Historically, oil and gas projects have been known to experience delays ranging from 5% to 20% of the project duration due to project complexity, significant capital requirements, and the multi-faceted nature of developments. In 2023, oil and gas projects across Africa are experiencing even further delays, a trend detailed in the African Energy Chamber’s (AEC) recent market-focused report, The State of African Energy Q1, 2023 Outlook. The report paints a revealing picture of the challenges facing the industry and the potential impacts these delays could have.
Procrastination: The Foe of Progress
According to the report, delays from discovery to final investment decision (FID) to development kick-off have increased, resulting in revenue losses due to deferred production, increased costs for contractors, and a lack of progress. This trend aligns with Parkinson’s Law of Delay, which observes that work expands to fill the time allocated to it. In this scenario, procrastination becomes the ultimate foe of progress and productivity. Unless delays are addressed, Africa will be unable to unlock the full potential of its oil and gas resources.
Despite their significance, a number of large-scale projects are experiencing setbacks. These include the Mozambique liquefied natural gas project, which has faced multiple delays due to security concerns. Developed by TotalEnergies, the project was originally scheduled to commence production in 2024 after securing FID in 2019. However, the start-up has now been postponed to the late 2020s due to the declaration of force majeure by TotalEnergies. Additionally, the East African Crude Oil Pipeline, which aims to transport crude oil from Uganda to Tanzania for export, has been delayed due to financing challenges and environmental opposition. The project, being developed by TotalEnergies and other partners, was initially expected to begin operations in 2020 but is now projected to come online in 2025. In Nigeria, several offshore oil projects have also experienced delays due to security concerns, regulatory issues, and technical challenges. For instance, the TotalEnergies-developed Egina oil field faced a 12-month halt due to issues related to local content requirements and delays in the delivery of key components. Furthermore, significant natural gas reserves discovered in Ethiopia during the 1970s and 1980s are yet to reach FID, with project delays extending for decades.
However, there are several success stories, such as the Jubilee field off the coast of Ghana, which has been in production since 2010 and has had a significant positive impact on the country’s economy. Another example is Egypt’s Zohr gas field, which has been in production since 2017, and Angola’s Kaombo, which has been producing since 2018. These countries have experienced relatively few delays in their projects and are now reaping the benefits of successful development. Unless other oil and gas projects are expedited with similar urgency, Africa’s production forecast will see a downturn.
According to the AEC’s report, the currently producing fields, both in terms of liquids and gas, are in a state of terminal decline due to depleting reservoirs. Infill drilling or redevelopment programs on these fields, involving brownfield spending, may only temporarily stabilize the production decline. Liquids output from these fields is expected to decrease from 7.66 MMbbls/d in 2023 to 6.85 MMbbls/d in 2025 and 4.7 MMbbls/d in 2030. The average annual production decline rate is projected to be 8% from 2025 to 2030, increasing to 10% from 2031 to 2040. Any further delays or shelving of future
