Against a backdrop of civil unrest, political uncertainty and unattractive fiscal regimes, it is no surprise that there is limited interest from international investors to embark on an exploration adventure in Africa.
Those that are, are mostly focused on redevelopment of old discoveries and fields. These assets often remain locked in local companies, with close connections to the government.
But how to attract the companies that are able to explore new frontiers? Only a few key players, likely less than five as operator, are able to take on deepwater exploration in Africa.
As a result, there is only limited competition for open acreage and multiple comparable opportunities exist in several countries at the same time.
So, why would a country exert pressure on this limited pool of potential bidders by introducing hard deadlines for putting in a bid? Other well-known drawbacks of recent bid rounds include the poor-quality data rooms, delays, cancellations and long negotiation processes, coupled with rigid and often non-negotiable terms that do not match the asset value.
Patient negotiation
Instead, there are well-founded arguments in both government and industry that an open-door policy, in combination with a well-prepared data room and the opportunity to negotiate directly with authorities, is a preferred model. In this quiet operator landscape, it is much more preferable to arrive at the award of one or two blocks with patient negotiation than pretending multinationals are fighting for the same acreage.
Let’s take a look at some of the recent and current licensing rounds across Africa.
Local companies
One of the more successful rounds has been the Angolan round which closed in January 2024, receiving over 50 bids. However, these were principally submitted by small and mostly local companies for the 12 onshore blocks on offer.
The Nigerian Upstream Petroleum Regulatory Commission opened a bid round offering 12 onshore and deepwater blocks in April 2024 and this was subsequently increased to 29 with the addition of 17 more deepwater tracts. There is however limited interest in Nigeria except from local companies reflecting global perceived political risk and other surface risks.
Zanzibar, a semi-autonomous region of Tanzania, has made eight offshore blocks available in the Pemba-Zanzibar sub-basin. This is frontier acreage for which demand has been extremely limited except for players already in-country.
Contract sanctity perceptions
In August, the Egyptian Natural Gas Holding Company launched its 2024 bid round for 10 offshore and two onshore blocks in the Mediterranean and the Nile Delta with a bid deadline on 25 February 2025. Egypt is in a serious gas supply crisis, which has affected perception of the contract sanctity for offshore investment.
Open doors
In conclusion, the recent and current bid rounds in Africa seem to confirm there is very limited uptake by international players able to open up new frontiers. Maybe it is time to revise the rigid bid round concept and permanently open the doors for those keen to explore.
