African 2021 Bid Rounds Seek to Offer Competitive Edge

As Africa moves forward on its path toward a post-COVID-19 recovery, oil-producing countries are aiming to significantly boost exploration activities through the introduction of upcoming licensing rounds. However, given severe competition for limited exploration capital from investors, now – more than ever – African countries are in need of investor-friendly regulations, in which attractive fiscal terms, reduced tax and royalty requirements and shorter lead times are prioritized. With upcoming licensing rounds in Nigeria, Angola, South Sudan and Somalia, concessionaires are leveraging their unique selling points – including marginal field development, enhanced data offerings and untapped frontier acreage – to stand out from the crowd.  

Nigeria: Marginal Fields to Unlock Quick Returns

In a bid to increase production to three million barrels per day (bpd), Nigeria is considering new oilfield licensing rounds this year – previously delayed due to the COVID-19 pandemic – centered on deep and ultra-deep-water acreage. Such concessions remain significantly under-explored, representing a valuable opportunity for International Oil Companies in sub-Saharan Africa’s largest oil-producing market. Although the bid round was delayed, Nigeria went ahead with its marginal field licensing round – launched last June – to drive exploration and investment in marginal field development. The licensing round is the first of its kind since 2002 and offered a total of 57 fields located onshore and offshore, in which the country is yet to announce the winning bids. Marginal field licensing rounds represent an attractive opportunity for local and junior E&P companies, as they are less reliant on upfront capital and have the potential to generate quick returns by monetizing reserves on a smaller scale.

Angola: Geological Data Offers Competitive Edge

As part of its revised 2020-2025 Hydrocarbon Exploration Strategy, Angola will officially launch its 2020 Onshore Bid Round this month to ensure the ongoing exploration of its estimated 57 billion barrels of oil and 27 trillion cubic feet of gas. The round features nine blocks on offer in the Lower Congo and Kwanza Basins including: CON 1, CON 5, CON 6, KON 5, KON 6, KON 8, KON 9, KON 17 and KON 20. With the previous 2019 round attracting significant interest from major operators including Total, Eni, Equinor and BP, the 2021 bid round is expected to garner a similar response, with available geological data looking promising. Notably, Angola has made its licensing round more attractive to potential investors through the provision of Petroleum Geo-Services data. The data renders an enhanced geological understanding of hydrocarbon potential offshore Angola for both pre- and post-salt exploration and is available for companies ahead of bid applications – enabling technical insights into an area before bids are placed.  

South Sudan: Up to 70% of Acreage is Unexplored

Despite COVID-19 delays, South Sudan is expecting the launch of its first-ever licensing round within Q1 2021. The country is aiming to increase total production capacity from 170,000 bpd to approximately 190,000 bpd and the new round is expected to boost exploration and development to enable this increase. So far, 14 blocks have been allocated for the planned licensing round, in which further expansion can be expected with new seismic surveys taking place. What gives South Sudan a competitive edge over other African producing countries is the fact that it remains relatively unexplored. According to Abel Chol, Managing Director of Nilepet, South Sudan’s state-owned oil company, the country has already noted investor interest from Russian and Chinese firms and is aiming to maintain political stability and spearhead an ambitious economic recovery ahead.

Somalia: The Next Oil and Gas Frontier

With only two exploration wells offshore to date and 2D seismic data offshore indicating impressive potential reserves, Somalia is regarded as one of the few remaining frontier exploration areas in Africa. Accordingly, the Government has introduced the country’s first-ever licensing round – to run from August 4, 2020 through March 21, 2021 – in which seven offshore exploration blocks will be put on offer. Somalia’s investor appeal is linked to the geological similarities it holds with other high potential basins, including those in Mozambique, Kenya, Tanzania and the Arabian Peninsula, in which giant gas discoveries have been made in recent years. Additionally, the country’s regulatory environment was upgraded through the passing of its Petroleum Law in May 2019, which outlines a revenue sharing agreement determining how future industry revenues will be distributed throughout the country. The agreement has been deemed competitive on a global scale and is expected to drive further investment traction. What’s more, Somalia has established the Somali Petroleum Authority, an independent regulator responsible for overseeing industry activities, with a view to transparency and accountability.

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