Nigeria, Others Suffered 40% Drop In Oil Investment – Report

Nigeria and other oil-producing countries in sub-Saharan Africa saw a 40 per cent decline in oil and gas investment in 2020 to the lowest level in nearly 20 years, a new report has said.

The report titled ‘Sub-Saharan Africa Upstream: 2020 in review’, was released on Wednesday by Africa Oil Week in partnership with Wood Mackenzie.

It said, “The year 2020 was a brutal year for sub-Saharan Africa. Investment was slashed by 40 per cent and upstream value was down by 20 per cent with pre-FID (Final Investment Decision) projects deferred and downgraded. Woodside’s Sangomar in Senegal was the only project sanctioned,” it said.

“Nigeria hardest hit with capital expenditure cut by 79 per cent but spend on Total’s Mozambique LNG development picked up pace. Upstream NPV10 falls 20 per cent and value of pre-FID projects nearly halves. Nigeria’s suffers the biggest reduction, but some gains in South Africa.”

The report said crude oil production fell by five per cent as the Organisation of Petroleum Exporting Countries and its allies agreed to cut production to stabilise the oil price.

It said gas production was down four per cent due to declining production in Nigeria and Equatorial Guinea.

The report said spending cuts and OPEC cuts saw production decline across the board, adding that SSA’s high cost base made it particularly vulnerable to the oil price crash.

“Exploration drilling was at the lowest level since the 1950’s with just one commercial discovery,” the report said, adding that exploration and appraisal drilling fell by 85 per cent.

It said merger and acquisitions transactions were down but Equatorial Guinea and Cameroon gained an oil major as Chevron took over Noble Energy.

It added that discovered volumes decreased by over 80 per cent as high profile wells were deferred.

According to the report, Total’s Luiperd well in South Africa was the only bright spot in a black year for exploration.

It said, “Most fiscal terms in SSA are still tougher than the global average. Equatorial Guinea improved their fiscal terms, Nigeria and South Africa progressed draft petroleum bills.

“Nigeria opened its first marginal fields round in nearly 20 years; First E&P achieved first oil from OMLs 83 and 85 in Nigeria, and Nigeria Petroleum Industry Bill passed first two readings in National Assembly.”