Producers upbeat about African oil

Oil producers are optimistic about the prospects for oil production and the further development of oil and gas resources in Africa, delegates to the 16th African Oil Week were told on Tuesday in Cape Town, South Africa.

Duncan Clarke, chairman of Global Pacific and Partners, said industry leaders were hopeful despite many challenges, including the global economic crisis, reduced cash flows, geopolitical pressures and volatile prices.

Clarke said Africa was still at the frontier of the global oil industry and that many opportunities remained to be exploited.

Africa holds a fraction of the world's proven oil reserves -- 9percent compared with the Middle East's nearly 62 percent -- but industry analysts believe it could hold significant undiscovered reserves.

Clarke told the conference there was still significant potential for oil and gas extraction in Africa, which, he said, had oil reserves of 120-billion barrels and gas reserves of 500 trillion cubic feet.

"In particular, there is significant opportunity in the sedimentary basin, which still needs to be exploited," Clarke explained.

As a result, Africa would continue to be of interest to oil producers. The South African publication Mining Weekly said on Wednesday that there are currently 550 independent oil companies operating in Africa, either for exploration or for production operations.

Clarke believed this number would increase significantly over the next few years, when 800 independent oil companies would be operating in Africa by 2015.

He also laid out an "Africa Vision 2040", in which he anticipated the African oil industry would have grown markedly.

At that point, there could be 1,250 oil companies operating in Africa, between 50 and 100 African oil producers would be operating at an international level, more than 25 state-owned oil producers would be operational, and 25 African states would have proven gas reserves.

Junior oil exploration company Surestream Petroleum MD Chris said Africa was dominating the attention of global independent oil and gas exploration and production companies.

With an increasing number of oil companies operating in Africa, he said, the landscape is also changing, with increasing competition from national oil companies and few new license opportunities available in established oil provinces and countries.

The attention of these companies would remain focused on North and West African oil and gas deposits in the near and medium term.

However, new information regarding oil and gas resources in East Africa countries, especially Kenya, Ethiopia, Uganda, Seychelles and Madagascar, seemed promising.

Candax Energy CEO Mike Wood said that in terms of operating costs for independent oil companies, recent energy price volatility had demonstrated that the industry needed an oil price of 70 U. S. dollars per barrel to enable exploration investment to flourish in Africa.

However, there are still many uncertainties influencing the fortunes of independent oil companies, as a result of cash flow constraints, geopolitical pressures and the credit squeeze.

Source: Xinhua