Speaking in Nigeria earlier this month, high-level representatives from TotalEnergies, Shell and Chevron all confirmed multi-million-dollar investment projects in the pipeline, from driving frontier exploration to delivering gas from mature markets.
With the Invest in African Energy, IAE forum in Paris fast approaching this May, now is the time for investors to capitalise on a renewed pledge toward developing Africa’s oil and gas resources.
As one of Africa’s most historic producers, TotalEnergies is continuing to prioritise integrated energy projects that span the entire value chain, with an emphasis on improved connectivity and distribution to local and regional markets.
While TotalEnergies has historically been most active in the Gulf of Guinea – namely, Nigeria, Angola and the Republic of Congo – the company is expanding its focus to emerging frontiers like Mozambique, South Africa and Namibia.
Last December, TotalEnergies announced plans to restart its $20-billion Mozambique LNG project in Q1 2024, as well as take an Final Investment Decision, FID on a new Liquified Natural Gas, LNG import terminal at the Port of Matola, which could enable first LNG exports to South Africa upon its completion. In Namibia – where TotalEnergies invested half of its 2023 exploration budget the company is currently appraising its Venus-1 discovery and made another small hydrocarbon discovery at its Mangetti-1X well earlier this month.
TotalEnergies and Shell are taking strong investment decisions to explore Nigeria’s vast energy sector as key IOCs, show deeper interest in Africa’s oil sector.
There is volatility in the oil and gas business, this has never stopped TotalEnergies deploying, and developing resources and technology to enhance optimal utilisation of the resources for the benefit of the countries, the people, and the company itself,” said Mathieu Bouyer, Managing Director and Chief Executive of TotalEnergies Upstream Companies in Nigeria.
In more mature markets like Nigeria, Shell is targeting its gas and deepwater assets, as well as exploring new technologies to reduce operational costs and enhance its competitiveness.
Specifically, Shell Nigeria is deploying the Bonga Main Life Extension Project to extend the life of its Bonga FPSO, as well as mature several projects to deliver gas from offshore fields.
“It has continued to be challenging doing business, but we will continue to look for innovative ways that could help to reduce cost, and also drive efficiency in our business, so it is highly competitive and we stay very relevant in the oil and gas business today to help us survive and still stand tall in spite all the challenges,” said Elohor Aiboni, Managing Director of Shell Nigeria Exploration and Production Company.
Their comments are coming as leading IOCs are affirming their commitment to African oil and gas – a positive indication for service providers, drilling contractors and the industry at-large.
Speaking in Nigeria earlier this month, high-level representatives from TotalEnergies, Shell and Chevron all confirmed multi-million-dollar investment projects in the pipeline, from driving frontier exploration to delivering gas from mature markets.
With the Invest in Africa Energy, IAE, forum, in Paris fast approaching this May, now is the time for investors to capitalise on a renewed pledge toward developing Africa’s oil and gas resources.
As one of Africa’s most historic producers, TotalEnergies is continuing to prioritise integrated energy projects that span the entire value chain, with an emphasis on improved connectivity and distribution to local and regional markets. While TotalEnergies has historically been most active in the Gulf of Guinea – namely, Nigeria, Angola and the Republic of Congo – the company is expanding its focus to emerging frontiers like Mozambique, South Africa and Namibia. Last December, TotalEnergies announced plans to restart its $20-billion Mozambique LNG project in Q1 2024, as well as take an FID on a new LNG import terminal at the Port of Matola, which could enable first LNG exports to South Africa upon its completion. In Namibia – where TotalEnergies invested half of its 2023 exploration budget – the company is currently appraising its Venus-1 discovery and made another small hydrocarbon discovery at its Mangetti-1X well earlier this month.
Also, American multinational Chevron, is not shying away from the continent’s vast human resource and mineral resource potential.
The company is seeking to forge mutually beneficial partnerships with African stakeholders to facilitate knowledge and technology exchange, develop resources more expeditiously and empower local service providers.
Chevron represents one of the largest investors on the continent through its portfolio of large-scale projects, from launching a $1.4-billion infill drilling program in Nigeria, to delivering first LNG cargo in Equatorial Guinea, to starting production at its Lifua-A project in Angola.
The company is also a key shareholder in the West African Gas Pipeline, which delivers Nigerian gas to Benin, Togo and Ghana and plays a critical role in driving energy security in the region.
“We believe that energy is a fundamental building block of the economies and this is important to the economic life of a country,” said Michelle Pflueger, Director at Chevron Nigeria Limited. “As we continue to develop our partnership within Africa, we can support the people and the governments to improve their GDPs.”
The IAE 2024 is an exclusive forum designed to facilitate investment between African energy markets and global investors. Taking place May 14-15, 2024 in Paris, the event offers delegates two days of intensive engagement with industry experts, project developers, investors and policymakers.
Interestingly, worldwide Exploration and Production, E&P spending is set to increase 5 per cent in 2024, decelerating from 11 per cent in 2023, with the global upturn extending into a third year. North American spending growth should moderate to 2.2 per cent in 2024, following 19 per cent growth in 2023.
The majority of spending increases have shifted to international and offshore markets, according to WorldOil.
Specifically, spending by African companies is on track to increase 16 per cent in 2023, which is slightly above the +14.0 per cent growth projected in our mid-year survey.
Initial estimate for 2024 is for E&P spending to decelerate to 12 per cent, followed by the third consecutive year of accelerating growth.
Africa was severely impacted by COVID-19, with E&P collapsing to new lows 55 per cent below the 2012 peak.
However, three straight years of improvements increased capex to 54 per cent beyond the 2020 trough, but spending remains 20 per cent below pre-COVID 2019 levels and 32 per cent from the historical peak.
With growth of 12 per cent in 2024, there is forecast capex increase to 72 per cent from the 2020 trough but remain 10 per cent and 24 per cent below the 2019 and 2012 levels.
At the current pace of growth, spending could approach 2012 levels in 2027. The African Energy Chamber forecasts the continent to potentially spend a cumulative capex of $450 billion in Africa’s upstream sector.
The Nigeria oil and gas sector heavily relies on international transactions, making it highly susceptible to foreign exchange fluctuations.
Fluctuations in exchange rates can significantly impact the sector’s revenue and costs, leading to currency depreciation, inflated import prices, and fluctuations in export revenue.
Since Nigeria’s economy depends heavily on oil exports, this volatility directly affects Nigeria’s foreign exchange earnings and overall economic stability.
Additionally, oil exports, often transacted in US dollars, contribute significantly to the country’s foreign exchange reserves. Thus, sharp declines in oil prices can trigger currency depreciation, further pressurising the Nigerian Naira, according to Maryclare Obiamiwe, of Kenna Partners, in an analysis on, ‘Hedging Strategies For Nigeria’s Oil & Gas Firms’.
Of a necessity, Nigeria’s oil and gas firms must put hedging strategies in place to deal with this currency fluctuation.
Obiamiwe, urges that oil and gas companies in Nigeria can hedge against the risks posed by currency fluctuations in several ways. These hedging measures are broadly categorised into, Financial Instruments and Forward Contracts.
Oil and gas firms can utilise forward sale contracts, also known as forward purchase agreements or advance payment facilities.
These agreements involve a lender agreeing to buy a predetermined quantity of crude oil from the producer at a fixed price. This price is paid in advance by the lender while the crude is delivered at a later date. This provides predictable revenue and financial certainty.
An example is the proposed $33 billion crude oil repayment loan from Afreximbank Limited to the Nigerian National Petroleum Company Limited, which aims to improve dollar liquidity, stabilise the Naira, and reduce fuel prices.
Also, the Africa Oil Company has listed Investment priorities for 2024 looking at advancing its main opportunity set comprised of its core assets in deepwater Nigeria.
The company’s management will also evaluate the options for consolidating the ownership of its core assets and streamlining of the company’s business structure.
The OML 130 drilling campaign that commenced on February 22, 2023, has completed a total of five wells.
One production well and two water injection wells have been brought online at Egina. Two production wells have been completed at Akpo West and brought onstream over the Akpo FPSO during Q1 2024.
The multi-well program is planned for up to nine wells on the OML 130 asset during 2023 and finishing in 2024, with a further option to extend the rig contract to drill additional wells in the Block.
Acquisition of 4D monitor seismic surveys are planned for Akpo, Egina and Agbami during late 2023, through 2024.
The acquisition plan also includes a baseline 4D seismic survey of the Preowei field. The surveys will support future drilling decisions across both OML 127 and OML 130.
Full year 2023 production was in line with the midpoint of the management guidance for both working interest and economic entitlement.
Beyond the aforementioned drilling campaign on Egina and Akpo, which will offset production decline, there is a planned maintenance shutdown for the Akpo field which will occur in Q1 2024, this was previously planned for Q4 2023.
A planned maintenance shutdown will also be executed on Agbami during H1 2024.
Following the 20-year renewal of OML 130 on May 28, 2023, FEED studies have recommenced which could facilitate the final investment decision for the Preowei oil discovery development project. The Preowei oil field is to the north of the Egina FPSO and is a development opportunity via a satellite subsea tie-back project to the Egina FPSO.
Africa Oil has made a strong start in the delivery of its 2024 business plan with the strategic farm-out agreement between its investee company, Impact, and TotalEnergies for the interests in Blocks 2912 (PEL 91) and 2913B (PEL 56), offshore Namibia, which was announced on January 10, 2024.
This transaction gives the company the opportunity to continue its participation in the world-class Venus light oil development project, and the follow-on exploration and appraisal program on the blocks at no upfront cost.
This frees up the company’s balance sheet for the pursuit of other growth opportunities and shareholder capital returns.
Two major oil fields in Nigeria that have been in the pipeline are expected to take off by Q3 of 2024 after a major contract was sealed by the operator, Esso Exploration and Production Nigeria, Deepwater, Limited.
Helix Energy Solutions Group Inc, in a statement announced a deepwater well intervention contract award by Esso, with regards to Erha and Usan fields, located offshore Nigeria.
The project is expected to commence in September 2024, with the vessel expected to be in Nigeria into 2025. The fields are located approximately 97km offshore of Nigeria in water depths ranging from 700m to 1,500m.
Under the contract, Helix will provide the Q4000, a DP3 riser-based semi-submersible well intervention vessel, a 10k Intervention Riser System (IRS), remotely operated vehicles, project management, and engineering services to cover fully integrated well intervention services from production enhancement to plug and abandonment.
Scotty Sparks , Helix’s Executive Vice President and Chief Operating Officer, stated, “We are pleased to announce this contract for the Q4000. We are eager to strengthen our relationship with Esso and to further establish our presence as the leader for well intervention services in West Africa.”
The Q4000 provides a world-class offshore platform for a diverse array of tasks such as subsea well intervention, field and well decommissioning, subsea equipment installation and recovery, well testing, and emergency well containment with dedicated service areas to increase safety and vessel efficiency.
Helix Energy Solutions Group Inc , headquartered in Houston, Texas, is an international offshore energy services company that provides specialty services to the offshore energy industry, with a focus on well intervention, robotics and full field decommissioning.
