Oil and gas in North Africa

The Energy Exchange and the World Refining Association have released a report containing the findings of a recent survey, which was carried out to better understand oil and gas operations in North Africa. Below are some of the key findings.

Operating locations and concerns

• 65% of respondents are already active in Algeria.
• Morocco’s potential is thought to be on the up due to multiple factors such as 35% corporate tax and an estimated net value of US$ 14 – 15 /bbl for an oil discovery.
• 83% of respondents said that the main challenge for exploration and production projects is security and the political environment.
• Lack of a skilled domestic workforce and unclear regulatory frameworks were top concerns for oil and gas companies operating in West Africa, but less than 40% of respondents mentioned them.
• The lack of equipment, stakeholder engagement, environmental risks and finding the right partner were the lowest worries at 3%, 4%, 11% and 11% of respondents mentioning each, respectively.

Opportunities

• The survey found that different sectors within the oil and gas market are equally attractive to for North African companies and their partners.
• LNG has been named as the biggest opportunity in the region.
• Unconventionals, mature fields and offshore fields are also thought to show potential.
• Respondents from Algeria saw the biggest opportunities in LNG.
• Respondents from Morocco see offshore as the place for big opportunities.
• Tunisia believes that unconventional reservoirs show the most potential.

Investment and infrastructure

• The majority of respondents reportedly said that they expect the level of investment in North Africa’s oil and gas sector is going to increase over the next 3 – 5 years by up to 50% but only by a minimum of 10%.
• 60% of those who took the survey believe that attractive investment terms and conditions are going to help exploration and production projects move forward.
• 44% of respondents said that infrastructure development is the most important thing to help develop exploration and production in the region.

Unconventionals

• 71% of respondents are not currently involved in unconventional exploration and production activities in the region according to the report.
• 69% of respondents said that they expect unconventionals to move forward in the region.
• It has been said that the energy bid round terms and conditions for unconventional resources in North Africa are the most positive regulatory changes within the region.

Downstream sector and challenges

• The report says that the region is currently expanding its refining capacity and petrochemicals capacity due to the substantial wealth and opportunities provided by oil and gas.
• North African countries are also planning to become involved in advanced portions of the petrochemical value chain as they are the most lucrative, according to the report, and this will also allow economies to become more dynamic.
• 80% of respondents said attracting and securing investments in regional refining and for the needed related infrastructure was the biggest concern within the downstream sector.
• 31% of respondents said that complying with European standards and regulation is the biggest problem for North African refiners.
• 65% of the respondents said that Russian downstream developments are having a big impact on the North African refining market.

Overcoming downstream challenges

• There is continuing emphasis, according to the report’s findings, on North Africa’s refineries updating outdated equipment and investing in technology.
• The above will allow North Africa’s downstream sector to improve the quality of products for the domestic and export markets.
• Regional governments have emphasised the importance in investing in the refining and petrochemicals sector to see improvements.
• Operators are reportedly concentrating on the above, as well as building new plants to help encompass economic opportunities in more sophisticated parts of the supply chain.

Survey methodology

The survey was based on the views of people from oil and gas operating companies such as Sonatrach, ENI, Total and Gazprom International. The report disclosed that 36% of respondents are operators and 28% are from service and technology providers. 8% were from government bodies, 4% from consultancies and research institutes. The remaining 20% were made up of respondents from energy related companies within the oil and gas sector such as contractors.

Adapted from a report by Claira Lloyd.

Read the article online at: https://www.oilfieldtechnology.com/exploration/05112014/north-africa-oil-gas-sector-report-findings-1549/