PwC: Oil, gas firms likely to delay projects in offshore Tanzania
Wed Mar 04, 2015
African countries including offshore Tanzania may see frontier project delays due to the slump in global oil price, experts have warned.
According to an analysis on the oil and gas industry in Africa that was released recently by Price Water House Coopers LLP (PwC), explorers must rethink their capital expenditure on exploration activity across the African continent in the wake of the significant drop in the global oil price.
Other countries that are bound to experience frontier project delays include offshore South Africa, sub-salt Congo and Angola, and shale gas in South Africa. Shale gas, in particular, could move forward if the gas price were not 100 percent fully-indexed to oil.
It should be noted that oil companies do not make their investment decisions based on short-term, cyclical price changes but rather on wider price trends given the long-term nature of these investments.
PwC Africa Oil and Gas Advisory Leader Chris Bredenhann said major African gas projects are also expected to be under increased scrutiny, as oil-linked LNG prices have dropped significantly.
“While we don’t envision that the major LNG projects in Mozambique and Tanzania will be cancelled outright, costs are a major concern for investors,” Bredenhann says.
At this time, governments would do well to place regulatory, legislative and fiscal policies so that they are seen as attractive regimes when the price recovers.
Oilfield service companies will be hit hard globally, but Africa may be an especially vulnerable portion of their portfolios, states the analysis. Africa
SOURCE: IPPMEDIA
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