Sub-Saharan Africa, especially its largest oil producers Nigeria and Angola, will struggle to raise oil output through the middle of this decade, as international majors are shifting their investment priorities. 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 2020. As international oil majors are reassessing their investment priorities and projects compete for less capital amid an ongoing capex discipline, Nigeria, and Angola—the leading African producers in OPEC—are seeing few new projects being approved. 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 potential and could easily top Europe in terms of oil and gas output.
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. 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 large untapped resource base. Nigeria approved last month a new petroleum industry bill in Africa’s top oil producer and exporter, putting an end to 20 years of debates and delays. International oil majors have not been flocking to Nigerian oil assets now that fossil fuels are even more fiercely competing for Big Oil’s capital plans as majors start shifting more funding to low-carbon energy sources.