“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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