April 1, 2014
Publication: PESGB Newsletter
Author: Jan G. Norstrøm, VP Technology, Rystad Energy
Looking at the global supply forecast for liquids and gas, we estimate that around 40% of the future supply in 2030 will come from current discoveries not yet sanctioned, or from new undiscovered resources. Africa will be important to meet this supply through their combination of mature and frontier exploration and their central location for international export. So what can we expect in terms of exploration results and how will Africa perform in comparison to other continents?
Large Resource Potential in Africa
Africa holds about 320 bboe (billion boe) of undiscovered recoverable resources. This is in the same order of magnitude expected in the Arctic.
As illustrated in Figure 1, we regard North and West Africa as quite mature while East and South Africa are lesser explored and produced (as seen by the blue undiscovered share of volumes). Africa is also centrally located for transportation to other markets i.e. North Africa has a short way to European Markets, West Africa to both Europe and the US while East Africa can become a supplier of LNG to Asia like Australia. The many recent East African gas discoveries in Tanzania and Mozambique are believed to supply the Asian market.
There is always uncertainty in such estimates as above. In our approach we have considered sedimentary thickness and how much acreage is available in the different thickness intervals. We use this information together with previous discoveries and communicated prospect sizes in the industry. Combined, this is used to assess volumetric estimates for larger areas via statistical interpolation. With this, we can consider likely creaming by basin.
Today, Africa contributes approximately 8-9% of the global production of liquids and gas, expected to increase to around 10% of total supply by 2030. Gas alone accounts for about 7% of global gas supply in 2014, but its share is likely to increase to more than 10% by 2030. The African liquids supply contributes steadily around 9-10% throughout the period.
In Figure 2 we break down the expected 2030 liquid and gas supply from still unsanctioned projects. The figure shows that Africa will contribute about 17% of the new liquids supply and about 18% of the new gas supply. The dominant new supply of gas will originate from East Africa (Tanzania and Mozambique) while the new liquids mainly come from West Africa (Angola and Nigeria).
Africa – One of the Best Places for Exploration in terms of Finding Costs
To understand the global importance of the African exploration success we show in Figure 3 the African conventional discovered resources in 2013, the corresponding exploration spend in Figure 4 Figure and finding cost levels in Figure 5. One can see that due to East African and West African frontier exploration successes, Africa delivered great volumes compared to other regions. In South America for example, and in particular Brazil, the exploration activity is largely an appraisal of many former discoveries, thus having a high spend with lesser new volumes. Figure 5 shows the efficiency in exploration that Africa has achieved over the previous year (measured by pre-tax investment per boe returned). This reflects the excellent standing of Africa on conventional exploration.