On the back of rising gas demand and reformed regulatory environments, North African oil and gas markets are seeing significant growth and expansion, with U.S. explorers answering the call for heightened investment. From Egyptian offshore gas piquing the interest of international oil companies, to independent explorers tapping into gas-rich acreage, American oil and gas companies are either doubling down on their investments within existing markets, or laying the foundation to enter frontier exploration plays.
Algeria, for example, is seeking new foreign partnerships to offset its declining production from ageing oilfields, specifically fostering cooperation with U.S. oil majors. In March 2020, Algeria’s national oil company Sonatrach signed a Memorandum of Understanding (MoU) with Chevron and ExxonMobil to advance discussions on joint hydrocarbon exploration and development. Algeria is already the leading natural gas producer on the continent and is estimated to hold the third-largest shale gas reserves globally, with significant upside potential. The ability to translate these non-binding agreements into tangible investment remains contingent on the implementation of Algeria’s revised Hydrocarbons Law, which was adopted to simplify the structure of fiscal terms and reduce time associated with developing new oil and gas projects.
Neighboring Egypt serves as the third-largest natural gas producer on the continent and a critical link in the global energy value chain through its operation of the Suez Canal and Suez-Mediterranean Pipeline. The former enables the delivery of oil and LNG from the Persian Gulf to foreign export markets, including North America. Since the discovery of the prolific Zohr field in 2015, Egypt has successfully fast-tracked gas development, and is now turning to U.S. oil and gas companies to heighten exploration activities, with a view to achieving energy self-sufficiency.
In January 2020, the country signed two deals with ExxonMobil for oil and gas exploration; the first targets exploration in the North East Amriya block with a minimum investment of $220 million, and the second targets the North Marakia block with a minimum investment of $112 million. This year, Egypt signed new deals with a total of six companies, including ExxonMobil and Chevron, providing for the drilling of 23 wells in nine regions in the Mediterranean and three regions in the Red Sea, with a minimum investment of $1.4 billion. Houston-based Apache is another U.S. firm with operations in Egypt, accounting for roughly 27% of the country’s daily production of crude oil and condensates. In July, Apache announced agreements with Egypt’s Ministry of Petroleum and Mineral Resources to heighten its oil exploration and production activities in the country.
In addition to reigniting foreign investment flows to more established oil and gas producers, U.S. players are escalating their participation in nascent markets. In June, Morocco issued a two-year permit to ConocoPhillips to conduct onshore exploration works and studies in the northern Mesorif area. The American multinational is set to carry out geological and geophysical studies, along with the acquisition of 2D seismic data during the second year of the license. Morocco holds the fifth-largest oil shale reserves globally, yet currently only produces marginal amounts of oil, natural gas and refined petroleum products. To incentivize exploration in collaboration with international partners, Morocco has established an attractive operating and investment framework for oil and gas companies, and is expected to invest $40 billion in its energy sector by 2030.
ConocoPhillips is also active in Libya through its interest in the Waha concession in the Sirte Basin, in which the North Gialo field represents a major growth project under evaluation for development by the company and its co-venturers. While Libya is by no means an emerging producer – currently producing more than 1.2 million barrels per day – its operations have been interrupted over the last several years due to forced shutdowns of export terminals and associated infrastructure. The Libyan Government is seeking to revive its oil and gas industry and boost oil output on the back of more stable conditions in the country, positioning sectoral revitalization as a catalyst for broader economic growth.
Energy Capital & Power (ECP) – in partnership with the African Energy Chamber’s U.S.-Africa Committee – invites U.S. companies, investors and organizations to participate in the first-ever U.S.-Africa Energy Forum (USAEF) (December 9-10, 2021, Houston, Texas), introducing American companies to African opportunities. To learn more about how U.S. firms can advance the agenda of sustainable, long-term investment in African energy, please visit www.usafricaenergy.com. To sponsor, speak or attend USAEF 2021, please contact Senior Director James Chester at email@example.com