Upstream mergers and acquisitions hit record level in 2022
Merger and acquisition (M&A) deals across Africa’s oil and gas upstream sector in 2022 have reached a new record with $21 billion worth of deals having being announced in the past nine months, following a decline since the onset of the COVID-19 pandemic in 2020, according to a new study released by market intelligence company, Rystad Energy.
With three months to go until the end of the year, Africa’s M&A deals across the upstream segment have increased by three times from $7 billion in 2021 and by four times from the $5.5 billion recorded in 2020, according to the research firm.
Major deals that have driven the increase in M&A spending across the continent include Eni and TotalEnergies’ creation of Azule Energy in Angola by merging exploration and production projects, Eni’s acquisition of bp’s operating interest in two gas-producing concessions in Algeria, Seplat Energy’s acquisition of Mobil Producing Nigeria Unlimited’s assets in Nigeria for $1.28 billion, Tullow Oil’s merge with Capricorn and Repsol’s sale of $4.8 billion-worth of assets to EIG in Libya and Algeria.
In addition to an increase in spending, the volume of resources traded so far in 2022 has increased compared to the previous two years with this year’s traded resources standing at 3 billion barrels of oil equivalent (boe) compared to 2.4 billion boe in 2021 and 2.7 boe in 2020.
In addition, buyers are targeting producing assets in a bid to capitalize on the current increases in oil and gas prices across the globe with the share of producing resources traded increasing from 44% in 2021 to 63% in 2022.
With the energy transition pushing for majors to diversify their portfolios, the majority of assets offloaded in 2022 were high-emissions oil fields which accounted for 67% of the deals in 2022 compared to 58% in 2021.
The research firm forecast spending on M&A deals to continue to expand across the continent’s upstream segment through the end of the year as Africa turns into a hive of oil and gas exploration and production activities at the back of recent massive discoveries in Namibia by TotalEnergies and Shell and increased energy demand at global scale as a result of the effects of Russian-Ukraine war and energy transition-related matters.
