(Repeats report first published on Tuesday)
* Investment may take time to recover for West Africaprojects
* High costs of offshore fields make fields uneconomic
* Could have lasting impact on fragile economies
By Edward McAllister
DAKAR, Feb 16 (Reuters) - Oil firms have put major projectsin West Africa on hold because of low prices - as they haveacross the globe - but when the market finally picks up,development is likely to recover much more slowly in the regionthan elsewhere.
High costs bedevil the region, which includes establishedproducers such as Nigeria and newer entrants like Ghana. Add tothis long-standing problems of poor infrastructure, complexbureaucracy and politics, and West Africa may be well down thelist for any investment revival.
A dive in oil prices since mid-2014 has forced internationalenergy companies to postpone or cancel hundreds of billions ofdollars in investment all over the world.
In West Africa it has made projects for Royal Dutch Shell and Tullow Oil uneconomic, and hurt regionaleconomies that rely heavily on energy revenue.
Already, Gabon has cut its 2016 budget because of low oilincome and Ghana is considering doing the same. African oil exporters further afield,such as Angola, are also feeling the pain.
"There is no doubt that the amount of capital expenditureover the next five years will be severely reduced," said AndrewHayman, an Africa oil and gas project specialist at dataprovider DrillingInfo. "From the bigger producers like Nigeriaand Angola to the smaller producers, the capital will just notbe available."
According to the United Nations, overall foreign directinvestment in Central and West Africa, which includes major oiland gas projects, fell 44 percent to $14.2 billion last year,greater than the 31 percent drop for Africa as a whole.
The number of oil and gas rigs in the region dropped by twothirds to 18 in December 2015 compared with the same month in2014, according to U.S.-based oil service firm Baker Hughes,which conducts surveys on rig activity globally.
"Capital investors are getting cold feet about newinvestment," Hayman said. "Countries in West Africa will belower down their list so investment will be longer coming back."
BIG COST PROBLEM
Africa holds 129 billion barrels of proven oil reserves,according to PricewaterhouseCoopers, or nearly 8 percent of theglobal total. Development varies widely from Nigeria, aprominent world player, to Gabon, which is struggling tomaintain output from maturing fields.
There are bright spots. Senegal is beginning to establishoffshore potential, with Kosmos Energy saying last month it haddiscovered a "significant" amount of natural gas off itsAtlantic Coast.
But much of West Africa's oil and gas is offshore wheredrilling is expensive: sub-ocean wells can cost $100 millioneach and whole projects billions. Accordingly, manymultinationals have cut offshore development.
Offshore projects made sense back in early 2014 when oil wasabove $100 a barrel but this week it is little more than $30. By contrast, in the United States, which has largeshale oil deposits onshore whose geological make up is wellknown, wells can be drilled for a few million dollars.
These are the kind of projects that will be revived firstwhenever oil prices finally rebound. West African projects willneed to be not only viable, but also compete with suchproduction if they are to attract investment.
"There is a big cost problem in West Africa," said GailAnderson of U.K.-based consultancy Wood Mackenzie. It reckonsonly a third of the $270 billion of oil projects in the planningstage in sub-Saharan Africa are viable when oil is below $50.
CUTTING BACK
On Feb. 4, Shell said it was delaying its Bonga South Westproject offshore Nigeria for at least another year as part ofglobal cost cuts. Its final investment decision, first mootedfor 2015 or 2016, will now not be made before 2017.
For Shell it makes sense to wait. Bonga South West involvesthe construction of a complex floating production and storagefacility and the project's numbers were last crunched when oilwas nearer $100.
"Bonga Southwest ... ought to be a good project," chiefexecutive Ben van Beurden told analysts. But, he said, "we needto get to a point that we believe not only is the projectaffordable ... but also competitive."
Six days later, Africa-focused Tullow Oil said it wasconsidering halting drilling of new wells offshore Ghana whileprices remain depressed.
Tullow has already halved investment in West and CentralAfrica to $100 million per year. It could come down further,Tullow said last week, and possibly remain low into 2018 - afactor likely to hit production.
"Exploring today in this oil price environment is notsomething you should be doing," chief executive Aiden Heaveysaid. "It will be very difficult to get banking for anydevelopments, so you focus on the assets that you have." (editing by David Stamp)
