Dec 05, 2008
Oil and gas should not be viewed as Africa’s curse, industry expert assertsBack
Africa|Exploration|Africa|Angola|Energy|Oil And Gas|Locomotive
© 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
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
This Week's Magazine
While economic forecasts for the African continent are most favourable, African airlines may not be able to benefit from the expected growth in the region’s gross domestic product (GDP), International Air Transport Association VP: Africa Raphael Kuuchi has warned....
The Automotive Production and Development Programme (APDP) will need to change substantially post 2020, says Metair Investments South African operations COO Ken Lello. “We must not make tweaks. We have to change. What we are doing is not sustainable.”
Banking group Absa’s forecast is for the rand to end the year at around R13 against the dollar, weakening further to R13.50 by 2016, says Absa sectoral analyst Jacques du Toit. He warns that possible interest rate hikes in the US may see capital being pulled from...
The Dispute Resolution Centre at the Bargaining Council for the Civil Engineering Industry (BCCEI) is now open to handle party-to-party disputes. The BCCEI represents the interests of all level four to nine Construction Industry Development Board companies.
Communications technology firm Ericsson sub-Saharan Africa head Fredrik Jejdling says the company’s commitment to sustainability and corporate responsibility has been integrated into all facets of its operations, which has provided it with sustainable revenue...