What's changed in Africa Upstream since the price crash?
Following coronavirus, the Africa upstream landscape looks markedly different. We compare our latest data with our Q1 2020 view.
The price crash hits hard for Africa
In 2020 oil and gas markets suffered a double crisis of supply and demand. Africa has been hit hard and widespread cuts and project deferrals have been implemented.
We take stock by comparing our latest data with our Q1 2020 view and the comparison reveals some striking changes in investment, production and value as companies adjust to the new market conditions:
- Upstream spend in 2020 is down US$14 billion
- FIDs targeted in the next 18 months are down from 22 to 3
- Upstream value in Africa is down one third (US$200 billion)
Deepwater and LNG investment are hit hardest
No resource theme is immune. But cuts are particularly severe in deepwater and LNG. Capital expenditure revisions on deepwater West Africa projects and deferrals on large LNG projects in Senegal/Mauritania and Mozambique both contribute.
The Majors are responsible for most international investment in Africa’s upstream sector and they are cutting heavily. Cuts are expected to be larger than elsewhere in their portfolios. But where does this leave valuations and how core is Africa in these portfolios now? How have the E&P focused mid-caps Tullow and Kosmos fared?
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