Dire Straits Of African Oil And Gas Present Opportunities For Some

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Written by Staff

From Mail&Guardian. Story by Lisa Steyn.

The dire state of Africa’s oil and gas industry does present opportunities for some.

The decline in the oil price has plunged Africa’s oil and gas industry into dire straits, a situation made worse by factors such as uncertain regulation, corruption and the prospect of political and social instability.

It is a particular burden on those economies most reliant on the industry for revenue, and could have far-reaching socioeconomic results.

The oversupply of oil has persisted since July last year, when the price of Brent plummeted from more than $110 a barrel to less than $50 in January this year, and again in recent weeks where they have slipped to just $40.

The recently published PwC Africa Oil and Gas Review 2015 found that respondents to the survey were suffering because of the reduced prices, and were plagued by issues such as regulatory uncertainty and corruption.

But a few respondents said the lower oil price would enable increased exploration and development because contractor and rig costs were lower.

PwC said these lower costs were being factored into models to identify the commercial viability of new ventures, which could provide an area for growth in the industry over the next few years.

“It is clear through our interactions that many companies are taking a different perspective on the challenges they face. They are being looked at as realities that can and must be dealt with if they wish to enter African markets,” the report said.

“This lull in activity is giving the industry a moment to make plans for the execution of large-scale projects while also formulating a strategy that will make them more competitive for the future in the new African market.

“While the industry is in a fragile state, we at PwC envision that the players who survive the downturn in prices the best will emerge as agile machines with well-thought-out plans.”

Read more at Mail&Guardian.