British multinational, PricewaterhouseCoopers (PwC) has predicted in their 2020 Africa Oil and Gas Review that Nigeria and other oil-producing African countries will lose an estimated $1 trillion in oil export revenues over the next 20 years, as a result of likely low prices.
According to the report, production in 2020 saw a decline of 10% relative to the previous year driven by the Covid-19 demand slowdown for exports. Africa’s proven oil reserves have also remained static at 125.7 Bbo from the end of 2019 to 2020. 41% of these reserves are located offshore while 59% are onshore. Gas exporting countries in the region equally saw a total decline of more than 6% in 2020 from 39.7 mtpa in 2019 to 37.3 mtpa in 2020.
Covid-19 delivered value destruction of the oil market in Africa and many African countries, which are dependent on oil and gas revenues, have had to divert fiscal resources to supporting healthcare and welfare responses to the pandemic, leading to greater economic distress. Oil demand globally shows a curbed recovery over the next few years following the Covid-19 induced demand slump, with prices predicted to reach a ceiling of around $54 per barrel, compared to a pre-Covid-19 estimate of long-term pricing ranging between $60 and $70 per barrel.
PricewaterhouseCoopers further reiterated 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. The review suggested that Africa can benefit tremendously from the technology foundations and learning curves largely paid for by the developed world and that energy transition does create significant positive economic impact and opportunities