Oil and gas demand from Africa will remain high

The long-term outlook
for the oil and gas
industry is not as
depressing as one
might think – especially
in Africa where demand is
expected to remain high.
According to Simon
O’ Toole, a petroleum
exploration consultant with
the World Bank, demand for
oil has been on the increase
since 2009 and this trend
is expected to continue –
especially in Africa where
power remains a constraint.
“Demand for oil and gas
from markets in Africa
remains high and it’s a
demand that is expected to
continue to rise,” he said.
While the oil and gas
industry is probably
experiencing its most
tumultuous period since the
infamous oil crisis of 1973 in
Africa, growth is the long–
term prediction.
Low oil prices and Africa’s
lack of
infrastructure
had however
impacted on
investment in
oil and gas on
the continent
and exploration
in many areas
had come to a
standstill, he
said.
“The
disruptions we
are seeing at
the moment
– like the variations in the
oil price – are largely about
geopolitical issues between
countries. We have the Middle
East driving the price down
by over-supplying the market
while trying to kill the US shale
gas industry, which has proved
to be remarkably robust and
has stayed
profitable at
around $50 a
barrel,” he said.
“It has, in this
environment,
become
impossible to
predict the oil
price.”
The World
Bank has
continued to
forecast low
commodity
prices across
the board for 2016 saying
this will undermine growth
prospects for many resource-
rich countries that experienced
a surge in exploration,
investment and production
during the commodities boom
of the 2000s.
Countries that have
borrowed and invested
heavily in anticipation of
faster growth may struggle to
service their debt and sustain
investment when growth
disappoints as a result of
lower commodity prices.
With oil and metals prices
today 50-70% lower than
their early 2011 peaks, natural
resource development projects
have already been put on hold
or delayed in several emerging
and developing countries.
But, said O’Toole, the
current downturn in oil
prices was probably not
as severe when viewed in
terms of the long-term
demand being forecast on the
continent.
He said in this regard
logistics companies
specialising in the oil and
gas industry would still find
opportunities but it would
require being inventive and
adaptable in the future.
“Since there is no real
foreseeable alternative –
especially in Africa – for
fossil fuels, the oil price will
in reality drift up and down
for some time, but companies
that are able to innovate
will thrive in the oil and gas
industry on this continent.”
INSERT
Since there is no real
foreseeable alternative
for fossil fuels, the oil
price will in reality
drift up and down for
some time.
– Simon O’ Toole