West Africa’s thriving economies: part 2

To read the first part, click here. NG Weng Hoong explores some of the world’s fastest growing economies in West Africa’s oil-rich states.

Ghana

Helped by rising crude oil production and exports of gold and cocoa, Ghana’s economy is on course to repeat last year’s 8% growth, said the International Monetary Fund (IMF).

The bank expects it to make net oil export gains from next year, thanks largely to rising production and the government’s efforts to reduce fuel subsidies.

Since the start of 2013, the government has implemented three rounds of fuel price increases that have freed up funds for social and infrastructure investment.

Ghana became an oil producer in December 2010, when its main Jubilee offshore field began producing 85 000 bpd of light crude. With the discovery and development of new blocks near Jubilee, Ghana’s oil production could rise from 90 000 bpd in 2012 to 250 000 bpd by 2021.

Ghana will have a second oil producing area comprising the three offshore fields of Tweneboa, Enyenra and Ntomme (TEN), in 2016.

Located in the Deepwater Tano contract area, the TEN project is capable of producing as much as 80 000 bpd of light crude oil, said Tullow Ghana Limited which owns a 47.15% stake. Its partners include Kosmos Energy (17%), Anadarko Petroleum (17%), Sabre Oil & Gas Holdings Ltd, a wholly owned subsidiary of Petro SA (3.825%) and the Ghana National Petroleum Corporation (15%).

A World Bank team, which recently visited the West African country, criticised the government for not expanding and upgrading the national power infrastructure.

“While the blackouts are partly due to the unexpected interruption of imported gas supplies, a deeper look reveals a broader problem of a power sector without a cushion to absorb external shocks. Avoidable delays in the production of Jubilee gas have left Ghana’s gas-based power plants needlessly idle or burning very expensive oil. The three year delay in commercialising Jubilee gas has cost Ghana US$ 1 billion in extra crude oil used for power generation,” said the bank.

Angola

Africa’s future leading oil producer?

As it continues to raise output and find favour with investors, Angola is looking to overtake troubled Nigeria to become Africa’s largest crude oil producer later this decade.

Angolan officials believe production could rise 15% to reach 2 million bpd by 2015, while Nigeria’s current output of 2.4 million bpd may decline on multiple threats posed by theft, terrorism, oil field and pipeline sabotage, and reduced industry investments.

Angolan Oil Minister Botelho de Vasconcelos has set an optimistic target for his country’s oil production to reach 2 million bpd next year, but that seems unlikely as some of its older fields are maturing while new finds are still not ready for production. In 2011, ExxonMobil stopped exporting Xicomba crude when the offshore field began drying up after eight years of production.

However, Angola enjoys political stability, rare among oil producers in the developing world. In addition, it has a large proved and probable reserve base of more than 12.7 billion barrels of crude oil. Angola has enjoyed political stability and economic growth since emerging from a devastating 27 year civil war in 2002.

Angola’s economy is expected to grow an average 8% a year over the next two years, thanks to rising oil and gas exports, which are expected to reach US$ 65.7 billion in 2013. Oil accounts for more than 90% of the country’s export earnings and provides approximately 80% of government revenues.

Western majors Chevron, ExxonMobil, Total, ENI and BP have long dominated Angola’s oil and gas industry, but could be joined by state-owned players like China National Petroleum Corp (CNPC) and Malaysia’s state Petronas.

Investors look to Ivory Coast and Senegal

Oil and gas companies are looking beyond Nigeria, Ghana and Angola, as they scour West Africa’s smaller countries like Ivory Coat and Senegal for new offshore riches.

The new finds have boosted hopes that Ivory Coast might stop a decline in its current oil production of 35 000 bpd after peaking at 40 000 bpd in 2010. In actively courting foreign investors, the government has set an ambitious target to raise production to 200 000 bpd by 2018.

Another West African state, Senegal, has caught the attention of US independent ConocoPhillips which has acquired a 25% stake in three offshore blocks, Rufisque, Sangomar and Sangomar Deep, owned and operated by UK’s Cairn Energy.

The Edinburgh-based firm said it will collect from ConocoPhillips a share of the costs already incurred for a 2050 km² seismic survey as well as future expenses when it starts drilling the first well early next year.

Cairn said it will retain operatorship and 40% interest in the blocks during the exploration phase while Petrosen, Senegal’s national oil company, will retain a 10% interest during exploration. In the event of a commercial success, ConocoPhillips would have the option to operate the future development of the resource.

Cairn Energy’s chief executive Simon Thomson said:“This strategic farm-out means Cairn is able to intensify its plans to explore its acreage offshore Senegal, where the gross prospective block wide resource potential is estimated to be in excess of 1.5 billion barrels.”

This is an abridged version of the full article from Ng Weng Hoong, published in the November 2013 issue of World Pipelines, available for subscribers to download now.

Read the article online at: https://www.worldpipelines.com/business-news/30122013/west_africas_thriving_economies_part_2/