
 - Premier Oil Reaps $250M Brexit Windfall From Weak Pound (Aug 18)
 - Premier Hits Oil in Bagpuss Well (Aug 5)
 Company: Ophir Energymore info
 - Ophir Energy Prepares for 'Prudent' Exploration Drilling Campaign (Sep 15)
 - Ophir Says Two Bidders In The Fray For Fortuna Contract (Sep 15)
 - Ophir Energy Commences Oil, Gas Production in Indonesia, Thailand (Sep 13)

Our Privacy Pledge

Most Popular Articles

From the Career Center
Jobs that may interest you
United States Houston: Account Rep, Bus Dev, Sr
Expertise: Business Development|Sales
Location: Houston, TX
Business Development Manager
Expertise: Business Development|Construction Manager|Sales
Location: Tempe, AZ
SXL- Manager, Business Development
Expertise: Business Development
Location: Newtown Square, PA
search for more jobs

Brent Crude Oil : $49.98/BBL 1.59%
Light Crude Oil : $49.18/BBL 1.56%
Natural Gas : $2.73/MMBtu 1.44%
Updated in last 24 hours