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The key to long term sucess in African oil industry

The key to long term sucess in African oil industry

Despite continuous challenges and problems facing the African oil industry, the country continues to offer foreign and local opportunities.

Dave Wilkin, ExxonMobil's new opportunity exploration manager for Africa, says, "Countries in Africa with good fiscal regimes will attract investors. Governments must offer transparent, long term relationships and an environment of long term stability," explained Wilkin.

"Yet, many laws are currently being made which actually scare away investors. This while every investment of $1 in the oil industry adds $4 to the gross domestic product of a country and creates two jobs."

The key to long term pathways to profit on the continent now lies in partnerships, he emphasised at the 22nd Africa Oil Week taking place in Cape Town.

Eleven of the top 20 oil and gas discoveries since 2014 have been drilled in Africa and this will likely be surpassed in 2015. Wilkin offered five critical elements to be profitable in Africa's oil industry.

These are appropriate geology for commercial exploration, a commercial framework in place from the start, use of the latest technologies, skill and discipline to explore safely and efficiently and shared partnerships over at least 20 years. For him the commercial framework must have a good balance between the awareness of the risk involved and the reward that could be gained.

It is also important not to forget the socio-economic development aspects of the relationship between a company and the host nation where it is exploring.

Oando Energy Resources, an independent oil explorer and producer in Nigeria, it expects the oil price not to go higher than $60 a barrel for the next 12 to 18 months. The company does not see the price going as low as $20 a barrel and neither up to $80 a barrel over this period.

"We see an Africa that will continue to play a significant role in the world and we see opportunities for the increased participation for independent oil explorers and producers," the company said.

Currently, at a local level, French oil major Total is expected to resume drlling offshore South Africa in the second half of 2016, part of a broader campaign to explore in Africa.

Reuters reporetsd that last year, Total stopped drilling off the southern coast of South Africa after experiencing mechanical problems with its rig during high winds and rough seas in the Outeniqua Basin, about 175km off the southern coast of South Africa.

“Our plan is to drill next year but only if those conditions are met. I think it is better to think second half than first half,” Kevin Mclachlan, Total's senior vice-president for exploration told Reuters on the sidelines of an African oil and gas conference in Cape Town.

Total is the operator of Block 11B/12B, where it holds a 50% stake in the field with equal partner CNR International, a subsidiary of Canadian Natural Resources.

Mclachlan said the company planned to drill between 10-15 wells over the next three years across the continent, including in Africa's top two oil producers - Nigeria and Angola.

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