IOCs step on break in new Africa exploration
AFRICA IS OF TEN THE FIRST PLACE crude oil explorers are keen to look at once prices are high, but deeppocketed international oil companies (IOCs) have been described as well suited to developing existing oil wells, rather than exploring new ones.
They are perceived to slow down exploration activities on the continent despite the cushy $70 per barrel range oil prices are in.
Exploration projects in Africa are picking up as active rigs working in waters off the continent’s coast have increased to the highest in two years, according to Baker Hughes data, but upstream spending recovers threaten to slow down, rather than accelerate new oil fields exploration, Gabriel Mbaga Obiang Lima, Equatorial Guinea’s energy minister has cautioned.
This is because oil majors can often take longer to assess, prioritize, execute and appraise frontier exploration drilling compared to more nimble, tightly focused independent explorers. He described them as “big elephants”, and said they would not fast-track initiatives and projects.
“Majors have big portfolios and take time to evaluate, they definitely slow down exploration, that’s the negative part,” he said on the sidelines of Africa Oil and Power conference in Cape Town.
Oil majors have emerged leaner and cash- flow positive from the downturn and competition is heating up for quality exploration acreage to rebuild resources depleted during the spending slump, but this is not all good news for Africa.
Despite the view held by the minister, oil majors are racking up stakes in various oil rich African countries and buying oil blocks from indigenous firms.
Meanwhile Total has con- solidated its position in Uganda’s maiden oil fields in recent years while BP is building its African natural gas assets in Egypt, Mauritania and Senegal.
Also, Shell secured its first exploration acreage offshore Mauritania in July, while ExxonMobil acquired stakes in Namibian fields in August.
“What are the majors like Total, Exxon, and Shell seeing that the rest of us are not? The independents are leaving but the majors are coming back, and are coming very aggressively,” Obiang Lima said.
Equatorial Guinea is to launch a new exploration bidding round in January next year in the hope of attracting new upstream spending and increase the country’s output from its current 120,000 barrels per day, the minister said.