Africa countries vie in licensing round beauty parade

A clutch of sub-Saharan African states have launched new upstream licensing rounds on the back of improved oil prices but investor appetite is likely to be shaped by regulatory uncertainty and perceived political risk.

Sub-Saharan Africa has delivered key exploration finds recently, from major gas discoveries by Anadarko in Mozambique's offshore Rovuma basin and BP in offshore Mauritania and Senegal to oil discoveries in Ghana's waters in the west to the inland basins of Uganda and Kenya in the east of the continent.

Upstream licensing rounds are planned by existing exporters and by countries rarely on the radar of firms until now. The latter include Guinea, which has already signed a technical agreement with Total for three offshore blocks that will test if Guinea's waters are an extension of the prolific gas-rich Senegal-Mauritania basin. The National Office of Petroleum of Guinea (Onap) aims to award blocks to firms in October.

Guinea's neighbour Sierra Leone on 21 May extended bids for its upstream licensing round to 27 September from June. The delay has been caused by political instability and violence surrounding hotly contested elections in March and April that resulted in president Julius Maada Bio being sworn into office on 14 May. Sierra Leone's proposed state-take of around 70pc in upstream contracts may also deter potential investors.

Liberia is also planning a licencing round this year, in the Harper basin, but a closely watched drilling programme by ExxonMobil at offshore block 13 in 2016 and by Anadarko in 2012 resulted in no commercial discoveries. National Oil Company of Liberia has not been slow in promoting licensing rounds having marketed them in 2014, 2009, 2007 and 2004.

Exporters Ghana, Cameroon and Congo (Brazzaville) may have more luck.

Ghana this month announced plans to award six upstream blocks in its main oil and gas producing offshore Tano/Western basin this year and an additional three blocks in the same region in 2019. The round follows the entry of ExxonMobil into the country's offshore in January and a maritime boundary dispute ruling in its favour against Ivory Coast by the International Tribunal for the Law of the Sea last year.

Cameroon has a 29 June deadline for eight blocks on offer in its bidding round. Improved cost recovery terms for operators may see increased appetite for acreage take-up.

Congo (Brazzaville) has launched a second phase licensing round for 2018-2019, centred on four onshore and 11 offshore blocks. The round will be formally opened in September and firms have until June, 2019 to bid. Blocks are being offered in ultra deep, deep and shallow waters and in the onshore areas of Conkouati, Nanga and Niambi.

Uganda, Namibia, Kenya and Gambia are amongst states also planning rounds. Ivory Coast, Equatorial Guinea and Mozambique are in negotiations with firms that bid for blocks at the end of last year. Sudan, Madagascar, South Sudan, Zambia and South Africa say they are open to direct negotiations for blocks.

Africa's largest oil and gas exporter Nigeria has pencilled in a second marginal field licensing round but uncertainty surrounds this ahead of national elections planned for February. Recent rounds have been mired in controversy and some licences revoked after the failure to pay signature bonuses or legal action by firms including Shell and ExxonMobil to prevent blocks being awarded by defending their titles to blocks.

Angola has suspended a planned onshore round to Angolan firms. But state-owned Sonangol is showcasing offshore blocks 20/11 and 21/09 in Houston from 29 May to 6 June to potential new operators. The blocks contain sub-salt oil, condensate and gas discoveries made by Cobalt International which is under bankruptcy protection.