Page 60 - bneMag April 2022 Russia living with sanctions

60 Opinion
bne April 2022
Seeking advantage
Q: Is there a way for oil and gas producers in sub-Saharan Africa to take advantage of some Western countries’ desire to disengage with Russian suppliers?
DB: Russia is the world’s second-largest oil exporter. Companies no longer purchasing Russian crude will need to source it from elsewhere, which could increase competition for sub-Saharan African crude.
SP: One way for sub-Saharan African gas producers to go about taking advantage of the situation, [in which] some European nations are looking to end/minimise their gas supply trade relations with Russia, would be to showcase [their] large natural gas potential and secure long-term LNG supply contracts – and then focus on accelerating the upstream development and LNG export infrastructure development to fulfil these contracts.
Many upstream gas developments are delayed in sub-Saharan Africa, and LNG export infrastructure plans are [being] phased out. [Demonstrating the capacity] to develop potential and transform as a long-term supplier should be the focus if sub- Saharan African gas producers want to replace Russia as an LNG/natural gas exporter to Europe.
Frontier provinces
Q: Will higher oil prices make relatively high-cost projects (such as, perhaps, ultra-deepwater development offshore Namibia) a more attractive long-term proposition?
SP: The Venus and Graff discoveries offshore Namibia have definitely opened up a new exploration play, where more exploration activity can pick up. But as far as development of
these or the other sub-Saharan African deepwater discoveries is concerned, it still remains to be seen if the current high
oil prices will act as an accelerator or have long-term implications.
The current oil prices are driven by a crisis, which when solved will eventually lead to a more stabilised market at
a relatively lower oil price. There are many other factors – fiscal, administrative and other above-the-surface factors that either drive development or act as deterrents to deepwater development in sub-Saharan Africa.
“The current oil prices are driven by a crisis, which when solved will eventually lead to a more stabilised market at a relatively lower oil price”
So it cannot be said that the current high oil price environment will have a long-term positive impact on the cost-intensive deepwater developments off sub-Saharan Africa.
DB: Sustained higher prices will indeed make higher-cost projects more attractive. However, it’s important to note that investment in new greenfield developments, especially in remote areas like Namibia, which will take some years to get to first oil, are based on long-term oil price assumptions, not what is happening now or forecasts over the next 12-24 months.
Europe and Asia have been the two main buyers of Nigerian LNG.
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