Merlin Energy Resources Bill Wilks and Helen Bone have recently returned from African Energy Week 2025. With over 6,000 attendees the event is possibly the largest energy conference on the continent. It provides a forum in which the energy strategies of countries across Africa can be showcased and where operators and investors can connect to further future developments.
With so much going on at the conference Bill and Helen came away with a basket of learnings and these are some of their key take aways.
Drill Baby Drill?
With the conversation focused on renewable energy in the UK, the significant focus on hydrocarbon-based energy solutions at AEW25 was noticeable. Indeed, with around 43% of the African population not having access to electricity, and a huge population increase estimated in Africa in the next decades, the focus is very much on a swift roll out of energy solutions. There is a huge inventory of under-developed oil and gas resources across Africa, so hydrocarbons are understandably a key part of the solution being implemented to bring millions out of fuel poverty. That’s not to say that renewables are not part of the conversation, with “energy transition being A priority, just not THE priority”. Perhaps the most popular phrase shared at AEW was ‘Energy Security’. Whilst this is somewhat lost on our own government in the UK, it is front and centre for Africa and the key pillar of governmental energy strategies across the continent.
Unlocking the Potential of Africa
The second theme repeated in numerous talks highlighted the need for political stability, regulatory transparency and timely decision making from governments and regulators to attract investment and unlock the potential of Africa. (Those working in the UK may wish to weep at this point). Civil unrest is still a major issue driven by economic disparity, political corruption and social inequality.
Many countries, including Nigeria, Angola, Equatorial Guinea and Namibia, highlighted the efforts being made to address these key issues, with revised hydrocarbon legislation and fiscal terms being rolled out and moves made to tackle political corruption. In addition, a more open dialogue between operators and governments is being pursued to identify where barriers and bottlenecks exist and how they could be removed to speed up Africa’s energy development. It was abundantly clear that IOCs and NOCs have recognised these positive moves and this has already unlocked a raft of very significant projects.
'Gas, gas and more gas'
The value of gas is now being heralded as a very bankable ‘transition fuel’ and huge efforts made to release its value. Since 2010 73% of the >2000MMboe discovered in Africa belong to gas accumulations and yet just under 10% of these discoveries are in production, compared to 40% of oil discoveries*. Potential development projects range from extracting late field life gas from brown fields to developing larger gas accumulations for transport as LNG (or FLNG). Gas has the added benefit of being a cleaner fuel than oil thereby also reducing climate impact. Many countries are putting legislation in place to support the development of stranded gas accumulations which should help realise the value of this important commodity and also terminate gas flaring. The flip-side, however, is that oil developments are seen as faster to get to production, on average, so they attract investment due to the faster pay-back. It is clear that oil can be the main focus for smaller operators, whereas stranded ‘big gas’ projects are the preserve of multinationals and NOCs.
*S&P Global
The Rise of Indigenous Companies
As part of the new petroleum legislation, many countries are bringing in local content policies which strive to ensure that Africans benefit directly from the growth of the energy industry in their country, either as equity holders or as key players in the supply chain. Leading the way is Nigeria which has recently, in conjunction with local operators, identified the top 10 skills which are the focus of upskilling in country to support Nigerian energy developments.
This legislation has driven an increase in indigenous companies across Africa. Many are focused on brown field projects which are being pushed (logically) to sustain daily national production. These projects provide lower cost entries for companies willing to push development forward. Companies who focus on brown field development have identified a particular niche for experienced in-country engineers as they re-develop abandoned fields with ageing infrastructure which doesn’t fit with current specifications – in which case that experience is invaluable. “Brownfields need grey hair!” as one commentator put it.
Investment
Access to finance does seem to have improved for oil and gas projects in recent months, as the ESG toxicity has relented. Indeed, a pragmatic view has emerged of what a ‘just transition’ looks like for Africa. Small and mid-sized operators are finding that access has eased to both equity-based lending and debt (as part of the mix). However, green-field exploration is still hard to fund for such companies, especially through equity, and for the time being it will likely be the preserve of multi-nationals and NOCs. This does beg the question as to where the ‘next Namibia’ will come from, as the exciting new play-opening concepts have so often come from small operators. (Think Senegal too). Change may be coming on that, but for now development and Near Field Exploration may be the typical limit of the smaller players.
The landscape is certainly changing. There was much excitement around the imminent establishment of the ‘African Energy Bank’ which may grow to become a driver for projects across the continent in decades to come. It may also address the oft-cited fact that finance in Africa is more expensive than in the west. With the move towards local content, one can also expect a greater influx of funding from high net-worth individuals.
Conclusion
These represent just a small proportion of the take aways from the conference but are the key messages that were repeated across multiple sessions. Watch this space for more insights from the conference in the coming weeks.
Bill Wilks will be attending GESGB Africa on the 23-24th October in London and would be happy to catch up with anyone wanting a chat about these or any other Africa topics. Merlin has worked with more than 20 operators in 18 countries across Africa, from top class sub-surface studies to asset reviews and advisory services. It is looking forward to delivering in the years ahead for its clients and ‘new kids on the block’, whether that be oil and gas or renewables!
Tags: Africa, Conference, Energy Transition, Geoscience, Merlin News
Source: Merlin Energy Resources
