DHL Report: African Oil and Energy Sector Fuels Global Investor Growth

East Africa’s oil and gas activity is beginning to cause a stir across the continent, competing with the traditionally strong west in the industry, and catching the attention of exploration companies and their suppliers, alike.

This is according to Steve Harley, President of DHL’s Energy Sector, who says that while Angola and Nigeria have always been the most notable producers within the Sub-Saharan region, more recently, significant gas discoveries in Tanzania and Mozambique has led to East Africa now receiving its share of attention from global oil companies and potential investors.  

 “Oil discoveries in Uganda and Kenya have also added to the excitement in the sector as new players look to enter these markets, including some of the largest independent and international oil companies, otherwise known as the super majors, who are now also witnessing the potential in this region,” he said.

He says that in addition to the developments in East Africa, both Namibia and South Africa are also on the radar of investors within the sector.

“South Africa in particular is receiving much attention, mostly because of the potential of shale gas in the Karoo, but also because it has a long and largely unexplored coastline, off which many believe large hydrocarbon fields may exist. As a result of the region’s potential, there are several offshore drilling exploration expeditions currently being planned in South Africa by the major oil companies.”

Harley added: “While exploration activity in Africa is at its highest level ever, the continent remains largely unexplored.

“PwC’s Africa Oil & Gas review titled From Promise to Performance, released in June 2013, revealed that Africa currently supplies approximately 12 percent of the world’s oil and boasts untapped reserves estimated at eight percent of the world’s proven reserves.

“With the ever-increasing need for energy in Asia and in particular China, many of these countries are positioning themselves strategically in Africa as they seek to tap into new resources to support their growing energy needs.” 

DHL is beginning to witness many exploration companies, as well as the oilfield service companies, outsourcing their non-core functions within their own supply chains, creating opportunities for small and medium enterprises to provide products and services required to support oil and gas operations locally.

“The knock-on effect can therefore be game-changing for any single country or region in terms of economic development. The importance of this outsourcing and localisation trend therefore cannot be underestimated,” Harley explained.

 There are also stronger relationships and increased levels of collaboration being witnessed between African countries as they seek to share risk and jointly benefit from a united approach and vision. This is particularly evident in the east of the continent, where a recent example saw the expansion of Sonangol in Mozambique, from Angola.

Harley says that there is no sign of the activity within the sector slowing down. “The increased activity within the sector bodes well for the continent in general, and the fact that the company is already seeing positive economic effects of the new investments across the continent is extremely encouraging.”