Offshore staff
OSLO, Norway – Many of Africa’s largest planned offshore projects look set to be delayed with oil prices falling below their breakeven costs, according to Rystad Energy.
In most cases, the operators were expecting sanctioning under a price assumption of $55-$60/bbl. If they do not go ahead as planned, this will likely cause the continent’s liquids production to decline for much of the 2020s, with a major impact on some energy-reliant state budgets.
The top upcoming final investment decisions (FIDs) in Africa have a breakeven crude price of more than $45/bbl, Rystad said, with some closer to $60/bbl.
“The investments for major planned oil and gas projects will now see a timeline shift or even a spending cut altogether,” said senior upstream analyst Siva Prasad.
Rystad estimates that timeline delays for these pre-FID projects could typically cause a 200,000 b/d drop in liquids production between 2021 and 2025.
Over the longer term the impact could be much higher, with production set to fall on average by close to 1.185 MMb/d between 2026 and 2030.
Hydrocarbon-producing African nations rely heavily on their oil and gas output to satisfy both domestic energy needs and exports. Nigeria based its 2020 capital budget on plans to produce 2.1 MMb/d of oil this year at a crude price of $57/bbl.
“An extended period of the current price scenario could therefore prove detrimental to the health of these economies,” Prasad said.
03/26/2020
