By Ajong Mbapndah L
Invited to headline the American Association of Petroleum Geologist’s (AAPG) Division of Professional Affair’s luncheon on Africa, on the sideline of AAPG’s yearly conference, Verner Ayukegba, Senior Vice President of the African Energy Chamber-AEC spoke to invited guests on the diversity of opportunities to invest in Africa’s oil and gas and energy sectors.
Building off the ExxonMobil’s outlook for 2050, published in 2024, Ayukegba told the audience that more than 50% of the world’s energy consumption will still be generated from oil and gas, despite significant improvements in technologies to reduce consumption and emissions as well as the increasing abilities of renewables. Global demand for oil and gas is expected to grow steadily, driven by population growth, increased urbanisation as well as increased industrial activity in developing countries, he said.
According to VP Ayukegba, Africa remains one of the most underexplored regions for oil and gas, producing only over 8% of global oil output and 6% of global gas output. To meet rising demand, we are likely to see a significant rise in exploration across Africa with spending now expected to increase over the 5 years outlook, marking a reversal from the 60% drop between 2015 and 2020, Ayukegba said.
“We are likely to see a significant rise in exploration across Africa with spending now expected to increase over the 5 years outlook, marking a reversal from the 60% drop between 2015 and 2020,” Ayukegba said.
Touting the potential, Ayukegba said sourcing oil and gas to meet this growing demand to 2050 and beyond, presents a major opportunity for investors and E&P companies alike. Citing the IEF, Ayukegba said the annual Upstream capital expenditure is expected to rise to 22% by 2030 in a bid to meet this growth in demand.
“Many African countries, including major producers like Angola, Algeria and Nigeria, recognise that they face stiff competition from other regions for these investment dollars and have embarked on major regulatory changes to improve their operating environments. In order to increase the attractiveness of their countries for investors, and to avoid the risk of being saddled with stranded resources, African countries have multiplied reforms intended to provide incentives to increase drilling, streamlined their tax systems to meet globally acclaimed standards, and introduced specialised upstream regulators,” Ayukegba said.
Using specific examples to buttress his case, Ayukegba cited Nigeria that enacted its long-awaited Petroleum Industry Act (PIA) in 2021, which led to the creation of an upstream focused regulator the NUPRC as well as a downstream and mid-stream focused regulator, the NMDPRA. The NUPRC has the technical competencies to respond swiftly to changing market conditions and continuously foster an ever-improving industry environment for investors, he said. Ayukegba told the enthused audience that bid rounds are now held frequently with the focus being on ceding licenses to companies that have the technical and financial capacity to fulfil their work program obligations.
“The new act has also brought about much needed transparency in the governance of the sector as well as simplified the taxation regime in place. Tax incentives for new drilling programs are readily available. Whilst there is still more that can be done in terms of reforms, we expect Nigeria’s prolific basins to see increased capital inflows over the next decade,” said Ayukegba.
Like Nigeria, Ayukegba said Angola has also embarked on the road of constant reforms aimed at ensuring that the country regains and keeps its competitive edge.
“In 2019, Angola enacted vast reforms in its oil and gas sector. Key to those reforms was the creation of the upstream regulator ANPG, which immediately embarked on simplifying the attribution of new licenses with a multi-year bid round, Angola also simplified its taxation structure for the sector, leading to increased exploration activity, said Ayukegba.
According to the AEC VP, other countries that have benefited from an increase in exploration spending in Africa include Namibia, Cote D’Ivoire, Senegal, Mozambique and South Africa. The result has been groundbreaking discoveries that underline Africa’s huge potential, Ayukegba said.
Ayukegba called on AAPG members to aggressively pursue opportunities across Africa, ideally in collaboration with local companies that have been able to build competencies and capacity in recent years.
