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Saltiel keynote: Africa must overcome challenges to realize full E&P potential

Posted on 22 October 2010

Africa is a vast continent full of both opportunities and challenges for the oil and gas drilling industry. Comprising over 53 nations, Africa’s natural resources represent 10% of the world’s oil reserves and 8% of its natural gas.

Rob Saltiel, Atwood Oceanics president/CEO

Rob Saltiel, Atwood Oceanics president/CEO

Speaking at the 2010 IADC Drilling Africa Conference, 20-21 October in London, Rob Saltiel, president and CEO, Atwood Oceanics, remarked, “Africa is the home to many large oil and gas discoveries, which are shaping not only companies but nations.”

From 2004 to 2009, Africa’s oil production grew a mere 4%. “2010 will be a bounce-back year for the continent,” Mr Saltiel said.

Africa is currently host to 34 floating rigs and 24 jackups. The majority of the floaters are found in Angola, Nigeria and Egypt, which host 10, seven and four rigs, respectively.  The bulk of the jackups can be found in Nigeria and Egypt, each country hosting seven rigs.

Africa is not just for the supermajors either. The continent is an “equal opportunity landscape,” Mr Saltiel said. There are currently 38 offshore rig years contracted in 17 African countries to companies of all sizes, from international oil companies to indigenous companies such as Conoil and Afren.

In the near term, Ghana, Angola and Nigeria are three countries that stand to realize substantial growth, he said.

“I characterize Nigeria as a war between the challenges it faces and the potential that it promises,” said Rob Saltiel, Atwood Oceanics president/CEO.

“I characterize Nigeria as a war between the challenges it faces and the potential that it promises,” said Rob Saltiel, Atwood Oceanics president/CEO.

On Ghana’s Jubilee field, discovered in 2007, first oil is expected by the final quarter of 2010. Production from Jubilee is expected to reach 120,000 bbl/day by mid-2011. Ghana is also the recent recipient of a $14-billion loan package from China that will go toward development of energy, transport and agriculture infrastructure; a 20% growth in GDP is expected next year.

After years of civil war, Angola is seeing relative stability, which has helped the country realize a 60% growth in oil and gas production. There’s also the capacity for production to grow by 50% over the next five years. While most drilling to date has been in shallow depths, debate is ongoing over whether a Brazil-like pre-salt play exists in deeper sands — an opportunity that will be tested over the next five years.

In Nigeria, hydrocarbon production averaged 2.1 million bbl/day in 2009 – down from 2.5 million bbl/day in 2005.  “I characterize Nigeria as a war between the challenges it faces and the potential that it promises,” Mr Saltiel said. The country is the leading holder of proven gas reserves in Africa – and the eighth largest holder in the world.

Among the challenges that international companies face in Nigeria is the Nigeria Content Development Act, recently signed into law, which has led to an increase in rig-tendering time from approximately 12 months to 24 months, and sometimes even 36 months.

It is not all about North or West Africa, however. Emerging exploration continues in Liberia, Mozambique, Madagascar, Tanzania, Kenya and Uganda.

In closing, Mr Saltiel identified five key elements Africa needs to achieve its full potential: a stable regulatory and legal framework; governance and political stability; human development; transparency; and security assurance.

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