HomeRegional NewsEast AfricaEast African gas prominent among global discoveries

East African gas prominent among global discoveries

According to Richmond Energy Partners conventional oil and gas exploration continues to be very successful, but 2014 is a make or break year for frontier deep water exploration. It also says that over five years, some US$32.5 billion of exploration drilling spend has seen no shortage of commercial discoveries with 2013 being the best year for oil discoveries for five years.

Commercial success rates are being maintained at around one in three globally with a finding cost of US$1 per barrel of oil equivalent over the last five years. Gas in East Africa, Israel and Australia makes up half of the 35 billion barrels of oil equivalent discovered over this period. Although these gas discoveries are commercial, much of this gas will take decades to produce and monetise. In fact, 40% of recent discoveries have still not progressed to development six years after discovery.

The oil and gas industry faces other headwinds too. Key plays in East Africa and Iraq are maturing rapidly and delivering smaller discoveries. In addition, the dramatic increase in spending on frontier drilling in recent years has been largely disappointing, with a success rate of less than 10%. The new pre-salt play in Angola has become the key emerging play globally.

The high cost of frontier drilling in deep water, coupled with very little commercial success can be a company breaker, as much as a company maker. With US$2.9 billion budgeted in 2014 for deep-water frontier wells, 2014 may be literally a make or break year for several exploration companies.

Richmond Energy Partners Managing Partner, Keith Myers says, “Whilst the headline numbers are encouraging, success is concentrated in only a few geological plays and companies. At US$100 million average cost per well, industry exploration performance in frontier deep-water plays in particular has simply not been good enough recently. There is great pressure to deliver in 2014”.

Top stories
Nigerian Electricity Regulatory Commission moves to protect consumers
East African gas prominent among global discoveries
Jeffreys Bay wind farm fully commissioned