Thursday, 7 April 2016

Africa’s Top 10 Places to Invest in 2016

Africa’s Top 10 Places to Invest in 2016While the oil price stays low, the oil stays in the ground. But not for long. Home to some of the biggest oil and gas discoveries in recent years, Africa is under explored and its untapped hydrocarbons reserves are enormous.     As the oil price plummets, now is the time to invest in new acreage and guarantee future reserves in anticipation of an eventual market rebound. Competition, especially among the lesser explored countries, to attract exploration and foreign capital is stiff. Fiscal conditions, investment incentives and resource opportunities all factor into the appeal of an oil and gas jurisdiction. Africa Oil & Power has selected our top ranking destinations for oil and gas investment in 2016: Here’s our top ten.    

MOZAMBIQUE
A number of significant offshore discoveries instantly made Mozambique a globally relevant player. By the end of the decade, it will become a major LNG exporter capable of influencing gas markets. Competition with neighboring Tanzania for first LNG export from East Africa is fierce, but Mozambique’s project holds the edge. Plus, its legal and fiscal framework is more attractive to investors, particularly after the revision of the Tanzanian code in 2014, which made contract terms stricter and more punishing for investors. If you are looking for the hotspot for gas production with a friendly business environment and considerable growth potential, Mozambique is your pick.     “Competition with neighboring Tanzania for first LNG export from East Africa is fierce, but Mozambique’s project holds the edge.”    

KENYA
Kenya capitalized on its strong reputation to command the attention of investors keen to explore for first oil. The country has been looked at as the most promising exploration play in East Africa. Kenya’s tax code sets a steep 37.5 percent corporate income rate on non-resident companies but it offers reduced rates of 20 percent for up to five years for new companies listed in Kenya. The incentive has worked well to court international companies to incorporate in the country. But the current oil price drop has taken its toll on Kenya, empowering foreign operators with significant negotiation leverage as they mull an entry into this business friendly economy.  

NAMIBIA
Ranked number 1 in Africa for investment by the Global Petroleum Survey’s Policy Perceptions Index in 2015, Namibia presents an easy and business friendly environment. With royalties set across the board at 5 percent and a number of investment incentives in place, including a VAT waiver and other tax advantages for oil and gas companies, Namibia has been able to attract a number of international players in recent years, including Repsol, Shell and Tullow Oil. As the country’s basins remain mostly unexplored, Namibia represents a great mixture of investor friendly regulations and large untapped potential. So far, however, the exploration campaigns have revealed nothing but a string of dry wells.     “As the country’s basins remain mostly unexplored, Namibia represents a great mixture of investor friendly regulations and large untapped potential.”    

GHANA
Home to the famous Jubilee super-field discovered by Tullow Oil in 2007, Ghana is a developed and mature market, unlike most of the jurisdictions on this list. Comparatively, the country’s corporate income tax rate of around 35 percent and progressive royalty payments set between 3 and 12.5 percent are not as attractive as less proven playgrounds, but Ghana has remained welcoming to new investors because of its world-class discoveries and because of the way it conducts business with foreign companies. The oil and gas investors interviewed by the 2015 Global Petroleum Survey rated Ghana as the second best oil and gas market in Africa. Between large discoveries, an attractive regulatory structure and the ease of doing business, Ghana represents a great bet for new investors in African hydrocarbons. Read more....

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