Will Africa oil boom slip up and go bust?

Johannesburg - $50 crude shuts door on high-cost deals.

"On the brink of a boom" was the banner on PricewaterhouseCoopers' review of Africa's oil industry 16 months ago. Now, oil below $50 has made more than two out of three investment projects on the continent non-viable.
"Capital markets are effectively closed to the oil and gas industry" in Africa, Tony Hayward, former head of BP and now chairman of Genel Energy, said at a conference in Cape Town last month. "A decade of exploration, with billions of dollars invested and only limited commercial success."
When six of the 10 biggest global oil discoveries in 2013 were made in Africa, it underlined the potential of the energy riches that had lured companies from Royal Dutch Shell to Exxon Mobil.
Governments have been slow to react as the slump in crude makes the royalties charged from Libya to Angola look punitive. African production, already 19 per cent below its 2008 peak of 10.2 million barrels a day, is set to drop for a third year.
While final investment decisions have been made on less than 10 per cent of the 48 billion barrels of oil equivalent discovered in the past decade, governments haven't adapted to the new environment, Martin Kelly, director for sub-Saharan Africa research at consultancy Wood Mackenzie, said in an interview at the Africa Oil Week conference. That means some nations including Nigeria, the continent's biggest producer, are proposing increasing royalties at a moment the industry can least bear it.
"There are a raft of changes working their way through various parliaments around Africa at the moment and they've been primarily based on prices that were $100," Kelly said. "The world has changed since then."
African governments' profit share from deepwater oil projects off the continent ranges from 91.1 per cent in Libya to about 60.7 per cent in Gambia, according to data from Wood Mackenzie. That's higher than elsewhere in the world, with the continent's average onshore take of 66.1 per cent being 8.5 percentage points above the global one, the consultants said.
Persuading governments to cut their share of the spoils won't be easy with the end of the oil boom destabilising economies as revenue slumps and currencies tank. Nigeria, Africa's biggest producer, has imposed foreign-exchange restrictions to stabilise the naira, while second-ranked Angola has been forced to devalue its currency twice since June and slashed its budget by a quarter. - Bloomberg