Friday, November 20, 2015

Oil Boom Slumps

“On the brink of a boom,” was the banner on PricewaterhouseCoopers LLP’s review of Africa’s oil industry 16 months ago. When six of the 10 biggest global oil discoveries in 2013 were made in Africa, it underlined the potential of the energy riches that had lured companies from Royal Dutch Shell Plc to Exxon Mobil Corp. Now, oil below $50 has made more than two out of three investment projects on the continent non-viable.

“Capital markets are effectively closed to the oil and gas industry” in Africa, Tony Hayward, former head of BP Plc and now chairman of Genel Energy Plc, said at a conference in Cape Town last month. “A decade of exploration, with billions of dollars invested and only limited commercial success.”

"There are a raft of changes working their way through various parliaments around Africa at the moment and they’ve been primarily based on prices that were $100,” Martin Kelly, director for sub-Saharan Africa research at consultancy Wood Mackenzie said. “The world has changed since then."

African production, already 19 percent below its 2008 peak of 10.2 million barrels a day, is set to drop for a third year.

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