Nigeria, Angola Will Struggle To Increase Oil Output As Funding Declines

Nigeria and Angola, Africa's largest oil producers, will be grappling to raise their output in the next five years as they rank very poorly in oil major’s investment priorities.

According to a report by GlobalData, insufficient investments coupled with a few new projects could derail Sub-Saharan Africa’s ambition to increase its crude oil production through 2025 after a difficult pandemic hit in 2020.

Following pressure from investors concerned about climate change impacts to reduce spending on new projects and an uncertain oil market, international oil companies are reassessing their investment priorities and projects.

The report says many Sub-Saharan oil and gas projects would suffer some of the worst impacts of the spending cuts and countries like Nigeria and Angola, will take the biggest hits. The two countries will see falling crude oil and condensate production from this year onwards. At the same time, they also have a relatively small number of oil projects that would come on stream within 2025.

Nigeria recently passed its petroleum industry bill, but still contends with issues including worsening insecurity and dealing with host communities.

Sub-Saharan Africa has a lot of potentials and could easily top Europe in terms of oil and gas output, Conor Ward, Oil and Gas Analyst at GlobalData, said, commenting on the findings.

“However, companies have been more cautious than ever over their investments. Some of the huge discoveries made over the past decade have seen significant delays with no final investment decision (FID) in sight: as is the case with Shell’s Bonga Southwest/Aparo, which was discovered over 20 years ago,” Ward said.

“Sub-Saharan Africa is seeing a shift of investment away from the more developed countries in the region, most notably Nigeria, and more towards frontier countries such as Mauritania, Senegal, Mozambique, and Uganda as the fiscal terms offered by the host countries are far more appealing and have a largely untapped resource base,” Ward added.