The African continent will remain a key spot for hungry investors keen to take advantage of bumper revenues as explorers spurred on by high oil prices seek out previously under-explored frontier regions.
Forecasts by Cambridge Energy Research Associates (CERA) show that West African oil production capacity is projected to increase from 4.9 million b/d in 2003 to 8.2 million b/d in 2010. This means that one out of every five barrels of growth in global oil production capacity to 2010 could come from West Africa.
Nigeria, gripped by months of community unrest that has cut off over a quarter its 2.4 million b/d production, still attracts companies because of its enormous oil and gas resources.
Two countries - Angola and Nigeria - will account for the lion's share of regional production growth, but others will also play important roles: Chad, Congo-Brazzaville, Equatorial Guinea, Gabon, and possibly Sao Tome & Principe and Niger.
Majors, independents and National Oil Companies continue to plough billions of dollars into the region's untapped oil and gas riches, driven by the shift away from more mature acreage and the scramble for replace reserves.
China, the world's second biggest consumer, has also elbowed its way into Africa as it aggressively seeks assets to quench its growing thirst for energy. Trade between China and Africa reached around $40 billion in 2005, a rise of 35% from a year earlier and almost four times higher than in 2001.
China along with Malaysian companies replaced western companies in Sudan, where production is expected to rise above the 1.1 million b/d by 2010, making Africa's largest country one of the continent's oil top heavyweights behind Libya, Nigeria and Angola.
In April, China and Nigeria agreed a $4 billion investment deal in which the Chinese would invest $2 billion in Nigeria's downstream sector in exchange for preferential rights on four oil blocks. It has also shown interest in participating in the privatization of at least one of Nigeria's four refineries, an exercise shunned by western companies for being non-lucrative.
The China Export and Credit Insurance Corp in 2004 also pledged $7 billion investment in power generation, coal and agriculture in the next few years. Chinese Premier Wen Jiabao only last week wrapped up a landmark visit to Angola, Beijing's main oil supplier, where it recently clinched significant non-operating stakes in the relinquished parts of Angola's prolific deepwater blocks 17 and 18.
Wen also visited South Africa, Tanzania, Egypt, Ghana, the Republic of Congo, Angola and Uganda where a slew of economic and technical cooperation, energy and infrastructure, mining, oil exploration agreements were signed.
Nigeria, gripped by months of community unrest that has cut off over a quarter its 2.4 million b/d production, still attracts companies because of its enormous oil and gas resources.
Average spending in oil and gas exploration is expected to peak at $12 billion/year over the next five years with current oil reserves of 35 billion barrels including condensates to rise by 2.1 billion barrels from several ongoing key projects.
In a recent mini oil licensing round, 10 companies pre-qualified to pick up acreage included India's ONGC/Mittal, China National Petroleum Corporation, Taiwan's China Petroleum and Italy's Eni. The Nigerian government has said companies willing to invest in the country's downstream sector will be given preference to the 16 blocks on offer.
While not attracting western majors, the 2005 licensing round saw South Korean and Chinese companies clinching seven of 14 blocks offered after agreeing to invest in the country's power and refining sector.
Created on: July 20, 2006
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