Africa’s oil production to decline in 2024
The African Energy Chamber said Africa’s oil production decline is expected to be flat at about 6.77 million barrels per day, though months’ production seems too bleak.
In a statement seen by The City Review on Sunday, NJ Ayuk, Executive Chairman of the African Energy Chamber, noted that it is still “challenging to fully grasp the profound damage COVID-19 has inflicted on the lives of the people and to economic devastation across the globe.”
“A break from dramatic market swings has its appeal; marginal growth and declining production are not exactly welcome news. What’s more, even though the factors that impact oil demand are beyond our control, I don’t believe African oil industry stakeholders should resign themselves to a complacent “it is what it is” mentality about declining production during the next year,” Ayuk said.
“We should be seizing every opportunity to capitalise on our oil and gas resources. Every drop of oil extracted is a pathway to economic growth revenue that can fund social programmes, infrastructure development, and much-needed technology transfers from the international oil companies (IOCs) that invest in Africa,” he added
He said Africa’s 2023–2024 oil production will decline from 6.9 million barrels per day in January 2024 to roughly 6.62 million barrels per day.
“As for Africa, our 2023–2024 output is expected to stay relatively flat at about 6.77 million bpd. But month-on-month production looks a bit bleaker, with production declining from 6.9 million bpd in January 2024 to approximately 6.62 million bpd in December 2024,” he said.
The report considers increasing oil demand in the Northern Hemisphere in the third and fourth quarters of 2023, along with diminished supply due to decreased Russian exports and voluntary production cuts by Saudi Arabia. The result will be a supply deficit, setting the stage for increased production, at least in some regions of the globe, in 2024.
According to the report, a handful of African nations are driving oil and condensate output. This includes OPEC member nations Nigeria, Libya, Algeria, and Angola, which are expected to achieve outputs of 1.51 million bpd, 1.31 million bpd, 1.18 million bpd, and 1.01 million bpd respectively in 2024. Out of that group, Nigeria stands to be a star producer, contributing a little over a fifth of these countries’ combined total annual volume.
For instance, the driving African oil output are Egypt, Chad, and Ghana. Egypt, for example, is expected to see its oil output reach 560,000 bpd by the end of 2023 while totalling 520,000 bpd in 2024.
The African Energy Chamber outlook report also explores the impact of OPEC membership on African nations, especially in the areas of production cut requirements. The cartel establishes these cuts to control the global supply-demand balance and volatile market situations or irregularly high or low global oil prices.
“The member nations are expected to adhere to these cuts so that the cartel maintains its control on the global markets as opposed to losing the market share and control to North American shale,” it explained.
“These outages must be addressed: current producing projects in African OPEC countries represent about 44 percent of our continent’s total liquids reserves potential of more than 70 billion barrels. An additional 33 percent is believed to be in the undeveloped discoveries in these countries, along with 2percent from under-developed projects,” it stated.
For years, African OPEC members had a higher production capacity than the cartel’s quota and tended to produce higher, even during periods of Year over Year (YOY) production decline. But that is no longer the case. Nigeria, for example, has experienced production outages caused by pipeline vandalism, militant activity, and resulting force majeure imposed by operators, exacerbated by declining legacy fields and a lack of new start-ups. Angola and Equatorial Guinea have experienced outages as well, which likely will reach an average of 25,000 bpd over 2023.