Upstream O&G Entice New Players
The MSGBC region boasts substantial oil and gas reserves, which have already attracted significant investment from international oil companies (IOCs).
According to a report by Wood Mackenzie, the region has the potential to produce more than 500,000 barrels of oil equivalent per day by 2025. With new discoveries and exploration activities underway, the market is projected to grow over the coming years, thereby creating new demand for service companies.
Several IOCs are actively involved in the region, including bp, TotalEnergies, and Eni, and are investing heavily in E&P activities while spearheading large-scale projects. As these projects progress, service companies such as Halliburton, Baker Hughes, and SLB have seized the opportunity to provide various services, including drilling, completion, and production services. In 2019, bp awarded a contract for subsea production equipment to Baker Hughes and McDermott for the region’s most prominent gas project, the 5 million ton per annum (mtpa) Greater Tortue Ahemyim development – expected to produce first gas by year end. The contract includes subsea umbilicals, risers, flowlines, and subsea production systems equipment (SPS), and is valued between $500 and $750 million. In addition to GTA, Halliburton and Baker Hughes are responsible for providing chemicals and crude oil treatment, drilling, and well completion for the Sangomar project, a 100,000 barrel per day oil development set to come online late 2023.
Regarding further exploration in the basin, SLB – formerly Schlumberger – has reprocessed part of a governmental survey data under an agreement with Guinea-Conakry’s Office National des Pétroles to target open blocks over the shelf areas offshore the country, resulting in a high-quality dataset that provides new geological knowledge of the region. As such, service companies continue to play a central role in expanding the MSGBC upstream market.
Midstream Refining Awakens Interest
The MSGBC region has significant refining potential, but its refining capabilities remain underdeveloped, presenting a significant opportunity for service companies.
In Mauritania, the government is planning for the development of a new refinery, opening up new prospects for midstream service companies, while in Senegal, Afreximbank is in advanced discussions with Société Africaine de Raffinage (SAR), Senegal’s sole oil refiner, to help raise $500 million in syndicated finance for a further upgrade of its refinery. The SAR refinery recently underwent an upgrade to increase production to 1.5 mtpa from 1.2 mtpa, and this financing would enable another upgrade. Similarly, in Guinea-Bissau, the government is seeking private investors to develop a new refinery. These projects provide opportunities for service companies to provide engineering, procurement, and construction (EPC) services, among others.
Attention Turns to Power Production, Distribution
With relatively low power access rates, the governments of the MSGBC region have embarked on ambitious infrastructure plans aimed at increasing generation capacity and expanding national grids. These plans have created opportunities for service companies to provide various services, including equipment provision, transmission expansion, and substation development.
In Senegal, the government has been working with the World Bank Group to develop 60 MW of solar power through the Scaling Solar Program – aimed at facilitating finance and advancing access in developing countries. The program has attracted international companies such as Engie and Meridiam, which are providing various services including EPC and project development support. In Mauritania, the government has developed several wind and solar power plant projects such as the 102 MW Boulenoir project. These projects have created opportunities for service companies to provide equipment, construction, and maintenance services.
Renewable Energy Opportunities Expand
The MSGBC region boasts abundant renewable energy potential, particularly in wind and solar energy. Governments in the region have acknowledged the importance of transitioning to renewable energy to meet increasing demand and reduce carbon emissions. This creates a prime opportunity for service companies to participate in the expansion of the sector. For instance, in Senegal, the 158 MW Taiba N’Diaye wind farm, which generates 15% of the country’s electricity, attracted firms like Lekela for EPC and project development services while in Mauritania, the three large green hydrogen projects developed by Chariot, CWP Global and Conjuncta are expected to entice service companies to the country.
As opportunities for service companies expand, the upcoming MSGBC Oil, Gas & Power 2023 event – scheduled for November 21-22 – will connect companies to MSGBC opportunities, laying the foundation for growth across the high potential energy industry. Click here for more information.
