• Sunday, June 23, 2024
businessday logo

BusinessDay

Deepwater development to double gas output from Sub-Saharan Africa by 2030

Nigeria announces tender for experts to operate Port Harcourt oil refinery

Due to vast undeveloped deepwater resources, untapped natural gas supplies in Sub-Saharan Africa are set to be unleashed this decade, with output more than doubling in 2030, Rystad Energy research revealed.
The output is projected to increase from 1.3 million barrels of oil equivalent per day (boepd) in 2021 to 2.7 million boepd in 2030.
While deepwater developments have played a crucial role in the region’s liquids output to date, averaging about 50 per cent of annual production, gas output from such fields has been minimal. But it is expected to change as gas from deepwater reserves will surge in the coming years.

“Production from deepwater developments will skyrocket from 120,000 boepd in 2021,” it stated. “9 per cent of total output including shelf and land production, to 1 million boepd accounting for 38 per cent of total output.
Of the current potential recoverable reserves across Sub-Saharan Africa, about 60 per cent lie in deepwater regions, of which close to 60 per cent is gas.

Nigeria, meanwhile, holds significant recoverable reserves of gas that will contribute to the expected output hike.
However, Mozambique dominates with 52 per cent of the total recoverable gas resources in the area, followed by the Senegal–Mauritania maritime region with a combined 20 per cent and Tanzania with about 12 per cent.
On the other hand, Sub-Saharan African liquids production is expected to drop below 4 million barrels per day (bpd) for the first time in more than 20 years but will recover by 2028 and return to 2020 levels of around 4.4 million bpd by the end of the decade.

Read also: Schneider Electric unveils microgrid solutions for cleaner energy

The energy firm stated that liquids output is projected to grow in the 2030s, too, with total production of approximately 5 million bpd in 2035.
According to the report, liquids account for about 40 per cent of the region’s total recoverable deepwater resources, with Nigeria accounting for 33 per cent and Angola for 31 per cent.

Meanwhile, Ghana and Mozambique are two other countries with significant untapped resources, amounting to 8 per cent and 7 per cent, respectively, of the region’s deepwater liquids reserves.
Deepwater projects in Sub-Saharan Africa, on the other hand, are risky and can be delayed or halted due to high development costs, financing challenges, fiscal regime issues, and other above-ground risks.
Rystad also stated that many deepwater projects will face challenges getting off the drawing board as majors continue to rein in upstream spending and plow a course on the energy transition to help lower emissions.

“Majors are focusing on lowering upstream costs, reducing emissions, increasing renewables, and accelerating the energy transition, so deepwater projects often take a back seat when it comes to allocating investment.”
Meanwhile, European banks are tightening their rules for funding high-emission hydrocarbon projects, and African banks may find it difficult to meet the demand.
As a result, Asian banks, primarily Chinese, face less stringent regulations funding fossil fuel developments.