Russian-Ukrainian conflict: possible impact on upstream activities in Africa

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At the beginning of 2022, four Russian oil companies were present in different onshore and offshore locations in several African markets. Overall, Russian actors act more as operators in North Africa (Libya, Algeria, Tunisia), while they act mainly as partners in sub-Saharan Africa. Africa (Ghana, Nigeria, Cameroon, Congo and Mozambique). Exceptions include Lukoil (OTCPK: LUKOY) operator in Equatorial Guinea and Congo.

Lukoil seems to be the most active Russian oil company in the Gulf of Guinea sub-region, although it does not operate any production projects in the area. Gazprom (OTCPK:OGZPY) and Tatneft (OTCPK:OAOFY) tend to have a presence in North Africa, while Rosneftegaz (OTCPK:RNFTF) is the only Russian oil company with direct holdings in East Africa.

Additionally, Russian players are active in all types of upstream projects, from exploration areas to development and production assets in Africa.

Russian presence in Africa

Figure 1: Russian presence in Africa

In March 2022, the international communities began to impose financial and operational sanctions on Russian oil companies, in response to Russian President Vladimir Putin’s military operations in Ukraine which began in late February 2022. These measures are expected to impact several projects in upstream in Africa. The most relevant are listed below, with Russian company names in bold.

Risky exploration activities

  • In Tunisia, Lukoil operates the Chebba Marin exploration permit in the shallow waters of the Pelagian Basin. The company may not be able to conduct business in the area due to the current situation. It should however be noted that Lukoil has not been active on this permit since 2012, when it was suspended due to force majeure.
  • In Libya, the operator Tatneft is exploring its block 4 of the 082 zone in the Ghadames basin. At the end of February 2022, just before the outbreak of the conflict in Ukraine, Tatneft was testing an outpost well. The firm could stop drilling in the coming weeks due to an inability to finance operations. Gazprom also operates four offshore exploration blocks in the Pelagian Basin. Although there have been some announcements in recent years regarding the resumption of exploration work, the company was inactive at the start of 2022.
  • In Nigeria, operator Chevron (CVX) and its partner Lukoil have unconfirmed plans to further explore the deepwater block OML 140. A new wildfield has been planned since 2016 in deepwater, and such an expensive exploration campaign will clearly not be undertaken without a full funding guarantee.
  • In Congo, Lukoil operates two large exploration blocks with Eni (E) as a partner. The companies won the acreage in the Congo Licensing Round 2018-2019. Both blocks have commitments for the first period including the acquisition of 3D seismic data and a well. It is now unlikely that this work program will materialize during the first exploration period.
  • In Mozambique, the operator Exxon Mobil (XOM) and its partners Rosneft, Qatar Energy and Eni are planning exploration drilling activities in three offshore licenses. The first drilling could be located in the Zambezi Delta, with spudding expected in 2023.

FID and delayed development projects

In sub-Saharan Africa, Lukoil is active in three projects where FID should be taken in the short term. These key milestones are now in jeopardy, as the company has at least a 30% working interest in the projects, when it is not the operator.

  • In Cameroon, the operator New Age and its partners Bowleven and Lukoil plan to take in 2022 the FID for the undeveloped shallow water gas, condensate and oil fields MLHP-7 (Etinde EA). The land development plan (PDF) is still under review. However, possible international sanctions against Russian partner Lukoil could create an additional obstacle, as Bowleven stated on March 30, 2022.
  • In Ghana, the operator Aker Energy and its partner Lukoil could submit in 2022 a revised field development plan (FDP) for the Pecan and satellites project, in the DWT/CTP block. Aker has been revising the FDP since 2020, when total investment costs were significantly reduced. If the development plan is submitted and approved in 2022, first oil could be reached in 2025. However, this project is also at risk due to possible international sanctions that Russian partner Lukoil may face.
  • In Equatorial Guinea, the Russian actor Lukoil acts as the operator of the giant gas and deepwater Fortuna project. In addition to the possible sanctions mentioned above, although the contract remains valid, Lukoil has tacitly withdrawn from its role as operator of Fortuna. The company won the undeveloped 2 Tcf project under the 2019 EG Ronda licensing round and an FID had been expected since early 2020; this is now unlikely to happen before 2025.

Risk of future production in the Gulf of Guinea

Figure 2: Future oil production at risk in the Gulf of Guinea

Impact on crude oil and natural gas production

  • In Libya, Gazprom operates two production assets in the Sirte Basin, in partnership with the National Oil Corporation and Wintershall. Here, production at the field level should not be affected significantly as the partnership could offset any problems Gazprom may experience due to the sanctions. However, the group’s crude exports could be affected at the loading terminal at the port of Zueitina.
  • In Congo, Lukoil is a partner of Italian player Eni in several shallow water production assets, including the Nene Marine and Litchendjili Marine fields. The first has been in production since 2014, but phase 2B development started at the end of 2021, with the goal of adding some 15,000 boe/d. This phase could be compromised if the Lukoil partner is sanctioned and cannot co-finance the project. A more serious impact could perhaps be a delay to the proposed modular jack-up floating LNG development project at the Nene field. The planned start is in the second quarter of 2023.
  • In Egypt, Rosneft is one of Eni’s partners, along with BP (BP) and Mubadala Petroleum, in the giant deepwater field of Zohr and the adjacent Shorouk exploration block (Nile Delta basin). In the western desert, Lukoil is Eni’s sole partner in the Meleiha block where the Italian major operates more than twenty oil fields. Production from these fields is not expected to be significantly affected as Lukoil holds a minority stake with no field operations. In the rest of the country, Lukoil operates two small permits located in the Gulf of Suez. In the event of Lukoil’s withdrawal, the two areas could be taken over by an IOC or by a NOC such as GPC.


At the start of 2022, the Gulf of Guinea appears to be the most sensitive sub-region in Africa, in case the Russian-Ukrainian conflict drags on too long. Indeed, several key oil and gas projects need to be sanctioned in this area to ensure stable production prospects over the next decade. But international sanctions against the Russian firm Lukoil, for example, could jeopardize up to 173,000 boe/d of future production by 2028, in Ghana, Congo and Equatorial Guinea.

On the other hand, the current oil and gas production in North Africa (Libya and Egypt) is not expected to be so impacted, due to a relatively weaker participation of Russian actors in the projects and a strong partnership that could compensate for operational difficulties. problems that might be encountered.

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Editor’s note: The summary bullet points for this article were chosen by the Seeking Alpha editors.

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