Africa is one of the few regions in the world where significant oil and gas reserves remain underexplored and access remains relatively viable. Not surprisingly, different international players, both major and second-tier, have the region as a strategic option as reserves in other locations experience either depletion or cannot be developed due to political or regulatory impediments.
Datamonitor analysis shows that the African continent is expected to increase its total oil production by nearly 10% in 2011, reaching a total offshore oil output of approximately 6.7 million barrels per day, generating capital expenditures of no less than $30bn in 2011. The bulk of the production and investment is located in West Africa, where international energy, oil, and gas companies are developing different initiatives.
Among the nations that are expected to outperform, Datamonitor analysis observes that Angola and Gabon will be two of the regional leaders. Both countries are expected to attract high capital expenditures (CAPEX), and Datamonitor's forecast indicates that total oil production will grow by nearly 5% in Angola and by 4% in Gabon. Natural gas production in the two countries is also expected to present strong growth rates of nearly 48% and 39%, respectively. VAALCO Energy, Chevron, TOTAL, Tullow Oil, and Canada Natural Resources are some of the companies with strong footprints in the region.
VAALCO Energy, a Houston-based independent energy company, has plans to optimize production and reservoir management at its four producing fields off the coast of Gabon. The company has also confirmed its intention to focus on its West African asset base and acreage, and therefore, it will be a key player in the area. The company will continue the exploration program of its Elili prospect in Gabon with an estimated 2010-11 CAPEX of nearly $22m. In Angola, the Texan company will focus its initiatives in Block 5, where the company plans to drill at least two more exploratory wells. The company has plans to invest no less that $90m in its Kindele, Lorengo, and Jack prospects, all in Block 5.
Similarly, Chevron is another company that will play a significant role in the region in 2011. The American oil major will concentrate its efforts in Block 0 in Angola, where a strong drilling program remains a priority. In addition, technical improvements in the Benguela and Belize fields are likely to bring production upwards in the country. Chevron has also had the idea to increase its drilling program to further develop the Tombua and Landana fields.
Robust production growth plans combined with a desire to explore untouched areas will drive investment in Africa. The region still presents a number of challenges to all international players, such as the lack of auxiliary infrastructure or unstable regulatory frameworks. Nevertheless, Datamonitor analysis indicates that Africa will witness a strong growth in total CAPEX, and will certainly continue to be an attractive strategic alternative for many oil and gas companies in 2011.