Africa's Oil 'Sweet Spots' Still Viable After Price Rout

"You need to be close to or at production and have visibility on cash flow. That's critical right now," said Chris Bake, an executive at top energy trader, Vitol which has a stake in a $7 billion Ghana project.

Paul Eardley-Taylor of Standard Bank Oil and Gas said he expected liquefied natural gas projects in Mozambique - home to an estimated 180 trillion cubic feet of gas, or enough to supply Germany, Britain, France and Italy for 18 years - to go ahead.

"Mozambique achieved a lot over the last two months with the passing of enabling legislation. Standard Bank is hopeful that a final investment decision can be reached this year," Eardley-Taylor said. The CEO of South African petrochemicals group Sasol David Constable also said Mozambique remained a priority. "We want to stay warm other there," he said.

Revised Terms

Frontier projects are seen as most vulnerable to cuts such as offshore Namibia and South Africa as well as Angola and Gabon where vast oil reserves resembling Brazil's are thought to be trapped deep underwater beneath a salt layer.

Oil-dependent countries with reserves that are costly to develop such as Gabon and Angola should revise terms.

"If you want to get companies to start looking at licences again then they have to be made more attractive. It's very simple supply and demand," said Heavey. Mozambique has extended a bidding round by more than three months.

Other factors such as the Ebola epidemic in Liberia and Guinea and uncertainty over an oil bill in Nigeria are deterring investment in projects that might otherwise be attractive, even in the current environment, executives and analysts said.

(Writing by Emma Farge; additional reporting by Ed Cropley, Ed Stoddard and Karolin Schaps, editing by David Evans)


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