Africa’s oil and gas sector has undergone a dramatic transformation over the past decade, with capital expenditure projected to hit $43 billion in 2025, according to a recent report by Daily Times Nigeria.
This surge, which follows a low of $22.5 billion in 2020, reflects the continent’s growing role as a global energy hub. But how did we get here? This article traces the investment trends from 2015 to 2025, highlighting key drivers and what this growth means for Africa’s energy future.
Also Read: Africa’s Untapped Oil and Gas Potential Could Double with Enhanced Exploration
A Timeline of Capital Expenditure: 2015–2025
- 2015–2019: The Decline Begins
In 2014, capital expenditure in Africa’s oil and gas sector stood at $60 billion, per the African Energy Chamber (AEC). However, global oil price crashes and the onset of the COVID-19 pandemic led to a steady decline, with investments dropping to $22.5 billion by 2020. This period saw reduced exploration and project delays, particularly in high-cost regions like Nigeria and Angola. - 2020–2021: The COVID-19 Impact
The pandemic hit Africa’s oil industry hard, with a $33.5 billion contraction in capital expenditure between Q4 2020 and Q4 2021 (AEC). Production sanctions on African OPEC nations and a global demand vacuum forced operators to slash budgets, focusing on cashflow-neutral projects at lower oil prices. - 2022–2024: The Recovery Phase
By 2022, investments rebounded to $30 billion, driven by renewed global demand and deferred projects coming online. The AEC forecasted a steady rise, with estimates suggesting $49 billion by 2024 if exploration in regions like South Africa’s offshore fields accelerated. - 2025 and Beyond: A New Peak
Fast forward to 2025, and capital expenditure is projected at $43 billion, with a long-term forecast of $54 billion by 2030 (Daily Times Nigeria). This growth is fueled by Europe’s push to diversify from Russian fossil fuels and Africa’s strategic investments in oil, gas, and renewables.
Several factors contributed to the $20 billion recovery from 2020 to 2025:
- Global Energy Demand: Europe’s need for alternative energy sources post-Russia has spotlighted African producers like Nigeria and Algeria.
- Infrastructure Investments: Projects like Nigeria’s LPG distribution initiatives have attracted funding, supporting energy access for millions.
- Renewable Energy Synergies: Africa’s renewable sector saw a tenfold investment increase from $5 billion (2000–2009) to $55 billion (2010–2020), per McKinsey, creating a balanced energy portfolio that boosts investor confidence.
While Africa’s $43 billion in 2025 is impressive, it remains a fraction of global oil and gas spending, which Rystad Energy estimates at $500 billion for the same year. However, Africa’s growth rate outpaces many regions, with a 90% increase from 2020 to 2025 compared to a global average of 50%. This positions the continent as a key player in meeting future energy demands.
Despite the growth, challenges remain. The energy transition poses risks, with McKinsey estimating that 60% of Africa’s current oil production could become uncompetitive by 2040. However, opportunities in decarbonization and renewable integration offer a path forward, ensuring Africa’s oil and gas sector remains a global force.
