Firms fight for Africa’s oil and gas

Africa is emerging as a leading oil exploration frontier with prospecting companies repositioning themselves as the global economy recovers from financial crisis.

Global Pacific & Partners, a consulting firm, said interest in Africa is increasing with search for fossil fuel gaining momentum.

It projected that crude oil prices will average $75 per barrel next year as economic activities pick up.

Global’s chairman Duncan Clarke said the estimate is based on development cost among others for exploration adding that about $300 billion has been invested in Africa’s oil and gas exploration projects.

Begin drilling

In Kenya, for example, a second attempt at striking it rich with oil will kick off with the drilling of a five kilometre deep well in Isiolo by a Chinese firm within the next two weeks.

Mr Clarke said during the opening of South-South oil and gas management conference in Nairobi on Monday that foreign state-owned oil companies have dominated the upstream exploration sector in Africa.

Petronas of Malaysia, China National Offshore Oil Corporation and China National Petroleum Corporation are among the companies that have increased their operations on the continent.

Mr Clarke said European and American firms in the past dominated the oil and gas sector in Africa but the trend is changing with Chinese, Indian and other new entrants competing for a piece of the pie.

He said Africa’s share of world oil output in 2008 stood at 8 per cent noting that energy security still faces challenges like global supply concerns and geopolitical instability citing the Niger Delta as an example.

Bigger slice

“Civil unrest in the delta has for years disrupted Nigerian oil production with many facilities remaining off-line leading to loss of revenue from export of oil,” said Mr Clarke.

He said although African governments want a bigger slice of the oil and gas profits, the continent has to deal with the challenge of managing and getting more value out of their resources.

The consultant said exporters have suffered a 60 per cent drop in oil prices from a record high of $130 per barrel last year, translating to a decline in revenues and savings due to the global financial and economic crises

He said oil and gas resources are of little use without pipelines and refineries among others that enable the products to be moved, processed and converted to useful forms of energy.