By: NJ Ayuk, Executive Chairman, African Energy Chamber   It took less than 20 years for Somoil to become one of Angola’s largest private oil companies, but the company is hardly resting on its laurels. Somoil, like many independents operating in Africa today, is moving forward with ambitious plans for continued growth. Based on its current trajectory, Somoil’s chances of achieving its goals look good. The company operates three blocks with the capacity to produce as much as 50,000 barrels per day (bpd) of crude oil. In April, Somoil and London-headquartered Sirius Petroleum entered a $336 million deal with Angolan national oil company Sonangol to acquire participating interests in Angolan Deep Water Blocks 18 and 31, which are operated by British multinational BP. Somoil also acquired interests in Angola’s oil-producing Blocks 14 and 14K from TotalEnergies in 2022, and as CEO Edson dos Santos recently said, Somoil is very open to more partnerships and deals going forward. “I believe Somoil is the ideal partner for any company entering the oil and gas business in Angola,” Dos Santos told The Energy Year. “We are private and relatively small, but more importantly – agile… with a clear plan to grow and expand our presence in Angola and beyond.” Somoil is a fantastic success story, but it’s also a strong example of the gradually changing face of Africa’s oil and gas sector. Increasingly, international oil and gas majors have been divesting their African interests — many have been tweaking their portfolios in attempts to decrease their overall emissions — and independents have been stepping up to fill the gap. Our new report, “The State of African Energy: 2023 Outlook,” describes this trend in detail, noting recent acquisitions — especially in West Africa — by such independents as Somoil, Nigeria-based Seplat Energy, and U.K.-based Afentra, among others. As I’ve said in the past, the steady stream of international oil companies (IOCs) divesting African oil and gas assets is not a welcome development. Still, it has been encouraging to see how many independent companies have recognized this pattern as a huge growth opportunity. These independents will be well worth watching. A Major Presence To be clear, international majors like Italian energy company Eni, TotalEnergies of France, and U.S.-based ExxonMobil — along with the African national oil companies (NOCs) they frequently partner with — still have a considerable part to play in African oil and gas production. Together, they were responsible for nearly 75% of the continent’s hydrocarbon output during the last decade, our report notes. That likely won’t be changing overnight, or at least during the next year or two. Independents, meanwhile, will probably continue to be responsible for about 8% of Africa’s overall oil volumes through 2023. Exploration and production (E&P) companies and international NOCs will contribute small percentages as well. However, with the mergers and acquisitions (M&A) activity the continent’s oil and gas sector has been seeing, independents could very well be making a far greater contribution to Africa’s overall volumes as the decade continues. African oil and gas industry M&A activity hit record levels in 2022, with $21 billion worth of deals announced in the first nine months of the year, Energy Capital & Power reported in late September. That’s three times the $7 billion in deals made in 2021 and four times the $5.5 billion worth of deals that took place in 2020, according to Rystad Energy. Deal Drivers Why the flurry of activity? As I mentioned, international oil and gas companies, driven by environmental, social, and corporate governance (ESG) objectives, are at least part of the equation. As a June 2022 article for McKinsey explains, majors around the globe are feeling pressure from the public and their investors to deliver higher returns more sustainably. To comply, some are scaling back on exploration and production in Africa. ExxonMobil, for example, has been exiting its shelf water depth portfolio in Nigeria to decrease its high emissions oil and gas portfolio. Shell began talks with the Nigerian government in 2021 about selling its stake in the country’s onshore fields as part of a global drive to reduce its carbon emissions. Other decisions are based on security concerns: Some majors, in hopes of making their operations less vulnerable to theft and vandalism, have been shifting their focus to deepwater and selling their shallow-water and onshore assets. And in other cases, majors have simply decided to sell mature fields to pursue more lucrative projects. Large, international companies aren’t the only ones divesting assets in Africa, by the way. NOCs have been doing the same. During African Energy Week in Cape Town, Angola’s Sonangol, announced they are freeing up assets to allow them to focus on other priorities. Others, like Malaysia’s Petronas, have announced plans to divest some of their assets in Africa and Asia as part of global reorganization efforts. Growing numbers of independents, meanwhile, have decided that the benefits of operating in Africa outweigh the risks. These companies are interested in capitalizing on higher oil and gas prices — along with increasing global energy demands — and they’ve been enthusiastically grabbing up the majors’ divested assets. Some companies, looking for ways to remain resilient to market uncertainty as they pursue upstream opportunities, have been open to mergers and strategic partnerships. In mid-June 2022, for example, in an $827 million deal, the U.K.’s Tullow Oil signed an all-stock merger agreement with U.K.-based E&P company Capricorn Energy. The resulting new firm will own 1 billion barrels worth of resources and is expected to produce 100,000 bpd by 2025. Seizing Opportunities As for the independents acquiring assets from majors — and NOCs in some cases — many appear poised for long-term production success in Africa. Earlier this month, British independent Savannah Energy announced it had entered a share purchase agreement (SPA) with Malaysian state oil and gas company Petronas International Corp. Ltd. to purchase Petronas’ entire oil and gas business in South Sudan for up to $1.25 billion. Through the deal, Savannah will obtain interests in three joint operating companies (JOCs) that operate three blocks in South Sudan with a gross output of 153,000 bpd. The purchase is conditional on several conditions, including approval by South Sudan’s government. As I said when the SPA was announced, this deal is a win-win for South Sudan and Savannah Energy, which has a strong presence in Africa’s oil and gas industry, a growing portfolio of renewable energy projects, and a track record of social impact programs that help promote economic self-sufficiency in host communities. Savannah Energy’s presence in South Sudan will provide the country with more jobs and business opportunities, sustainable energy development, opportunities for women, and an aggressive turnaround of declining fields. Savannah’s announcement about South Sudan came only a week after it purchased ExxonMobil’s operations in Chad and Cameroon for $407 million. The deal includes ExxonMobil’s 40% stake in the Doba oil project in southern Chad, which comprises seven producing oilfields with a combined output of 28,000 bpd. Savannah also will obtain ExxonMobil’s 40% indirect interest in the Chad-Cameroon export transpiration system, which includes a pipeline and a floating storage and offloading facility offshore Cameroon. Other promising deals by independents include Seplat Energy’s plans to acquire ExxonMobil’s shallow water business in Nigeria, Mobil Producing Nigeria Unlimited (MPNU), for $1.28 billion. Earlier this fall, the deal received a green light from Nigerian President Muhammadu Buhari. Seplat is acquiring fields that produced 95,000 barrels of oil equivalent per day (boepd) in 2020 and are projected to bring Seplat’s total production up to 142,000 boepd once the deal is complete. Seplat Energy also will gain control of the Qua Iboe oil terminal and a 51% interest in the Bonny River oil terminal, along with natural-gas-to-liquids plants at two fields. Also described in our report is U.K.-based Afentra, an independent that stands to do well in Africa while making a positive social impact. Last August, the company secured a 20% stake in Sonangol’s producing shallow water Block 3/05, Lower Congo Basin, 50 kilometers offshore Angola, as well as a 40% interest in Block 23 in the Kwanza basin. Around the same time, Afentra made it clear that it was interested in more West Africa purchases. A small group of former Tullow Oil executives founded Afentra in 2021 specifically to capitalize on the opportunities being created by majors leaving West Africa. The company’s corporate strategy report, published that year, said the company would establish and meet high ESG standards. “The Global Energy Transition will take time, the strategy report stated. Hydrocarbons are part of the transition and will continue to remain important in the overall energy mix… The socio-economic impact of the energy transition needs to be considered alongside the climate impact. Afentra was formed to deliver this balance and create significant value for shareholders.” I applaud Afentra’s perspective and resolve. And, I applaud the many other independents willing to invest in our continent. This is their moment, and their spirit, determination, and willingness to make a positive impact are just what our continent needs.