“Combined with the commercial success rate for the wells drilled so far being better than 50%, this year is looking promising for hydrocarbon exploration across the African continent”, said Jamie Collard from Westwood when speaking to me this week. He will share more details during his presentation at the IMAGE Conference in Houston next week.
“At the same time”, he added, “we should be mindful that in 2014, more than 60 high-impact wells were drilled in Africa. But, since an incredible low in 2020, when only four high-impact wells drilled, it can’t be denied that Africa is on its way up.”
From gas to oil
Another factor that will please most explorers is that since 2018, it’s oil that was predominantly discovered rather than gas. The years 2015-2017 were exceptionally rich in gas discoveries, with more than 6 billion barrels of oil equivalent discovered mostly as gas, primarily driven by successes in Mauritania, Senegal and Egypt. But the tide has turned in favour of oil since, with Namibia taking the biggest share in this.
“Unless there is a well-developed local market for gas, or a readily available export route, gas is still seen as a difficult product to get to market”, said Graeme Bagley, who also works for Westwood. “The Eastern Mediterranean is a hotspot for gas exploration, with Egypt contributing significantly to success in the region”, he says, “which is no surprise given domestic demand and geographical position relatively close to the network of European pipelines.”
Of the 32 African basins where high-impact drilling took place over the past 10 years, only 10 delivered commercial success and only in five basins more than 1 billion barrels of oil equivalent was found: the MSGBC, the Orange, Nile Delta, Tano and Congo.
If Namibia was Guyana…
“What is subsequently happening in these hotspots is not the same”, said Jamie. “In the Nile delta, commercialization of discovered volumes is happening fast, because of the presence of infrastructure and a local market. In contrast, despite the gas discoveries in the MSGBC, most majors have since left the basin because of disappointing exploration results, the absence of a local market and the investment required to build (floating) LNG terminals.” And the Orange Basin? “If the Namibian discoveries were on the same timeline as the Liza discovery in the Stabroek licence offshore Guyana, the Venus and Graff discoveries would have received FID already”, added Graeme. If anything, it shows the more complex nature of the Namibian finds, which was recently confirmed by Shell’s CEO Wael Sawan when he said that the major needed more time to further address subsurface complexities before being able to take FID.
“Despite these uncertainties, the Orange Basin will remain active in 2024, with at least three more wells expected to spud in Namibia before the end of the year”, said Jamie. The timing for exploration drilling is less clear offshore South Africa, and is likely to commence from 2025. Elsewhere in South Africa, the recent Brulpadda and Luiperd gas discoveries were left in an uncertain future with TotalEnergies recently exiting Block 11b/12b. “Once more, it shows that making a discovery does not always lead to commercial success.”
