- Production: Signs of recovery after a significant production fall
- Demand: A half-century trend of rising demand
Production in decline
In 2017, Africa produced 8 million barrels of oil per day, down 2 million barrels per day during the course of a decade.
A decade before, Africa’s Oil Production Indicator was 334%. In 2012 it was 260%. Today it is 200%. This means that the region’s export potential is down to 4.0 million barrels per day, compared to 5.7 million barrels per day in 2012 and 7.1 million barrels per day in 2007.
A reduced export potential of more than 3 million barrels per day translates into a reduced revenue income of USD 150 million per day – income the region desperately needs.
Africa’s biggest producer is Nigeria, accounting for 25% of the region’s volume. Nigeria’s 2017 production of almost 2 million barrels per day is slightly above the 2016 level, but about 10% below the average of the last 10 years.
Africa’s next-biggest producers are Angola and Algeria, each of which has 20% of production. Whereas Angola’s production is stable at about
1.7 million barrels per day, the production in Algeria was down by 0.5 million barrels per day versus 10 years ago.
Libya, which in the early 1970s led African oil production with 50% of the total, accounted for only 10% of production in 2017.
A demand milestone
African oil demand continued its upward trajectory in 2017, surpassing 4 million barrels per day. In 2007 the continent needed only 3 million barrels per day.
Impressive though this increase is – particularly compared to a demand of 1 million barrels per day in 1975 – the 4 million barrel daily rate of consumption is only equivalent to the combined demand of Germany and France. Together, those countries have a population of 150 million. Africa’s population exceeds one billion.
The demand leader in Africa is Egypt, which consumes 0.8 million barrels per day. South Africa follows with daily demand of 0.6 million barrels.
What remains and where
There is enormous scope to meet Africa’s rising demand for oil. The region holds 7.5 % of the world’s reserves. Libya has the largest, with 48 billion barrels of proved reserves. Nigeria follows with 38 billion barrels. The challenge will be in attracting the investment needed to bring the region’s oil to the surface.
Future of oil in Africa
With global oil demand set to keep rising for the foreseeable future, Africa will play an important role in meeting that need. One of our objectives is to build on the success of the TEN Field in Ghana, which first produced in 2016. We also believe that our flagship development, the Jubilee Field, also offshore Ghana, has much more to offer after 8 years of production. By early 2019, we aim to get production in Ghana up to 180,000 barrels per day.
There are also 100s of millions barrels of yet-to-be developed resources in Ghana, with further upside potential. Over the years, we have been highly successful in Ghana and we expect that trend to continue.
Elsewhere in Africa, significant oil discoveries in Kenya and Uganda demonstrate major development potential and we see these projects coming on stream and delivering around 300,000 bopd gross in the early 2020s. New technology is enabling us to make the most of what we find. In Cote d’Ivoire, for example, full tensor gravity gradiometers have proven to be very helpful.
Of course, Africa continues to present significant challenges as well as opportunities. These include access to exploration acreage for credible exploration companies, difficult licence terms and complicated tax regimes. But increasingly, governments are willing to discuss these challenges and the best ways to overcome them. This sort of progress is enhancing the prospects of finding and producing more oil in Africa.
Robin Sutherland, General Manager New Ventures Africa, Tullow Oil