Africa’s budding oil and gas industry players will have to embrace new ways of doing business in order to survive the ongoing global oil price melt down, a report on the industry by consulting firm PWC has warned.
The oil & gas industry in Africa continues to face market challenges arising from the low oil price, competition for revenue growth and local talent together with new expectations from investors and regulators.
“Africa’s oil & gas industry is experiencing significant change and upheaval. There are fundamental shifts in companies’ strategies, business models and ways of working,” says Chris Bredenhann, PwC Africa Oil & Gas Advisory Leader.
The sustained lower price of oil has been accepted as the new normal in the oil & gas industry with companies putting plans in place to enable a more agile response to commodity price fluctuations in the future. For some, this means a diversification of portfolio, with many considering moves to an energy mix that includes some form of renewables. Despite the challenges, there are a number of opportunities on the African continent.
“The time is opportune for oil & gas companies to take up and utilise advances in technology as an enabler in meeting some of the challenges faced. Instead of playing catch up the rest of the world, we believe that the industry should be ‘learning to leapfrog’ so that they are not only ahead of disruption – they actually cause it,” Bredenhann says.
PwC’s Africa oil and gas review, 2017 analyses what has happened in the last 12 months in the oil & gas industry within the major and emerging markets.
As at the end of 2016, Africa is reported to have had proven natural gas reserves of 503.3 trillion cubic feet (TcF), up 1 percent in total gas reserves on the continent. About 90 percent of African gas production continues to come from Algeria, Nigeria, Egypt and Libya though the overall quantity produced in 2016 reduced by 1.1 percent down to 208.3 billion cubic meters.
Africa’ share of global oil production has continued its downward trend from the past four years, dropping sharply, moving it down from 9.1 percent of global output last year to 8.6 percent.