African upstream recovery raises funding dilemma: Fuel for Thought

Chinese President Xi Jinping last month announced a new $60 billion financing package in aid, investment and loans to Africa, as the world’s biggest energy importer continues to expand its global influence. Part of that pledge will further underpin efforts by China’s state oil giants to help develop the region’s sizeable oil and gas resources. For many existing and would-be African oil and gas producers, the promise of new funds to kick-start upstream activity after years of shrinking spending will be a welcome breath of fresh air. Frontier African exploration was one of the main casualties of the oil price slump. When the returns from $100 oil evaporated, industry concerns over the region’s political instability, local disputes and legal uncertainty soon resurfaced. With oil prices now hovering around $85/b, the region is eager for a fresh wave of upstream investment, and many governments are asking which kind provides the swiftest returns with the fewest strings attached. Speaking at an Africa Oil and Power event in Cape Town in early September, some regional oil ministers—many of whom had just returned from Beijing’s triennial African investment forum—voiced cautious optimism that more Chinese investment is the best option. “We are open to all… continue reading

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