China’s national oil companies (NOCs) are increasingly investing in Africa to secure oil supplies to help feed surging domestic energy demand. As a result, their development and production capital expenditure (capex) in Africa’s upstream sector is forecast to be the fourth highest between 2019 and 2023, behind global counterparts BP Plc, Royal Dutch Shell Plc and Eni SpA, according to GlobalData, a leading data and analytics company.
The company’s latest research reveals that the combined upstream investment in Africa from the three Chinese NOCs – China National Petroleum Corporation (CNPC), China Petroleum & Chemical Corporation (Sinopec) and China National Offshore Oil Corporation (CNOOC) – will be just over US$15bn.
While domestic asset developments remain the core strategies in the near to mid-term, the three China’s NOCs’ investment in Africa comes in the first place among all overseas regions and accounts for nearly 30% of combined international upstream capex.
Cao Chai, Upstream Analyst at GlobalData, comments: “Around two-thirds of the spending is in Nigeria, Angola, Uganda and Mozambique. Sinopec and CNOOC are well established in Nigeria and Angola while CNPC has a stake in the Rovuma LNG project in Mozambique.”
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Investment in Africa’s upstream sector by China’s NOCs started more than two decades ago. However, until the beginning of the 21st century, China’s presence was limited to Sudan, where CNPC was a major stakeholder in the Great Nile Oil Project Company.
Chai continues: “Since then, the surging domestic energy demand has led China to diversify its natural resources imports and the upstream footprint of China’s NOCs has increased substantially to nearly 20 African countries.”
Increased production volumes from Africa are expected due to the ramp up of the Egina field in Nigeria. CNOOC E&P Nigeria, a wholly-owned subsidiary of CNOOC, holds 45% interest of Oil Mining Lease 130 block, in partnership with the Nigerian National Petroleum Corporation (NNPC). The field, which commenced production earlier this year, is expected to reach its peak production of approximately 200,000 barrels of crude oil per day (boed) in 2019.
Chai concludes: “China’s NOCs intend to position themselves as global players in the international oil market. With CNPC and Sinopec’s new projects also coming online, the total production in Africa for the three companies is projected to be between 430,000 and 440,000 boed post 2020, accounting for nearly 20% of the their overseas volumes.”