Covid-19: PwC Forecasts $1trn Oil Revenue Loss For Nigeria, Angola, Others

Oil producing countries in Africa are expected to record an estimated loss of N1trn in oil export revenues over the next 20 years as prices are projected to drop to $54 per barrel.

According to the latest Africa Oil and Gas Review 2020, by PricewaterhouseCoopers, prices are predicted to reach a ceiling of around $54 per barrel, compared to a pre-Covid view of long-term pricing ranging between $60 and $70 per barrel.

The report showed that oil production in Africa declined by ten percent in 2020 from 8.3 million barrels per day, driven by the COVID-19 demand slowdown for exports, while the continent’s proven oil reserves stayed at 125.7 billion barrels from the end of 2019 to 2020.

Similarly, Africa’s proven gas reserves remained at 527 trillion cubic feet between 2019 and 2020, with production declining by nine per cent in 2020 due to Covid-19.

The Report stated, “It is estimated that this lower price forecast will cost Africa a potential $1tn in export revenues from oil over the next 20 years.

“Nigeria, Algeria, Angola, Libya and Egypt could each be facing $20bn or more in lost export revenue in 2020.”

According to the report, gas demand is expected to quickly recover from 2021 in mature markets and show steady growth in emerging markets.

“Much of Africa’s supply growth will come from Nigeria, but Tanzania, Mauritania and Senegal are also aiming to contribute to rising supply.

“The post-2021 demand growth will take place in China and India where gas benefits from strong policy support,” it added.

The report stated that the Covid-19 pandemic had reversed many of the sector gains and seen project delays and cancellations.

It said, “Many of the major international oil companies in Africa have written off/impaired some of their assets this year based on anticipated oil prices and assets they believe to be stranded.

“Many oil and gas majors in Africa have announced that start-up dates of their major projects are expected to be delayed by one to three years and smaller projects may be cancelled.

“Nigeria, Mozambique, Senegal, Kenya, Mauritania and Uganda are faced with project and FID deferrals, while two of Total’s projects in Angola are facing outright cancellation.”

PwC maintained that African oil-producing countries must act quickly to consider their long-term market positions and potentially move to diversify their economies or risk even greater financial and economic stress.