According to Simon Flowers, chairman and chief analyst at Wood Mackenzie, the protracted energy crisis has highlighted the global economy’s reliance on fossil fuels. “Much has happened in the global economy over the past 12 months. Oil prices have all but doubled and gas prices in Europe and Asia have gone through the roof,” he said, pointing out that geopolitical uncertainty and a possible economic recession were also on the cards. “The Russian invasion of Ukraine has shown us just how dependent the global economy is on oil and gas. The loss of gas volumes in Europe and the strain on commodities such as oil have led to a supply tightness around the world.”

According to Flowers, the globe has long faced an energy trilemma, which includes energy security, affordability, and, of course, sustainability.

“A year ago all the focus was on sustainability, but with the security of supply under huge pressure in Europe and prices skyrocketing, the picture has now changed. Now, energy security is at the top of the agenda. This decade the world will need more oil and more gas – and maybe even more coal than was ever anticipated.”  One of the issues, according to Flowers, is that investment in the oil and gas sector has declined dramatically in recent years, with most of the big oil firms exhibiting little desire for increased expenditure in the area.

“Oil and gas investment has been lagging the growing demand we are seeing. Investment decisions and corporate strategies have restricted investment. The major players are apprehensive about long-term demand and worried about the payback on capital-intensive projects. In this environment, we have seen a move to rather invest in short-cycle, low capital-intensive projects that have low carbon footprints and quick paybacks.” Flowers said that Africa, with its large oil and gas resources, was poised to take advantage of the increased demand for the commodities. “Africa  has a huge undeveloped resource, and no doubt more yet-to-find volumes,” he said, indicating that in the decade to 2020, 61 billion barrels of oil equivalent (BOE) of conventional resources had been discovered in Africa, almost twice as much as any other upstream region. Natural gas accounted for the bulk of these resources, much of it yet to be commercialised. Ongoing exploration was good news for the continent, said Flowers, while recent finds verified that Africa had an important role to play in the oil and gas sector.He said the giant Côte d’Ivoire and Namibia discoveries were two of the exciting projects currently on the continent.Eni’s Baleine project in Côte d’Ivoire is considered the biggest find ever and is already under development only a year after being found. It is estimated to hold 2.5 billion barrels of oil and 93.4bn cubic metres of associated gas. This will see the country that is the world’s top cocoa grower significantly extend its extractive industry.The Namibia find, said Flowers, was another important discovery. Woodmac currently estimates it at around six billion barrels, but the upside could be more than twice that, depending on future appraisal.Feature by Liesl VenterOIL & GASMost of the major oil companies are showing little appetite for increased expenditure in the sector.

Shell appeals historic seismic survey ruling

The Minister of Mineral Resources and Energy, Impact Africa, and Shell have applied to the Gqeberha High Court for leave to appeal the landmark finding that the government’s authorization to undertake seismic surveys off South Africa’s Wild Coast was illegal. The application has been opposed by coastal communities and fishermen, as well as the organisations Sustaining the Wild Coast, All Rise, Natural Justice, and Greenpeace Africa, which are represented by the Legal Resources Centre, Richard Spoor Attorneys, and Cullinan & Associates.

Shell, Impact Africa, and Minister Mantashe have all requested leave to appeal the entire decision. The case was scheduled to be heard in court on Monday, 5 December 2022