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."


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.

Company: Shell more info
Operates 30 Offshore Rigs
 - Oil's Heavy Hitters Line Up to Dive Into Mexico's Deep Waters (Jan 26)
 - UK Firm Intertek Says Employee Involved in Shell Oil Theft Case (Jan 17)
 - Shell Looks Beyond Road Fuels to Secure Future of Refining (Nov 06)
Company: BG Group more info
 - Shell Mulls LNG-Hub Network as Use by Ships and Trucks Expands (Jul 11)
 - Tanzania Laws Would Allow Govt to Tear Up Mining, Energy Deals (Jun 29)
 - Despite Cuts, Big Oil to Expand Production into the 2020s (Sep 05)
Company: PTTEP more info
Operates 3 Offshore Rigs
 - Ecuador to Offer Oil Blocks Under New Bidding Terms in Jan (Oct 06)
 - ExxonMobil Says Will Drop Discussions Over Indonesia's East Natuna (Jul 18)
 - Hydrocarbons Encountered at Te Giac Trang Field Offshore Vietnam (Dec 20)
Company: Tullow Oil more info
Operates 1 Offshore Rigs
 - UK's Tullow Oil Names New Head Of Ghana Operations (Feb 15)
 - Ivory Coast Awards Tullow Two New Oil and Gas Blocks (Jan 17)
 - UK's Tullow Oil Lifts Outlook On Higher Crude Prices, Output (Nov 08)
Company: Premier Oil more info
Operates 1 Offshore Rigs
 - Independents Go Big in North Sea (Jan 03)
 - European Oil Producers' Weak Hedging Shows Bet on Price Rebound (Jul 31)
 - Mexico Oil Privatization Pays Off With Billion-Barrel Find (Jul 12)
Company: Ophir Energy more info
 - Ophir Energy Cuts Cost; Eliminates Staff (Jul 12)
 - Tanzania Laws Would Allow Govt to Tear Up Mining, Energy Deals (Jun 29)
 - Ophir to Borrow $1.2B from Chinese Banks for Fortuna Floating LNG (May 08)