Exploration activities are escalating in areas outside the conventional plays in West Africa as more discoveries are reported.

The latest exploration booms in Africa in underexplored areas are just beginning, but successes in Ghana are triggering higher levels of investment from a broad range of oil and gas companies from minnows to majors.

“Chevron Corp.’s entry into Liberia suggests that the company expects the western African region to be rich in terms of new hydrocarbon finds,” according to a report by Rahul Gupta, analyst, oil and gas, GlobalData, on “Oil & Gas Exploration in Emerging African Markets - Analysis of Exploration & Development Plans of Key Companies.”

“Also, the basins of Namibia, which have remained almost unexplored until recently, are now attracting interest of global E&P companies.  The republic of Congo and Cameroon are the other countries on the western side of the continent where hydrocarbon exploration activities have started,” the report continued.

The rising global demand for oil and gas is driving the E&P companies to Africa, which is among the most preferred locations to explore for new reserves.

There are three reasons for the interest in West Africa especially.  “First, African governments have been offering competitive terms and conditions to foreign investors and companies.  Secondly, Africa is strategically located and has proximity with both the European and American markets.  Thirdly, most of the exploration activities in Africa are carried out in shallower waters offshore and not deepwater, although this is beginning to shift,” the report continued.

One added bonus for the petroleum industry is that African oil has low sulfur content.

There are some key factors that could discourage exploration activities in West Africa and all of Africa.

“The political scenario in some African nations has negatively impacted the operations by international oil companies (IOCs) and foreign companies in the region.  Though African governments have tried to reinstate peace in their respective countries, exploration activities may be severely hampered if countries are not able to provide safe and secure work environments,” emphasized the report.

Also, widespread corruption in some countries hampers smooth functioning of any commercial activity.

Another challenge for African countries, which is similar for many frontier areas, is the lack of infrastructure and general inaccessibility.  A lack of adequate transportation and logistics infrastructure adds to costs.

“A shortage of funds and minimal research and development facilities have affected the development of new technologies in the region,” the report stated.  “As a result, there are only a few cost-effective technologies available in the region.  The cost to import technology and advanced machineries in the region increases the exploration cost.”

In the emerging areas of West Africa, the following countries have active exploration blocks: Namibia, 41; Liberia, 12; Ghana, 13; Cameroon, 16; and Congo, 12.

In Ghana, recent oil production could enable the country to become an oil exporter, GlobalData noted.

Exploration activities are both onshore and offshore.  The major sedimentary basins are Tano, Cape Three Points, Saltpond and Accra-Keta.   The Tano Basin is the most active basin with seven active exploration blocks, the report continued.

The Voltaian Basin is onshore along Lake Volta.  Although there are no exploration blocks, the area is considered to have a considerable amount of hydrocarbons.

Cameroon has two major sedimentary basins -- Rio Del Rey and Douala.  Each basin has eight active exploration blocks.  The Rio Del Rey Basin produces 90% of Cameroon’s crude oil production.

Namibia is one of the countries where exploration activities are increasing at a fast pace.  “Namibia is expected to have an oil and gas reserve of 12 billion barrels.  According to the Ministry of Energy, the country is expected to start drilling activities starting in November 2011.  It is expected that Namibia will start oil production by 2014,” the report stated.

Exploration is conducted both onshore and offshore. Offshore is considered to be a very promising region since it is part of the South Atlantic rift system, the report said.

Major sedimentary basins offshore along the west coast of the country include Namibe, Walvis, Luderitz and Orange basins.  Nama and Owamba (Otasha) are two important onshore basins.

The Walvis Basin is the most active with 20 exploration blocks, followed by the Orange Basin with 10 blocks and Luderitz with six blocks.

The Namibe Basin runs from the southern coastline of Angola near northwestern Namibia.  The deepwater basin is in the South Atlantic Basin and has three active blocks, the report continued.

Contact the author, Scott Weeden, at sweeden@hartenergy.com.