Africa's Deepwater Oil Surge: A New Era of Energy Potential

Recent exploration successes and strategic project developments are setting the stage for a transformative era in Africa's energy landscape.

A Surge of Deepwater Discoveries on the Horizon

According to Rystad Energy, Africa could see an influx of about 3.5 million barrels of oil equivalent per day (boepd) from under-construction and pre-final investment decision (pre-FID) projects by 2035. Breakthroughs in countries like Namibia and Côte d’Ivoire have fueled renewed interest in exploring deepwater territories. Now, nations such as São Tomé and Príncipe, Liberia, and Sierra Leone are emerging as hotbeds for securing exploration acreage, drawing the attention of energy giants eager to tap into these untapped reserves.

Sanctioning Projects: Peaks, Valleys, and a Promising Future

Historically, the deepwater sector in Africa saw a surge in project sanctioning between 2015 and 2019, thanks to major discoveries like Eni's Zohr gas field in Egypt and TotalEnergies’ ambitious Mozambique LNG project. These projects, based on the Golfinho and Atum discoveries, set the tone for Africa's deepwater potential.

However, the momentum slowed significantly after the COVID-19 pandemic. The average annual sanctioning of deepwater resources plummeted to around 330 million barrels of oil equivalent (boe), a stark contrast to the nearly 1.89 billion boe sanctioned annually during the pre-pandemic peak years. Yet, Africa is on the brink of a new chapter. With Namibia's recent breakthroughs, along with ongoing developments like Area 4 in Mozambique, the next phases of Baleine in Côte d'Ivoire, and several projects in Nigeria, the continent is gearing up for another wave of deepwater projects. If all goes as planned, experts predict that the annual deepwater resource sanctioning could exceed 2 billion boe between 2025 and 2029, with the potential to push beyond 3 billion boe if favorable conditions align.

Overcoming Hurdles to Unlock Massive Potential

While the future looks promising, a few challenges need to be addressed to unlock Africa's full deepwater potential. One critical factor is the need for fiscal incentives to attract investment. Additionally, ensuring security for associated onshore facilities remains a priority, especially in regions where instability could pose risks to project timelines.

Energy majors are also selectively prioritizing the most profitable ventures in their portfolios, given the uncertainties of the global energy landscape. However, there's a silver lining: the continent's rich natural gas reserves offer a pathway to more secure investments. By advancing gas-to-power projects, Africa could not only bolster its hydrocarbon sector but also significantly improve electricity access for its populations, paving the way for broader economic development.

A New Chapter in Africa's Energy Journey

As Africa gears up for this deepwater renaissance, the continent stands at a pivotal moment. With the right mix of strategic investments, policy support, and security improvements, Africa could very well redefine its role in the global energy market. The discoveries under its deep blue waters may just be the key to unlocking a more sustainable and prosperous future for the continent.