In spite of its widely proclaimed crisis, Nigeria remains stubbornly on the list of top ten countries where Global upstream spend are predicted to he highest in the next five years. Its production may not increase exponentially, but will be on the upswing, according to recent evaluation by a number of industry analysts, including Wood Mackenzie.
As first oil is expected from Ghana’s deepwater Jubilee field in 2010 and production spend in Angola continues on an upward spiral, West Africa’s Gulf Of Guinea remains a site of relatively high oil production activity, compared with the rest of the world. “Major developments in West Africa, Kazakhstan, and the US Gulf Coast underpin growth in other regions” according to a recent Wood Mackenzie report, “whilst capacity additions in Brazil are outweighed, in the Latin American total, by prospective declines in Mexico and Venezuela”. The report added that “the biggest drop in supply capacity is expected in Europe, despite expenditures of over US$25 billion per year”. Wood Mackenzie contends that “the level of upstream investment across the globe is consistently dictated by three main criteria:
- Perceptions of prospectivity and/or recent levels of success in exploration/ development
- Expectations of a stable security situation and regulatory framework
- The attractiveness of the fiscal terms on offer”
Some OPEC member states have chosen to develop their resources in co-operation with the international industry, the report says. “Countries such as Angola and Nigeria are more dependent on external finance, skills and technology than some of their peers in the Middle East, and offer slightly more attractive terms to promote the timely development of new production capacity. In this respect, they are on a path which has been particularly successful for Qatar over the past decade”. 2009 spending has been generally conservative. The report views current spending plans as suggesting that “2010 will see a similar overall level of global upstream spend to that in 2009”. There will be some notable exceptions to this conservative trend. “Angola and Brazil are set for another phase of major investment which should b sustained for the next five years at least”.