Africa Surrounded! Oil exploration on all sides

English: Map of the African continent ქართული:...

English: Map of the African continent ქართული: აფრიკის კონტინენტის რუკა (Photo credit: Wikipedia)

 

 

 

The recent wave of oil exploration has resulted in drilling concessions in virtually every region of the continent – both offshore and further inland. I have maintained that the long term trend of energy price has to be upward as huge populations in fast growing economies such as India and China consume more energy as they industrialize and urbanize their societies. This increase in demand combined with improved drilling technology and geopolitical concerns has caused the industry to venture beyond the traditional production centers in Angola, Nigeria, and North Africa.

 

Listed here are some the projects either underway or about to start:

 

    ESTIMATED
REGION LOCATION RESOURCE BARRELS
East Africa    
1 Lamu Basin, offshore, Indian Ocean 4,900,000
2 Blocks 9 & 12A – Offshore Kenya
3 Western Kenya
4 Uganda
5 Puntland, Somalia 300,000,000
West Africa    
Offshore, Sierra Leone
Southern Africa    
Offshore, South Africa

 

 

 

We are fast approaching a point where most countries on the continent are either producing, exploring or considering exploration of oil and/or gas. This has major implications in several areas:

 

 

  • Global energy market – While I maintain that the general price trend is upward, it is not necessarily in a straight line. The addition of oil from these new sources is bound to put a brake on any price increases. However, there is also a relationship between prices and the industry’s willingness and ability to find new sources of supply.
  • Geopolitical – As the African continent, more than just a few countries, becomes identified as a source of oil it will attract the attention of major powers, who are also major consumers of oil. They are already taking an increasing interest in the politics of several countries.
  • Commercial – How will African companies and entrepreneurs take advantage of the current oil boom? What is the nature of foreign investment taking place. A few companies – Tullow of the UK, Africa Oil of Canada, Anadarko of the US, Kosmos of the US are frequently mentioned as playing a major role in exploration.
  • Development – What will be the impact on economic growth? How will the benefits of any subsequent extraction be share among the people of the producing countries? Will the new oil resource contribute the achievement of the Millenium Development Goals or will it become a curse leading to corruption and political instability?

 

 

Here are links to additional information on specific projects:

 

http://www.reuters.com/article/2012/08/17/petrosa-anadarko-idUSL6E8JH8M420120817

 

http://www.marketwatch.com/story/africa-oil-signs-farmout-with-marathon-oil-2012-07-23

 

http://www.reuters.com/article/2012/01/17/somalia-oil-idUSL6E8CH15720120117

 

http://www.examiner.com/article/west-silent-on-oil-rich-sierra-leone-cholera

 

 

 

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3 thoughts on “Africa Surrounded! Oil exploration on all sides

  1. SolsticeSon says:

    A friend from Cameroon was telling me last week they just found oil in Equatorial Guinea. How do you view the negative social, political and environmental aspects of oil rich countries?

  2. advansa says:

    The so-called resource curse is well known and much has been written already. Equatorial Guinea has been an oil producer for quite some time and is a classic example of a country where oil has enabled political instability and retarded democracy since the small ruling elite can use oil as a tool to solidify power, while much of the country remains in poverty. It is a cautionary tale for the countries cited in my post. Some seem to have gotten the message. Ghana for example, which has a relatively healthy political environment has looked for good examples like Trinidad & Tobago. Its stated development priorities include using oil as an input to ignite higher value industrial activity. Let’s hope the plan turns to reality.

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