Dec 05, 2008
Oil and gas should not be viewed as Africa’s curse, industry expert assertsBack
Siberia|Africa|Exploration|Africa|Algeria|Angola|Canada|Egypt|Libya|Nigeria|Somalia|South Africa|Crude Oil|Direct And Indirect Economic Benefits Oil|Energy|Oil|Oil And Gas|Oil Companies Dates|Oil Exploration|Oil Exploration Industry|Oil Industry|Oil Reserves|Duncan Clarke|Locomotive|Alaska
© Reuse this
“The reasons are that the oil industry has direct and indirect economic effects: it opens remote areas, and brings in foreign direct investment; it brings in technologies and companies; it creates employment; and it generates revenues for States.
It benefits countries’ balances of payments. It is the leading edge of investment into the continent. Oil is the locomotive pulling the continent forward – although it does occasionally stall. There has never been a proper analysis of the direct and indirect economic benefits oil and gas bring to Africa.”
He points out that, regarding crude oil, Africa is a continent of great promise and prospectivity. “The oil exploration industry has been active in Africa for over 100 years.”
Nor is it only foreign companies that are active in the African oil industry. “There are now 15 or so African countries which have indigenous independent oil companies,” he reports. “In fact, in Nigeria, the history of independent oil companies dates back 50 years. But the proliferation of such enterprises across the continent is new. It is a good sign. International companies need local partners.”
Then there are Africa’s State-owned oil companies. These, too, have proliferated in recent years. Twelve such companies have been created since the start of the twenty-first century, and today only 15 African countries do not have State-owned oil exploration and/or production companies. “The biggest African State-owned oil companies are in Algeria, Angola, Egypt, Libya and Nigeria,” says Clarke. “The rest, apart from South Africa’s PetroSA, are relatively small. In general, they are improving in quality and some are already world class.”
Of course, there are many non-African oil companies active across the continent. These include more than 50 major inde- pendents, about 25 “superindependents” and the top five “supermajors”, as well as a surprisingly large number of really big non-African State-owned companies. “In 2000, there were seven foreign State-owned oil companies in Africa,” he states.
“Today, 2008, there are about 30. Together, State-owned oil companies own 90% of the world’s oil reserves and represent a large and growing group. Non-African State-owned oil companies are much more dominant in African upstream exploration and production than are African State-owned companies outside their home bases.”
Oil exploration activities are running at high levels across the continent. Some 500 oil juniors are active in Africa, includ- ing local companies – Egyptians, Nigerians and South Africans, besides many others. Clarke estimates that this year will see 470 exploration wells drilled across the continent, in comparison with 170 in 2000 and an average of 280 from 1987 to 1997.
“There remains quite considerable unexploited potential in Africa,” he highlights. The continent now accounts for 13% of world oil output and 9% of global oil reserves – and the continent’s reserves are increasing. And there is also natural gas as well.
Some African countries have more gas than oil. Further, Africa is a much easier place to work than the far north (Siberia, Alaska, northern Canada) or the deep ocean. “Africa is now the world’s number one energy capital expenditure destination.”
All this is a blessing, because Africa is a continent of considerable underdevelopment and great poverty. Some 70% of Africans still live in subsistence economies, and about 50% live on less than a dollar a day. Africa accounts for only 4% of the world’s electricity, and 75% of this is found in just three countries – Egypt, Nigeria and South Africa.
It is forecast by the United Nations that Africa’s population will reach two-billion by 2050, of whom 50% will dwell in urban areas, and 70% of these urbanites will live in shanties. “Poverty in Africa needs to be solved by high, sustained, secular rates of economic growth,” highlights Clarke.
(Duncan Clarke is the author of The Battle for Barrels and Empires of Oil; his latest book, Crude Con-tinent: The Struggle for Africa’s Oil Prize, was published in October.)
Edited by: Martin Zhuwakinyu© Reuse this Comment Guidelines (150 word limit)
Other News This Week News
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
This Week's Magazine
JSE-listed real estate investment trust (REIT) Rebosis Property Fund achieved a distribution growth of 8.1% to 99.45c per linked unit in the financial year ended August 31, despite volatile market conditions.
A low-cost, inflatable incubator won this year’s international James Dyson design award, which aims to encourage and inspire the next generation of design engineers.
The World Bank released its ‘Doing Business 2015: Going Beyond Efficiency’ report last month and ranked South Africa 43 out of 189 global economies for its ease of doing business, with Singapore topping the rankings.
Air Products South Africa officially launched its R300-million Eastern Cape air- separation unit (ASU), at its new manufacturing facility in the Coega Industrial Development Zone (IDZ), earlier this month. It is the second facility that Air Products launched in South...
BMW South Africa (SA) has signed a power purchasing agreement with energy company Bio2Watt. The offtake partnership will bring renewable energy to the carmaker’s Rosslyn plant, north of Pretoria.