Page 7 - GLNG Week 10 2022

GLNG COMMENTARY GLNG

be generating substantial cash flow right now, a development offshore Namibia) a more attractive
disincentive to sell. long-term proposition?
Furthermore, the current high prices and SP: The Venus and Graff discoveries off-
extreme market uncertainty in the near to shore Namibia have definitely opened up a
medium term make asset valuations and closing new exploration play, where more exploration
the buyer-seller gap very tough. activity can pick up. But as far as development
of these or the other sub-Saharan African
Seeking advantage deepwater discoveries is concerned, it still
Q: Is there a way for oil and gas producers in remains to be seen if the current high oil prices
sub-Saharan Africa to take advantage of some will act as an accelerator or have long-term
Western countries’ desire to disengage with Rus- implications.
sian suppliers? The current oil prices are driven by a crisis,
DB: Russia is the world’s second-largest oil which when solved will eventually lead to a
exporter. Companies no longer purchasing Rus- more stabilised market at a relatively lower oil
sian crude will need to source it from elsewhere, price. There are many other factors – fiscal,
which could increase competition for sub-Saha- administrative and other above-the-surface
ran African crude. factors that either drive development or act as Put in simple
SP: One way for sub-Saharan African gas deterrents to deepwater development in sub-Sa-
producers to go about taking advantage of the haran Africa. terms, the events
situation, [in which] some European nations are So it cannot be said that the current high oil of the last month
looking to end/minimise their gas supply trade price environment will have a long-term pos-
relations with Russia, would be to showcase itive impact on the cost-intensive deepwater make sub-
[their] large natural gas potential and secure developments off sub-Saharan Africa.
long-term LNG supply contracts – and then DB: Sustained higher prices will indeed make Saharan Africa’s
focus on accelerating the upstream develop- higher-cost projects more attractive. However,
ment and LNG export infrastructure develop- it’s important to note that investment in new upstream more
ment to fulfil these contracts. greenfield developments, especially in remote attractive.
Many upstream gas developments are delayed areas like Namibia, which will take some years
in sub-Saharan Africa, and LNG export infra- to get to first oil, are based on long-term oil price Derek Boulware
structure plans are [being] phased out. [Demon- assumptions, not what is happening now or Head of Sub-Saharan
strating the capacity] to develop potential and forecasts over the next 12-24 months.™ Africa Research
transform as a long-term supplier should be Welligence Energy
the focus if sub-Saharan African gas producers NewsBase’s sister publication bne IntelliNews is Analytics
want to replace Russia as an LNG/natural gas following the war in Ukraine and its fall out with
exporter to Europe. daily reports with correspondents across the entire
Emerging Europe region, including in both Russia
Frontier provinces and Ukraine. Or sign up to Editor’s Picks here,
Q: Will higher oil prices make relatively high- a free weekly email digest of the most important
cost projects (such as, perhaps, ultra-deepwater stories in the last week.

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