Interview: Africa’s Oil Investment Has Nearly Halved. Can Independents Turn It Around?

What happens when an oil company can identify a promising African field but cannot raise the money to develop it? Africa’s upstream oil and gas investment has fallen from $68 billion in 2016 to $37 billion in 2025. In this interview with Impact Newswire, prolific energy deal maker Naeem Tyab argues that independent producers, acquisitions and new financing structures could help revive exploration and production. Here are the remarks from his two decades-long dealmaking history,  a case study on how frontier assets can signal for greater international capital.

For much of Africa’s upstream oil and gas industry, that is the question separating geological potential from commercial production. The continent has substantial petroleum resources, but exploration, drilling and field development require large amounts of capital, long investment horizons and confidence that governments will maintain predictable commercial terms.

The financing gap is widening. Africa’s upstream oil and gas investment fell to $37 billion in 2025 from $68 billion in 2016, according to the International Energy Agency, a decline of about 46%. Five countries, Algeria, Angola, Egypt, Nigeria and Libya, dominate the sector, accounting for roughly 70% of investment and 80% of production.

Yet capital has not disappeared from every part of the market. Investment in Mozambique, Namibia, Senegal and Uganda rose from a combined $1.5 billion in 2016 to $5 billion in 2025, suggesting that emerging producers can attract considerable money when investors see credible projects and a road map to commercial returns. The question is whether that interest can extend beyond a handful of markets.

Naeem Tyab, co-founder of then Caracal Energy, believes independent oil and gas companies have a bigger role in the next investment cycle. Unlike global majors, whose multibillion-dollar portfolios can make smaller assets less strategically significant, independent producers can build businesses around individual fields, acquire assets being sold by larger companies and concentrate capital on projects that established operators no longer prioritise.

The shift is already visible in transactions. In August 2024, the African Export-Import Bank arranged $650 million in reserve-based lending for Oando Petroleum and Natural Gas Company to finance its acquisition of Nigerian Agip Oil Company’s 20% interest in a Nigerian joint venture. The financing comprised a $500 million senior facility and a $150 million junior facility. The deal demonstrated how an African financial institution could help a domestic operator acquire assets from an international oil company rather than rely exclusively on the majors to develop them.

There is a broader financing precedent, too. In January 2024, Afreximbank announced an initial $2.25 billion disbursement under a $3.3 billion crude oil prepayment facility sponsored by Nigeria’s national oil company, NNPC. These transactions do not establish that more than $3 billion was committed exclusively to indigenous upstream operators across Africa in 2024, but they illustrate the scale of financing that can be mobilised through commodity-backed structures and acquisition-specific lending.

NJ Ayuk, executive chairman of the African Energy Chamber, has argued that independent producers are increasingly taking on work that international majors are less willing to pursue, from redeveloping marginal fields to exploring frontier acreage. He has pointed to the growth of indigenous operators as an opportunity to expand production and retain more value within African economies.

Tyab’s experience across the continent  proves a practical illustration of how such opportunities can be financed. Since 2005,  Tyab has sat across many African governments to help unlock  their hydrocarbon wealth. During his time as founder and President of Mogul Energy, its North African assets were sold to Sea Dragon Energy, marking his early involvement instrumental for this junior; the company operated offshore in the Gulf of Suez, Egypt. Later on, Caracal Energy had raised $174 million of debt in 2012 following an earlier $125m placement of shares. In 2013, it completed a deal to secure a staggered $300 million investment by Glencore Xstrata in exchange for a quarter share in its key Chad licences. Glencore Xstrata is the massive global mining and commodity trading enterprise formed when the commodity trading firm Glencore merged with the mining company Xstrata in May 2013.

The International Energy Agency has warned that Africa faces significant constraints in financing its energy sector. In its 2025 investment report, the agency said overall energy investment across the continent was roughly one-third lower than a decade earlier, while debt-servicing costs were equivalent to more than 85% of total energy investment in 2025. Those figures cover the wider energy sector, not upstream oil and gas alone, but they underline the competition for capital.

This October, Tyab spent African Energy Week in Cape Town bringing investors, financiers, operators and policymakers together. He says interest in African deals is returning after a decade, but that the next cycle will depend less on conference announcements than on whether companies can assemble investable assets, secure financing and demonstrate that projects can generate returns.

In this interview with Impact Newswire, Tyab replays why investment fell, how independent companies can compete for capital, and how to create a perfect storm for financing acquisitions, and why he believes African governments must make it easier for credible investors to take geological and commercial risks.

Here is the interview excerpt, edited for clarity:

1. After decades in more than 12 countries doing oil and gas deals in Africa since 2005, what’s different in today’s climate ?

The biggest change is that capital has been absent for a long time, and now we are seeing renewed interest. After the oil price collapse at the end of 2014, upstream investment took a hit. Projects were postponed, development programmes slowed and some opportunities that could have moved forward simply did not.

What concerns me is that the recovery has not been evenly distributed. Investors have continued to favour a limited number of established producers, while other African markets have struggled to attract the financing they need.

This week in Cape Town, I have been meeting people who are actively looking at African opportunities. The difference is that we are talking about capital and transactions, not just potential. The challenge is to turn that interest into funded work programmes and producing assets.

2. Is this primarily a consequence of lower oil prices, or has Africa developed a reputation for being too difficult to invest in?

Oil prices were the starting point, but they do not explain everything. Investors also consider political and regulatory risk, the time it takes to develop a field and whether the commercial terms will remain predictable throughout the life of a project.

Capital is mobile. If an investor can deploy money in a market where the rules are clear and the route to production is shorter, that market has an advantage.

Africa does not have a shortage of geological opportunities. What we need is a commercial environment in which investors can assess those opportunities, price the risks and make decisions with confidence.

3. Five countries account for roughly 70% of Africa’s upstream investment and 80% of production. Is that concentration rational, or does it leave the continent unnecessarily exposed?

Investors naturally concentrate on markets where there is existing production, infrastructure and an established operating environment. That makes commercial sense.

But even the established markets have experienced a substantial decline in investment. The combined investment of the five largest producers fell from about $50 billion in 2016 to $25 billion in 2025.

That tells you the problem is not confined to frontier markets. The industry needs fresh capital across the board, including in countries that already have production and infrastructure.

4. Mozambique, Namibia, Senegal and Uganda increased their combined upstream investment from $1.5 billion in 2016 to $5 billion in 2025. What does that tell you about where investors are willing to take risks?

It tells me that investors will look at new markets when they see an opportunity to create value. These countries have different geological prospects, commercial structures and stages of development, so you cannot treat them as one investment proposition.

But the broader lesson is that established production is not the only thing that attracts capital. A credible asset, a workable fiscal framework and a clear development plan can make a new opportunity competitive.

The task for African governments is to make sure that promising projects can progress from exploration to development without unnecessary delays.

5. You have said that “it won’t be the majors’ turn this round.” Why do you believe independent companies will lead the next phase of African upstream investment?

The majors have very large portfolios. An individual African asset may not be significant enough to change the performance of a global company of that size.

For an independent, the same asset can be the foundation of an entire business. That gives smaller companies a different incentive to identify opportunities, take calculated risks and concentrate on developing a particular field.

Independents can also acquire assets that larger companies no longer consider central to their strategies. But they need to be able to finance the development work after the acquisition. Signing a production sharing contract is only the beginning.

6. What must African governments change if they want independent producers to invest more?

They need to recognise the economics of independent operators and offer terms that reflect the risks they take.

A smaller company cannot be expected to carry the same financial burden as a major with a much larger balance sheet if the two are undertaking comparable risks. The fiscal and contractual arrangements need to make commercial sense for the investor and the host country.

Governments should also make the process of obtaining approvals and progressing work programmes more predictable. Investors can evaluate geological risk. What becomes difficult is adding avoidable uncertainty around permits, contractual obligations and the ability to develop the asset.

7. Where will the financing come from? International private equity, African banks, development finance institutions or new pools of capital?

There is interest from different sources, including financiers who specialise in emerging and frontier markets. The important thing is matching the financing structure to the asset and the development programme.

An exploration project has a different risk profile from an asset that is already producing. A company needs to understand how much capital it requires, when it will need that capital and what milestones it must reach before generating revenue.

The opportunity is there, but companies must be prepared. That means having the assets lined up, the commercial terms understood and the work programmes properly costed before approaching investors.

8. Many mature assets sold by major oil companies have not experienced increased investment after changing hands. Why should investors believe independent energy companies can do better?

Because the acquisition is not the whole transaction. The development capital matters just as much.

If an energy company completes an acquisition but cannot finance the next phase of work, the asset may not progress. That is why we look at the acquisition and financing together. Before committing to an asset, we need to understand what it will cost to develop, where the money will come from and how the project can reach production.

The discipline is to make sure that the financing plan is credible before the acquisition closes, rather than treating it as a problem to solve afterwards.

Brenda Fassie (South Africa)

Most Famous Song: “Vuli Ndlela”

Short Bio: Brenda Fassie (1964-2004), often called the “Queen of African Pop” or “Madonna of the Townships,” was a South African singer, songwriter, and dancer. She was celebrated for her powerful voice, energetic stage presence, and candid lyrics that often reflected the realities of township life during apartheid.

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