Economy
Outlook for Africa’s Oil & Gas Sector Positive—Report
By Dipo Olowookere
A new report by PwC has disclosed that the outlook for Africa’s oil & gas industry remains positive amid difficult operating and economic headwinds.
Tough economic and external conditions have placed pressure on oil & gas companies to be more cost-effective and efficient. As a result, companies have adopted to a low-cost environment, which promises to be even more beneficial given the current recovering oil price.
In the PwC’s annual Africa Oil & Gas Review released at the 25th Africa Oil Week conference, 2018 held in Cape Town, PwC Africa Oil & Gas Advisory Leader, Mr Chris Bredenhann, said, “Africa’s oil & gas companies have weathered the downturns and capitalised on the upswings focusing their efforts on new ways of working, reducing costs and utilising new technology.”
Companies have taken to restructuring their portfolios with a focus on established regions, less exploration, higher value plays with low break-even-cost, and projects with shorter lead times and lower risk. The industry has also renewed its focus on delivering projects on-time and on-budget.
As the oil price is steadily rising towards pre-collapse levels, the outlook for the industry is hopeful. “It is, however, important for companies to avoid falling into the cost inflation trap that could eat into the profitability gains that should follow from the rising oil price. Keeping up capital discipline and further improving productivity will yield sustained results for the industry,” Bredenhann adds.
Despite positive developments, the oil & gas industry still faces numerous and persistent challenges around talent shortages, regulatory uncertainty, political instability, corruption and fraud, and a lack of infrastructure.
Notwithstanding the challenges, Africa does offer plenty of opportunities in the form of unexplored hydrocarbon demand fuelled by population growth, urbanisation and the emergence of a growing middle class.
PwC’s Africa Oil & Gas Review, 2018 analyses what has happened in the last 12 months in the oil & gas industry within the major and emerging markets. This edition focuses on the expert opinions of a panel of industry players from across the value chain who share their views of oil & gas in Africa.
At the end of 2017, Africa is reported to have 487.8 tcf of proven gas reserves, 7.1% of global proven reserves, only marginal changes to the prior year. Africa’s share of global oil production has slightly increased by 0. 3% since last year to 8.7% standing at 8.1 million bbl/d. The main contributors continue to be Nigeria, Angola, Algeria and Egypt. Libya also increased its production by 102.9% in 2017, placing it as the fourth-largest oil producer in Africa with an 11% share moving Egypt into fifth position.
Regulatory developments in Africa
Regulatory uncertainty continues to be a major barrier to the development of the oil & gas industry in Africa. Overall, there are some positive developments that demonstrate that governments are reacting to the new environment. Despite some notable improvements around regulation, there is still a high level of uncertainty in a number of jurisdictions, the report said.
In South Africa, the proposed Amendment Bill to the Mineral and Petroleum Resources Development Act (MPRDA) may be withdrawn, and there are plans to split oil & gas from mining formulating separate legislation, it added.
Growth and development
The report stated that the outlook for the oil & gas industry is looking more optimistic with the Brent oil price having broken through the $80 mark at the time of compiling our report. Although there has been a significant increase in the number and size of final investment decisions (FIDs) in 2018, the industry is not what it was. New finds are much smaller and leaner than they were in prior years. Deepwater oil has been given preference over gas, and oil fields offering the highest rates of return are attracting investment. There is also a preference for brownfield over greenfield developments.
The current oil price recovery reflects a tight supply and demand balance, as well as an indication that we are heading towards a potential global supply crunch in the early 2020s. Exploration spend in Africa and globally is starting to pick up as well. It is safe to assume that this trend will continue if the current higher price environment is sustained.
Digital disruption in Africa
There have been a number of developments in digital transformation in the oil & gas industry, not only globally, but also in Africa. A number of new technologies have been deployed by the industry across the value chain. Some examples include: the use of drones to inspect remote facilities thereby reducing safety and health risks; the use of robots to undertake monitoring and safety checks, which also reduces the safety risks for human operators; and the use of virtual reality to simulate the drilling of wells remarkably reducing drilling costs. Digital disruption is here to stay, and African companies must embrace this to reap the rewards.
Looking to the future
Africa is the world’s fastest economic region with a growing population that is becoming more urbanised. According to PwC’s Strategy& estimates, Africa’s total energy demand is forecast to increase by 60% to 28 000 trillion btu by 2030.
Based on different potential trajectories for economic development, energy access policy and climate mitigation strategies, researchers have put forward various alternative scenarios for energy production and consumption on the continent in the years ahead.
Hydrocarbons are expected to continue to play a major role in the energy mix that will satisfy Africa’s growing energy needs. Major gas resources on the continent including Mozambique, Nigeria, Angola, Tanzania, Senegal and Mauritania, could augment the key position of gas as an energy source for Africans. In the low-carbon context, gas also plays the role of a transition fuel before a wider switch to renewables, a development which is likely to take longer in Africa than on other continents.
The increase in population and the demand for freight transport will also see an increased demand for liquid fuels. Many African countries are ‘thinking refineries’ at various scales. Countries that are considering new refineries or upgrades include Angola, Equatorial Guinea, Uganda, Nigeria, Republic of Congo, Ghana, São Tomé & Príncipe, and Zambia. Given projected population growth and refined fuels consumption, an estimated additional 3.4 bbl/d of refined fuels will be needed to meet Africa’s needs by 2030.
The role of National Oil Companies (NOCs)
The role that NOCs play as operators and custodians of the orderly development of the hydrocarbon industry in their respective countries cannot be underestimated. Almost 30 of Africa’s NOCs are involved at various points of the value chain and at different levels of maturity.
The PwC analysis delves deeper into the NOC landscape to provide a perspective on the future that NOCs could face.
“We have identified four potential scenarios along two axes: the level of regulatory stability and the level of diversification within a country’s economy,” it said.
These scenarios depict a number of possible future pathways and provide industry players with some options with regard to how they might respond to these potential outcomes and their impact on operations.
NOCs should consider these scenarios to enable them to design strategies that avoid the pitfalls identified.
The African oil & gas industry has been through some difficult years in the wake of the oil price crash. However, the industry has restructured itself and is more competitively placed in terms of operational performance, the report stated.
“It is critical that the sector retains its capital discipline and adopts digital technologies if the hard-earned wins in cost savings are to be retained. Progress in addressing corruption and improving corporate governance will also need to be maintained. Moreover, in the longer term, the energy transition will continue to impact the sector’s dynamics with implications for oil demand,” Bredenhann concludes.
By Aduragbemi Omiyale
The presidential candidate of the Labour Party in the 2023 general elections, Mr Peter Obi, has expressed worry over plans by the administration of President Bola Tinubu to spend about $11.6 billion on debt servicing.
In a post on his social media platform on Monday, the opposition politician criticised this move, saying it is not good for the country.
He also said this action “should concern anyone interested in the country’s economic future and long-term development.”
The former Governor of Anambra State kicked against the penchant of the government to borrow from various sources without anything to show for it.
“There is nothing inherently wrong with borrowing when it is guided by prudence and directed toward productive investment, he noted, stressing that countries such as Japan, the United Kingdom, the United States, the United Arab Emirates, Singapore, and Indonesia are all heavily indebted, yet their borrowings are largely channelled into education, healthcare, infrastructure, and innovation – sectors that generate long-term economic returns and sustain repayment capacity.”
According to him, “despite high debt levels, their obligations remain more manageable because they are tied to measurable productivity.”
He said, “Nigeria’s situation, however, is markedly different. A huge proportion of past borrowing has been directed toward consumption, with limited visible or sustainable developmental outcomes to justify the scale of indebtedness.”
“It is also important to note that a huge portion of the debt currently being serviced was accumulated under the Tinubu administration itself, while borrowing has continued at a significant pace. The administration’s recent external borrowing alone includes about $6 billion (from First Abu Dhabi Bank in the UAE—$5 billion, and UK Export Finance via Citibank London—$1 billion), a further $1.25 billion under consideration from the World Bank, and an additional $516 million arranged through Deutsche Bank, bringing the latest known external loan commitments to roughly $7.8 billion. In addition, domestic borrowing through monthly bond issuances continues to add to the overall debt stock,” the businessman also stated.
“Against this backdrop, Nigeria’s 2026 budget shows that health is N2.46 trillion, education is N2.56 trillion, and poverty alleviation is N865 billion, giving a combined total of about N5.885 trillion for these three critical sectors.
“By comparison, debt servicing at about $11.6 billion (approximately N17–N18 trillion, depending on exchange rate assumptions) is almost three times higher than the total allocation to health, education, and social protection combined. This imbalance highlights a troubling fiscal reality in which debt obligations increasingly crowd out investment in human capital and poverty reduction.
“Moreover, even within the limited allocations to these sectors, funds may not be fully released, and a significant portion of what is eventually released could be misappropriated,” he further stated.
Mr Obi said, “The central issue is not borrowing itself, but whether borrowed funds are being converted into measurable productivity, inclusive growth, and improved living standards. Without this, debt servicing shifts from being a temporary fiscal obligation to a long-term structural burden that constrains development and deepens economic vulnerability.”
By Adedapo Adesanya
Pathway Advisors Limited, an issuing house and financial advisory firm, has announced the successful completion of the Series 2 Commercial Paper issuance for Veritasi Homes & Properties Plc.
The Series 2 offer, issued under Veritasi Homes’ newly registered N20.00 billion Commercial Paper Programme, raised N16.76 billion, significantly above its initial N12.00 billion target on the back of strong institutional demand.
This issuance builds on the company’s track record in the Nigerian debt capital market and follows the recently concluded N10 billion 3-year 20 per cent Series 1 Fixed Rate Bond Issuance, further reinforcing investor confidence in Veritasi Homes’ strong credit profile.
The 364-day tenor instrument attracted robust participation from a diverse pool of institutional investors, underscoring sustained confidence in the Company’s financial strength, operating model, and governance standards.
Commenting on the deal, the Founder/CEO of Pathway Advisors Limited, Mr Adekunle Alade (MBA, FCA, M.CIod), noted that the outcome further validates investor appetite for well-structured transactions in the Nigerian capital market.
“The strong oversubscription speaks to the market’s confidence in Veritasi Homes’ performance, governance, and repayment track record. We are pleased to continue supporting issuers with strong fundamentals in accessing efficient funding.’’
He further highlighted that Veritasi Homes’ consistent market activities since 2022, including successful issuances and full redemption of matured obligations, continue to strengthen its reputation among institutional investors.
“Pathway Advisors Limited remains committed to maintaining its leadership position within Nigeria’s capital markets through the origination and execution of transformative, value-driven, and commercially viable transactions by deploying innovative financial solutions and facilitating strategic capital formation across critical sectors.
“We are committed to supporting credible corporates in accessing efficient short-term and long-term financing solutions within the Nigerian capital market,” he said in a statement on Monday.
Speaking on the transaction, the Managing Director/CEO of Veritasi Homes & Properties Plc, Mr Nola Adetola, described the outcome as a strong endorsement of the company’s fundamentals.
“This result reflects the resilience of our business model, our growing market reputation, and the continued trust of the investment community. We are grateful to all institutional investors for their confidence in Veritasi Homes.”
He added that the proceeds from the issuance will be deployed to support the company’s working capital requirements, enhance liquidity, and complete the ongoing development activities across its real estate portfolio.
Mr Adetola also commended Pathway Advisors Limited for its advisory and arranging role in the successful execution of the transaction.
By Aduragbemi Omiyale
The Securities and Exchange Commission (SEC) has approved the transition to the T+1 settlement cycle for capital market transactions from June 1, 2026.
This is coming some months after Nigeria moved from the T+3 settlement cycle to the T+2 settlement cycle.
The T+ settlement cycle is the number of working days required to complete a capital market transaction, such as the trading of securities, shares, and others, from the first day the trade was executed by an investor.
In a notice on Monday, the SEC, which is the apex capital market regulator in Nigeria, said it was authorising the new system to “promote an efficient, fair, and transparent capital market.”
Under the new arrangement, equities and commodities traded by investors at the market would be cleared and settled by the Central Securities Clearing System (CSCS) within one day.
The agency noted that the migration to a T+1 settlement cycle forms part of its ongoing market modernisation initiatives aimed at enhancing market efficiency and strengthening risk management. reducing counterparty exposure, improving liquidity, and aligning the Nigerian capital market with international standards and global best practices.
“Accordingly, all eligible trades executed in the Nigerian capital market shall settle one business day after the trade date (T+1),” a part of the statement noted.
It was stressed that “Friday, May 29, 2026, shall be the final trading day under the existing T+2 settlement cycle. Trades executed on Friday, May 29, 2026, and Monday, June 1, 2026, shall both settle on Tuesday, June 2, 2026. All trades executed from Monday, June 1, 2026, onward shall be subject to the T+1 settlement cycle.”
SEC tasked all capital market operators, securities exchanges, clearing and settlement infrastructure providers, custodians, registrars, issuers, and other relevant stakeholders to take all necessary measures to ensure full operational readiness and compliance with the new settlement framework.
“Market participants are expected to review and align their systems, processes, controls, and operational workflows ahead of the implementation date,” it further stated, promising to continue to engage stakeholders and monitor the implementation process to ensure an orderly and seamless transition.
The regulator said it remains committed to strengthening market integrity, enhancing investor confidence, and fostering the development of a modern. resilient and globally competitive Nigerian capital market.
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