SUMMARY:
The world continues to need oil, but less than before the COVID-19 pandemic, due to more people working from home, and people fearing the lack of social distancing on airplanes, trains and busses. Many oil explorers suspended some drilling. Many oil producers idled some wells. Many big oil companies put up some assets for sale. But oil exploration is not dead in Africa, which was a hot spot for oil and gas exploration before the pandemic.
DETAILS:
French Total and the Uganda government just signed a deal to construct a pipeline to carry Ugandan oil to oil tanker ships on the Kenyan coast. The presidents of countries signed their own deal about the $3.5-billion infrastructure. The final investment decision on the pipeline is expected by the end of this year.
Uganda and Kenya would both be newcomers to the oil exporting community. If construction of a $3.5-billion oil pipeline makes economic sense for two poor countries, there may be some hope for oil demand.
Last week Canadian exploration company Africa Energy said it expected to strike a lot of oil in an offshore block in South Africa. possibly exceeding an earlier discovery by Africa Energy and Total in the same block. Earlier this year, Africa Energy doubled its stake in the consortium exploring the block to 10 percent.
The Luiperd prospect is the largest of five prospects in the offshore block 11B/12B in South African waters. Consortium members estimate Luiperd resources alone to be in excess of 500 million barrels. Africa Energy said the entire offshore block has potential reserves of several billion barrels.
Australian company Invictus plans to start drilling exploration wells in Zimbabwe in October 2021-- the first oil and gas wells to be drilled in that country. The project will cost $15 million, Africa Oil and Power reported last week. In the 1990s, Exxon had identified that area was highly likely to contain hydrocarbons, but they wanted oil, and the area was more likely to contain natural gas. Zimbabwe, now 100-percent dependent on imports for its energy needs, is negotiating a production sharing agreement with Invictus in case oil and gas are found.
UK-based explorer PetroNor just received a 30-year drilling license from the Gambian government, concerning two offshore blocks. PetroNor will explore one of the blocks, with the other explored by an unnamed “major oil company”. The friendly Gambian government will give PetroNor a year to decide if it wants to proceed with drilling in the offshore block.
Big oil producer Angola recently approved a plan, to take effect by 2025, with a goal of producing at least 1 million barrels per day by 2040.
PANDEMIC DELAYS
The COVID-19 pandemic reduced African oil and gas demand too. Kenya's government said Covid-19 slowed down exploration in the Turkana region, delaying their desire to become an oil exporter until 2024, rather than 2022.
The pandemic also delayed exploratory drilling in Mozambique, following the distribution of new blocks in a government tender. Drilling was supposed to begin this year, but the pandemic pushed the schedule to 2021 or 2022.
South Africa delayed a new oil and gas exploration and production bill that was supposed to be passed this year, because of the pandemic. They moved the approval deadline to the end of the third quarter of 2021.
