Even as recently as 2019, experts in the oil and gas industry in Africa were looking to the future with optimism. They were collectively attempting to create a more productive 2020 – that is, until the COVID-19 pandemic began to make its way across the world in the early parts of the year.
As is now common knowledge, the pandemic had a major negative impact on just about every global industry you can think of – with the oil and gas industry in Africa being chief among them.
But even though these types of delays were impacting licensing rounds at the worst possible moment, people are still optimistic. Those license process improvements were essential in 2019, to say nothing of how critical they are now. But despite it all, the outlook for crude pricing looks good for 2023 – which could mean positive things for the industry as a whole.
A More Productive Future for Africa’s Oil and Gas: An Overview
Indeed, experts agree that the crude pricing expectations as we move into 2023 are optimistic, albeit cautiously so. It has been said that oil prices could climb as high as $100 per barrel by the end of the summer. That would be a stark increase from the roughly $50 per barrel that we saw in 2019.
Of course, not all of this is good news. There has been a significant underinvestment in Africa’s petroleum market – a trend that unfortunately shows no signs of reversing anytime soon. That has caused people to be a bit more pessimistic about that particular market in the country.
It’s equally important to note that this is not simply a problem that is taking place in Africa – far from it. Globally, oil and gas producers are continuing to feel the negative impact of COVID-19. Not only did the virus itself cause production issues, but the global supply chain is steel reeling from the effects of the last three years.
Thankfully, independent oil companies in Africa have stepped in to pick up some of the slack. There has been a significant amount of investment activity in the area, particularly as the long-term producers seek to divest some of their interests for a wide range of different reasons.
Still, there are challenges to be faced – and the streamlining of the licensing round process that was pivotal in 2019 is chief among them. Not all countries actually use this process in oil and gas production. Many enter into direct negotiations with companies as they attempt to approve exploration and production rights in various areas. There is absolutely no reason why Africa can’t be the same way.
Should the producing states in Africa choose to go this route, it could avoid unnecessary delays in the process. It would still allow them to tackle their own issues and priorities, but in a way that creates a true win-win situation for both themselves and independent oil companies in every sense of the term.