{"id":1280,"date":"2022-12-20T10:23:03","date_gmt":"2022-12-20T10:23:03","guid":{"rendered":"https:\/\/taqas.net\/en\/?p=1280"},"modified":"2022-12-20T10:23:07","modified_gmt":"2022-12-20T10:23:07","slug":"independent-oil-companies-becoming-increasingly-larger-presence-in-africas-oil-and-gas-industry","status":"publish","type":"post","link":"https:\/\/taqas.net\/en\/independent-oil-companies-becoming-increasingly-larger-presence-in-africas-oil-and-gas-industry\/","title":{"rendered":"Independent Oil Companies Becoming Increasingly Larger Presence in Africa\u2019s Oil and Gas Industry"},"content":{"rendered":"\n

It took less than 20 years for Somoil to become one of Angola\u2019s largest private oil companies, but the company is hardly resting on its laurels. Somoil, like many independents operating in Africa today, is moving forward with ambitious plans for continued growth.<\/strong><\/p>\n\n\n\n

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\u00a0NJ Ayuk, Executive Chairman, African Energy Chamber
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It took less than 20 years for Somoil to become one of Angola\u2019s largest private oil companies, but the company is hardly resting on its laurels. Somoil, like many independents operating in Africa today, is moving forward with ambitious plans for continued growth.<\/p>\n\n\n\n

Based on its current trajectory, Somoil\u2019s chances of achieving its goals look good. The company operates three blocks with the capacity to produce as much as 50,000 barrels per day (bpd) of crude oil. In April, Somoil and London-headquartered Sirius Petroleum entered a $336 million deal with Angolan national oil company Sonangol to acquire participating interests in Angolan deepwater Blocks 18 and 31, which are operated by British multinational BP. Somoil also acquired interests in Angola\u2019s oil-producing Blocks 14 and 14K from TotalEnergies in 2022, and as CEO Edson dos Santos recently said, Somoil is very open to more partnerships and deals going forward.<\/p>\n\n\n\n

\u201cI believe Somoil is the ideal partner for any company entering the oil and gas business in Angola,\u201d dos Santos told The Energy Year. \u201cWe are private and relatively small, but more importantly \u2013 agile\u2026 with a clear plan to grow and expand our presence in Angola and beyond.\u201d<\/p>\n\n\n\n

Somoil is a fantastic success story, but it\u2019s also a strong example of the gradually changing face of Africa\u2019s oil and gas sector. Increasingly, international oil and gas majors have been divesting their African interests \u2014 many have been tweaking their portfolios in attempts to decrease their overall emissions \u2014 and independents have been stepping up to fill the gap.<\/p>\n\n\n\n

Our new report, \u201cThe State of African Energy: 2023 Outlook,\u201d describes this trend in detail, noting recent acquisitions \u2014 especially in West Africa \u2014 by such independents as Somoil, Nigeria-based Seplat Energy, and U.K.-based Afentra, among others.<\/p>\n\n\n\n

As I\u2019ve said in the past, the steady stream of international oil companies (IOCs) divesting African oil and gas assets is not a welcome development. Still, it has been encouraging to see how many independent companies have recognized this pattern as a huge growth opportunity. These independents will be well worth watching.<\/p>\n\n\n\n

A Major Presence<\/strong><\/p>\n\n\n\n

To be clear, international majors like Italian energy company Eni, TotalEnergies of France, and U.S.-based ExxonMobil \u2014 along with the African national oil companies (NOCs) they frequently partner with \u2014 still have a considerable part to play in African oil and gas production. Together, they were responsible for nearly 75% of the continent\u2019s hydrocarbon output during the last decade, our report notes. That likely won\u2019t be changing overnight, or at least during the next year or two.<\/p>\n\n\n\n

Independents, meanwhile, will probably continue to be responsible for about 8% of Africa\u2019s overall oil volumes through 2023. Exploration and production (E&P) companies and international NOCs will contribute small percentages as well.<\/p>\n\n\n\n

However, with the mergers and acquisitions (M&A) activity the continent\u2019s oil and gas sector has been seeing, independents could very well be making a far greater contribution to Africa\u2019s overall volumes as the decade continues.<\/p>\n\n\n\n

African oil and gas industry M&A activity hit record levels in 2022, with $21 billion worth of deals announced in the first nine months of the year, Energy Capital & Power reported in late September. That\u2019s three times the $7 billion in deals made in 2021 and four times the $5.5 billion worth of deals that took place in 2020, according to Rystad Energy.<\/p>\n\n\n\n

Deal Drivers<\/strong><\/p>\n\n\n\n

Why the flurry of activity? As I mentioned, international oil and gas companies, driven by environmental, social, and corporate governance (ESG) objectives, are at least part of the equation. As a June 2022 article for McKinsey explains, majors around the globe are feeling pressure from the public and their investors to deliver higher returns more sustainably. To comply, some are scaling back on exploration and production in Africa. ExxonMobil, for example, has been exiting its shelf water depth portfolio in Nigeria to decrease its high emissions oil and gas portfolio. Shell began talks with the Nigerian government in 2021 about selling its stake in the country\u2019s onshore fields as part of a global drive to reduce its carbon emissions.<\/p>\n\n\n\n

Other decisions are based on security concerns: Some majors, in hopes of making their operations less vulnerable to theft and vandalism, have been shifting their focus to deepwater and selling their shallow-water and onshore assets. And in other cases, majors have simply decided to sell mature fields to pursue more lucrative projects.<\/p>\n\n\n\n

Large, international companies aren\u2019t the only ones divesting assets in Africa, by the way. NOCs have been doing the same. During African Energy Week in Cape Town, Angola\u2019s Sonangol, announced they are freeing up assets to allow them to focus on other priorities. Others, like Malaysia\u2019s Petronas, have announced plans to divest some of their assets in Africa and Asia as part of global reorganization efforts.<\/p>\n\n\n\n

Growing numbers of independents, meanwhile, have decided that the benefits of operating in Africa outweigh the risks. These companies are interested in capitalizing on higher oil and gas prices \u2014 along with increasing global energy demands \u2014 and they\u2019ve been enthusiastically grabbing up the majors\u2019 divested assets.<\/p>\n\n\n\n

Some companies, looking for ways to remain resilient to market uncertainty as they pursue upstream opportunities, also have been open to mergers and strategic partnerships. In mid-June 2022, for example, in an $827 million deal, the U.K.\u2019s Tullow Oil signed an all-stock merger agreement with U.K.-based E&P company Capricorn Energy. The resulting new firm will own 1 billion barrels worth of resources and is expected to produce 100,000 bpd by 2025.<\/p>\n\n\n\n

Seizing Opportunities<\/strong><\/p>\n\n\n\n

As for the independents acquiring assets from majors \u2014 and NOCs in some cases \u2014 many appear poised for long-term production success in Africa.<\/p>\n\n\n\n

Earlier this month, British independent Savannah Energy announced it had entered a share purchase agreement (SPA) with Malaysian state oil and gas company Petronas International Corp. Ltd. to purchase Petronas\u2019 entire oil and gas business in South Sudan for up to $1.25 billion.<\/p>\n\n\n\n

Through the deal, Savannah will obtain interests in three joint operating companies (JOCs) that operate three blocks in South Sudan with a gross output of 153,000 bpd. The purchase is conditional on several conditions, including approval by South Sudan\u2019s government.<\/p>\n\n\n\n

As I said when the SPA was announced, this deal is a win-win for South Sudan and Savannah Energy, which has a strong presence in Africa\u2019s oil and gas industry, a growing portfolio of renewable energy projects, and a track record of social impact programs that help promote economic self-sufficiency in host communities. Savannah Energy\u2019s presence in South Sudan will provide the country with more jobs and business opportunities, sustainable energy development, opportunities for women, and an aggressive turnaround of declining fields.<\/p>\n\n\n\n

Savannah\u2019s announcement about South Sudan came only a week after it purchased ExxonMobil\u2019s operations in Chad and Cameroon for $407 million. The deal includes ExxonMobil\u2019s 40% stake in the Doba oil project in southern Chad, which comprises seven producing oilfields with a combined output of 28,000 bpd. Savannah also will obtain ExxonMobil\u2019s 40% indirect interest in the Chad-Cameroon export transpiration system, which includes a pipeline and a floating storage and offloading facility offshore Cameroon.<\/p>\n\n\n\n

Other promising deals by independents include Seplat Energy\u2019s plans to acquire ExxonMobil\u2019s shallow water business in Nigeria, Mobil Producing Nigeria Unlimited (MPNU), for $1.28 billion. Earlier this fall, the deal received a green light from Nigerian President Muhammadu Buhari.<\/p>\n\n\n\n

Seplat is acquiring fields that produced 95,000 barrels of oil equivalent per day (boepd) in 2020 and are projected to bring Seplat\u2019s total production up to 142,000 boepd once the deal is complete. Seplat Energy also will gain control of the Qua Iboe oil terminal and a 51% interest in the Bonny River oil terminal, along with natural-gas-to-liquids plants at two fields.<\/p>\n\n\n\n

Also described in our report is U.K.-based Afentra, an independent that stands to do well in Africa while making a positive social impact. Last August, the company secured a 20% stake in Sonangol\u2019s producing shallow water Block 3\/05, Lower Congo Basin, 50 kilometers offshore Angola, as well as a 40% interest in Block 23 in the Kwanza basin. Around the same time, Afentra made it clear that it was interested in more West Africa purchases.<\/p>\n\n\n\n

A small group of former Tullow Oil executives founded Afentra in 2021 specifically to capitalize on the opportunities being created by majors leaving West Africa. The company\u2019s corporate strategy report, published that year, said the company would establish and meet high ESG standards.<\/p>\n\n\n\n

\u201cThe Global Energy Transition will take time, the strategy report stated. \u201cHydrocarbons are part of the transition and will continue to remain important in the overall energy mix\u2026 The socio-economic impact of the energy transition needs to be considered alongside the climate impact. Afentra was formed to deliver this balance and create significant value for shareholders.\u201d<\/p>\n\n\n\n

By NJ Ayuk<\/a>, Executive Chairman, African Energy Chamber<\/p>\n","protected":false},"excerpt":{"rendered":"

It took less than 20 years for Somoil to become one of Angola\u2019s largest private oil companies, but the company is hardly resting on its laurels. Somoil, like many independents operating in Africa today, is moving forward with ambitious plans for continued growth. \u00a0NJ Ayuk, Executive Chairman, African Energy Chamber It took less than 20 …<\/p>\n","protected":false},"author":2,"featured_media":1282,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30],"tags":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/taqas.net\/en\/wp-json\/wp\/v2\/posts\/1280"}],"collection":[{"href":"https:\/\/taqas.net\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/taqas.net\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/taqas.net\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/taqas.net\/en\/wp-json\/wp\/v2\/comments?post=1280"}],"version-history":[{"count":1,"href":"https:\/\/taqas.net\/en\/wp-json\/wp\/v2\/posts\/1280\/revisions"}],"predecessor-version":[{"id":1283,"href":"https:\/\/taqas.net\/en\/wp-json\/wp\/v2\/posts\/1280\/revisions\/1283"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/taqas.net\/en\/wp-json\/wp\/v2\/media\/1282"}],"wp:attachment":[{"href":"https:\/\/taqas.net\/en\/wp-json\/wp\/v2\/media?parent=1280"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/taqas.net\/en\/wp-json\/wp\/v2\/categories?post=1280"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/taqas.net\/en\/wp-json\/wp\/v2\/tags?post=1280"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}