African Oil & Gas and the Rest of the World: What Changed in 2023? (By NJ Ayuk)

By NJ Ayuk, Executive Chairman, African Energy Chamber (

It’s undeniable that the Russian invasion of Ukraine proved highly disruptive to world energy markets. This geopolitical clash led to the imposition of Western sanctions on the export of Russian oil and fuel and the imposition of a price cap on Russian crude by the G7 group.

It also led to the redirection of world oil trade flows. Asian countries such as China and India, for example, began absorbing considerably more Russian oil and fuel than they had done previously, and many European countries began seeking new suppliers or buying more from existing suppliers outside Russia so as not to run afoul of sanctions.

Meanwhile, European buyers of Russian natural gas also started looking for alternative sources in 2022. They did so with slightly less urgency, it is true, given that natural gas imports were never subjected to sanctions. But they were still keen to find other suppliers, especially after Russian gas deliveries started becoming erratic a few months into the war.

These considerations drove Italy, for instance, to send representatives of the government and of Eni, a partially state-owned company, to Africa for talks with Egyptian, Algerian, and Angolan officials on expanding the scope of existing supply contracts. These talks were successful, as they allowed Eni to secure commitments for the delivery of an additional 7.0-7.5 billion cubic meters of gas beyond the originally planned amount in 2022, plus additional volumes in the following years.

New Links with Europe?

The talks also took place against a backdrop of speculation about how the rearrangement of world oil and gas trade flows had the potential to benefit Africa.

The idea was that Africa could, with a little help, become a natural partner for Europe. The two continents had the advantage of relative geographical proximity (at least along the shores of the Mediterranean Sea) and existing infrastructure connections (such as the subsea pipelines that link Algerian and Libyan gas fields to Italy and Spain). Major European companies — such as the British majors BP and Shell, France’s TotalEnergies, and Norway’s Equinor, as well as Eni — already had sizeable greenfield and brownfield portfolios in Africa.

So (advocates of this view argued) why not build on these pillars that were already in place and turn Africa into Europe’s closest key supplier of fuel and energy?

But that’s not how it happened.

New Gaps Between Africa and Asia, South America

Instead, Asian countries awarded far more new exploration acreage to investors than did African states after the conclusion of COP27, the 2022 UN Climate Change Conference held in Sharm El Sheikh, Egypt.

As the African Energy Chamber (AEC) notes in its newly released 2024 African Energy Outlook, Asia has accounted for the single largest portion of post-COP27 exploration acreage awards, equivalent to more than 52% of the offshore total and almost 45% of the onshore total. Africa lagged significantly behind, accounting for 28% of the offshore total and only 5% of the onshore total.

There were also significant discrepancies between Africa and other regions of the world with respect to recent oil and gas discoveries. As the AEC’s outlook points out, South America’s deepwater zones have yielded nearly 13 billion barrels of oil equivalent (boe) in new commercial finds since 2019, with 3 billion boe per year discovered in 2019 and 2020, 1.5 billion boe in 2021, 2.6 billion boe in 2022 and 2.8 billion boe since the beginning of 2023.

By contrast, Africa’s deepwater zones have yielded about 7.65 billion boe in new commercial finds since 2019, with 2.9 billion boe per year discovered in 2019, 425 million boe in 2020, 1.135 billion boe in 2021, 1.94 billion boe in 202,2 and 1.27 billion boe since the beginning of 2023.

What’s more, South American fields have generally contained more oil than their African counterparts, with the mix being 80:20 in favor of oil in the former region, compared to 65:35 in the latter region. And since oil generally commands a higher price than gas, this has made the South American discoveries easier to monetize — and thus more immediately valuable — than those in Africa.

This gap could prove somewhat less significant later in the decade, assuming that the transition away from fossil fuels gains momentum. This shift is expected to have a bigger impact on crude oil-derived petroleum producers than on natural gas, which many African countries view as the best available bridge fuel. (Nigeria, Africa’s biggest producer of both oil and gas, is one such country, and its “Decade of Gas” policy is designed to promote and expand domestic gas utilization for electricity production and industrial use.)

In other words, if global demand for crude oil fades as many energy consumers switch from petroleum products to renewables, investment in South America’s relatively oil-rich acreage will dwindle over time. However, investment in Africa’s relatively gas-rich acreage will remain at peak levels for a longer period, as gas is a cleaner-burning fuel than petroleum derivatives, and African states such as Nigeria will continue to use it for several more years even after they close the last power station to use refined petroleum products.

In the meantime, though, there is still a distance between Africa and the rest of the world in terms of what the continent can do to establish closer ties to energy markets in Europe and elsewhere and to expand the development of its own hydrocarbon resources. The Russia-Ukraine could have helped close that gap to a much greater extent, but instead, other regions have attracted more attention.

This is an All-Hands-on-Deck Moment

That said, I do not believe for one second that we should accept lagging energy industry investments as an inevitable reality for Africa. Instead, energy industry stakeholders should view our report’s findings as a call to action. It is not too late to reverse course.

African governments must act immediately to make exploration and production in Africa investor friendly. Now is the time to offer tax incentives, fast-track projects, show more transparency in processes, and do everything possible to minimize investor risk.

Operators have a role to play as well. They should be working cooperatively with government administrations and implementing measures to bring down unit costs, which would allow breakeven prices to be brought down.

Prompt action and cooperation will create a win-win that will allow African nations to reap the socioeconomic benefits of their oil and gas resources and companies to capitalize on the significant opportunities our continent’s oil and gas offer.

For more insight on these and other topics, download the 2024 African Energy Outlook at

Distributed by APO Group on behalf of African Energy Chamber.

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