• Thursday, June 13, 2024
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Nigeria, Angola will struggle to raise oil output as funding dries – report

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Africa’s biggest oil producers, Nigeria and Angola will struggle to raise output in the next five years as they do not rank important in oil major’s investment priorities, according to data and analytics company GlobalData.

Lack of sufficient investments and few new projects could derail Sub-Saharan Africa’s ambition to increase its crude oil production through 2025 after a difficult pandemic hit in 2020, the report said.

Following pressure from investors concerned about climate change impacts to reduce spending on new projects and an uncertain oil market, international oil companies are reassessing their investment priorities and projects.

Read also: Millions of dollars down the drain, oil in the north remains elusive

GlobalData report says many Sub-Saharan oil and gas projects would suffer some of the worst impacts of the spending cuts and countries like Nigeria and Angola, will suffer the most.

According to GlobalData, the two countries will see falling crude oil and condensate production from this year onwards. At the same time, they also have a relatively small number of oil projects that would come on stream within 2025.

Sub-Saharan Africa has a lot of potentials and could easily top Europe in terms of oil and gas output, Conor Ward, Oil and Gas Analyst at GlobalData, said, commenting on the findings.

“However, companies have been more cautious than ever over their investments. Some of the huge discoveries made over the past decade have seen significant delays with no final investment decision (FID) in sight: as is the case with Shell’s Bonga Southwest/Aparo, which was discovered over 20 years ago,” Ward said.

“Sub-Saharan Africa is seeing a shift of investment away from the more developed countries in the region, most notably Nigeria, and more towards frontier countries such as Mauritania, Senegal, Mozambique, and Uganda as the fiscal terms offered by the host countries are far more appealing and have a largely untapped resource base,” Ward added.

Nigeria has to address the above-ground risks for companies if it wants to attract investment, the analyst noted.

Though Nigeria has passed a Petroleum Industry Bill but other issues including insecurity and dealing with host communities issues have worsened.