A webinar hosted by Rystad Energy and the African Energy Chamber investigated exploration activities across the African oil and gas market.

Ahead of African Energy Week (AEW) – Africa’s premier event for the energy sector which runs from October 18 – 21 in Cape Town – market research firm and AEW 2022 intelligent partner, Rystad Energy, and the African Energy Chamber (AEC) hosted a webinar exploring oil and gas exploration trends across the African market.

Under the theme, ‘Exploration Potential for Africa’, the webinar was moderated by Bimbola Kolawole, Head of Business Development in Africa at Rystad Energy, with speakers Verner Ayukegba, Senior Vice President, the AEC; Per Magnus Nysveen, Senior Partner and Head of Analyses at Rystad Energy; Palzor Shenga, Vice President, Upstream Research, Rystad Energy; and Aatisha Mahajan, Vice President, Exploration Research, Rystad Energy.

The webinar explored ongoing exploration trends as well as opportunities in Africa, with Ayukegba stating that “As a result of the COVID-19 crisis, exploration revenue has reduced significantly. However, owing to recent price developments, an increasing number of companies are looking into increasing investments evidenced by a rapid increase in exploration activities offshore Namibia, in Angola and in Zimbabwe. ExxonMobil will be launching a massive campaign in Angola next year while two appraisals are expected in Namibia. For Africa to ensure energy security and long-term supply whilst meeting global demand, we need to focus more on exploration.”

Commenting on whether the core spots of exploration in Africa have changed, Mahajan explained that “We see a lot of frontier exploration. Exploration is not focused on certain regions and exploration spots have changed. Angola, Namibia and Egypt, even with the downturn of the market, have continued. Exploration has been dynamic with increased activities in West, East and North Africa which have led to significant discoveries such as the Yakaar-Teranga in Mauritania. Interest by majors is also increasing with the companies coming back to the continent resulting in other major discoveries such as the Luiperd and Brulpadda in South Africa.”

Shenga added that “There has been a decrease in activities but new license increases and recent discoveries are pushing ahead offshore activities. We have a lot of onshore potential in Africa in which we will see many activities in years ahead.”

Commenting on licensing round opportunities in Africa, Maharaj stated that, “Upcoming countries such as Seychelles and Zimbabwe have also changed the landscape with increases in onshore drilling interest. South Sudan, Congo, Sierra Leone, Tunisia and Kenya are also set to introduce licensing rounds next year. Some might be finalized this year as an increasing number of countries complete licensing processes.”

In agreement to Maharaj’s notion, Ayukegba added that “There has been a 180% shift in the manner in which governments are doing, there has been significant change and there has been more regular engagements. There is now more regulation aimed at driving drilling. At AEW 2022, we are going to see announcements from a couple of countries awarding licensing blocks.”

In regard to how Africa can expand exposure of licensing rounds, Shenga stated that “Success does not depend on the number of licensing rounds or blocks awarded, but on the companies awarded as well. Accessibility, environmental risk and geopolitical trends are some issues prioritized by companies when assessing their participation and the potential of a market.”

According to Ayukegba, “It has to be the right geology. African countries must invest in data to ensure geology is correct. We need to look at fiscal terms which are favorable and competitive in the market. If we don’t have the right terms, firms will run away. We also need to understand what is happening in international markets to be able to attract investors from there. Decarbonization needs to be prioritized and project timelines need to be short to take advantage of market prices. Local content rules need to make sense.”

Nysveen said that with capital remaining a significant challenge, Africa needs to implement “integrated business plans to unlock more exploration capital.”

What’s more, the webinar analyzed the role of recent discoveries on exploration in Africa. Commenting on this, Shenga stated that they “lead to a rise in exploration and in investments. For example, Chevron is now moving back to Namibia after 19 years of market absence whilst Shell is moving exploration focus east of recent discoveries in South Africa.”

Africa’s exploration landscape will be further unpacked during AEW 2022, with a suite of market stakeholders, global financiers and public and private sector companies making their way to Cape Town for four days of networking and dialogue.