Africa is likely to experience continued oil and gas investment over the next three to five years as the stabilisation of crude prices above $60/bl, coupled with the continent’s rapidly expanding population, lure oil producers to one of the last remaining energy investment frontiers, Standard Banks affirms.

The financial institution noted in a press release issued this week that the string of successful exploration projects over the past decade has seen the number of African countries with proven oil and gas reserves rise to 28, with discoveries in Ghana, Niger, Mozambique, Uganda, Kenya, Senegal, Mauritania and South Africa.

The investment required to bring these countries’ reserves on stream will add further impetus to Africa’s oil consumption, which at four-million barrels a day already significantly exceeds the continent’s 2.1-million barrels of daily refinery output, Standard Bank Oil and Gas head Dele Kuti said.

“An expanding population, rapid urbanisation and accelerating economic growth are causing the gap between Africa’s demand for gas and petroleum products, and its ability to supply them, to incrementally widen over time.”

He added that this would serve to attract further investment from major and independent oil producers, which, in itself, would exert pressure on the demand side of the equation as the resulting infrastructure investment in refineries, roads, pipelines and housing drives energy consumption.

Kuti commented that Africa’s oil and gas sector was experiencing renewed investment interest from exploration companies and refiners following a prolonged break during a slump in oil prices, which saw crude prices drop to below $30/bl in early 2016.

An improvement in oil prices, which are expected to average between $60/bl and $70/bl in the medium term, has resulted in greater interest in the continent, in part, because of its population boom and the connotation for energy consumption. Kuti noted that the ‘BP 2019 Energy Outlook’ forecast Africa to account for 6% of global energy demand by 2040.

He added that, in 2018, the International Energy Agency projected global energy demand would grow by more than 24% to 2040, requiring more than $2-trillion a year in investment to bring new energy supply on stream.

Given Africa’s burgeoning population and economic growth, it was likely that a portion of this investment would be directed towards the continent’s relatively untapped energy market, Kuti predicted.

“All of this investment activity will, in turn, spur demand for lending, deal structuring and transacting capabilities across the continent,” he said, adding that institutions with deep knowledge of the continent stood to benefit from those initiatives.