Abuja: Two breakthrough offshore discoveries in Namibia by Shell and TotalEnergies in 2022 have marked a significant milestone for the country's energy landscape and Africa's broader upstream ambitions. These high-impact discoveries have created a ripple effect, benefiting the entire continent and fueling ongoing interest in African exploration and production (E and P).
According to African Press Organization, the African Energy Chamber's 2026 Outlook Report, "The State of African Energy," projects renewed momentum in the continent's upstream market over the next several years. The report forecasts global E and P capital expenditure (capex) to reach approximately USD 504 billion by 2026, with Africa contributing about USD 41 billion. Africa's hydrocarbon production is expected to remain stable at around 11.4 million barrels of oil equivalent per day (boe/d) through 2026, with new projects on track to increase output to 13.6 million boe/d by 2030.
Despite the optimism, the report acknowledges that investors are exercising caution to protect their balance sheets, closely scrutinizing opportunities. Nevertheless, the potential for sustained upstream expansion is promising for African states with petroleum reserves, contingent on attracting the necessary capital for future discoveries.
Emerging basins in Africa are signaling strong new potential, with significant progress in Namibia's Orange Sub-Basin, Côte d'Ivoire's deepwater finds, and Egypt's underexplored offshore acreage. Notably, in Libya, BP and Eni plan to spud the Matsola-1 ultra-deepwater gas prospect, which could pave the way for deeper exploration in the Sirte Basin.
The report highlights that while prospects are promising, Africa must confront operational and investment challenges to translate discoveries into development. Advances in seismic acquisition, processing technologies, and drilling capabilities are helping oil and gas companies de-risk complex prospects across the continent.
Geological complexity, political, and security challenges persist in several countries, affecting operations and capital flows. The report notes that upstream capital spending in Africa has risen consistently over the past three years, but global investment growth has not kept pace with upstream cash flows. Companies are channeling significant cash flow into dividends, buybacks, and debt reduction rather than growth.
In this competitive environment, African states must act swiftly to capitalize on the current E and P appetite by reducing risks, providing clear monetization pathways, and establishing stable frameworks to instill investor confidence for long-term commitments.