Oil and gas are the two big global drivers of economic growth - Africa is in the focus

1 Oil and gas energy sector is in pressure

Africa is well endowed with oil and gas reserves. Africa’s economically recoverable oil and natural gas reserves account for 10% of the world’s total. Africa consumes 3.4% of global oil and 2% of gas but produces 12% of global production of oil and 5.9% of gas[1]. Africa consumes less than 30% of its oil and gas and exports the rest. Oil and gas resources are concentrated in a relatively small number of countries and sub-regions (North and Western Africa). Algeria, Angola, Libya, Nigeria are the major producers. Other producers are Egypt, Sudan, Equatorial Guinea, Congo Republic, Chad, Gabon, Tunisia and Cameroon. In fact, many more African countries like Ghana could become important net oil exporters in the long run if recent trends will continue. There have been noticeable changes in the geography of oil and gas in Africa since the 1990s and Africa is still relatively open to foreign oil exploration.

According to OPEC, the proven crude oil reserves are: OPEC-members 922 billion barrels and non-OPEC-members 273 billion barrels, in sum 1.195 billion barrels. The major part of OPEC oil reserves is located in the Middle East (Saudi Arabia 262 billion barrels, Iran 136, Iraq 115, Kuwait 101, United Arab Emirates 97, and Qatar 15) contributing about 2/3 of the total[2]. Other resource-rich countries are: Canada 179 billion barrels, Russia 60, Kazakhstan 30, the US 21, China 16.0, Mexico 12, Brazil 11, Norway 7, and Azerbaijan 7).

The investment that OPEC members (notably, Saudi Arabia and Angola) are making to expand their oil production capacity is expected to more than offset the slower expansion of non-OPEC supply. Angola as the results of deepwater exploration could increase its production from 1.0 million barrels per day to 4.0 million by 2030, assuming political stability, FDI inflows, and access to modern technology. FDI flows are needed especially in offshore production. Geopolitical issues in some OPEC countries, including Iraq, Iran, Venezuela, and Nigeria, make it difficult to estimate future production levels. Indonesia, Mexico and Venezuela, the resource-rich countries are expected invest carefully. The North Sea production is projected to decline. Promising deepwater discoveries in the Gulf in Mexico are under the loop of sustainability. The current economic downturn and civil unrest in countries like Ecuador and Colombia have delayed development of its oil production infrastructure. Egypt and Tunisia produce mainly from mature fields. Sudan is expected to increase significantly its volumes. Eritrea, Somalia, and South Africa have some resource potential. Some West African producers such as Cameroon, Chad, Congo, Equatorial Guinea, Gabon, Ghana, Mauritania, Niger, Sao Tome and Principe, and Ivory Coast are expected to benefit from the substantial exploration activity. [3]

The transportation sector will dominate petroleum-based liquids products. Growth in economic activity and population growth are the key factors that determine transportation sector energy demand. Economic growth spurs growth in industrial output, which requires the movement of raw materials and manufactured. As standards of living rise, demand for personal transportation increases. Over the next two decades, demand for liquid fuels is expected to increase more rapidly in the transportation sector than in any of the other end-use sectors. In the OECD countries, which will remain the greatest users of energy for transportation, the transportation sector’s share of total liquids demand is projected to rise from 58% in 2004 to 63% in 2030. In the non-OECD countries, the transportation sector is projected to account for a rising share of liquids consumption, and the liquids share of transportation energy use grows from 42% in 2004 to nearly 50% in 2030.[4] For freight transportation, trucking is expected to lead the growth in demand for transportation fuels. Freight trucks are projected to be the fastest growing mode of travel in the US. The volumes of freight transported by air and marine vessels are expected to increase rapidly until 2030[5].

China’s energy use for transportation is projected to grow by an average of 4.9% per year until 2030. China is projected to account for 28% of the total increase in world liquids consumption from until 2030[6]. Virtually all the growth in transportation energy consumption in China is projected to be in the form of liquids, mostly petroleum based[7]. Economic growth, rapid urbanization, and the emergence of a modern transportation system all have contributed to the increase in China’s liquids consumption. India is the second of newly industrialized countries India’s transportation energy use is projected to grow at an average rate of 3.3% per year until 2030. India’s transportation infrastructure is relatively well developed. Its railways are well established. India will continue to expand its public transportation networks in the near future, allowing robust increases in both road and rail transport and resulting in a more than doubling of transportation energy use until 2030[8]. Both China and India have launched their national highways development projects to modernize its major highways. Over the past two decades, the growth in non-OPEC liquids production has resulted in an OPEC market share substantially below its high of 52% in 1973. In 2004, OPEC produced 41% of the world’s liquids supply. High oil prices, new exploration and production technologies, aggressive cost-reduction programs by industry, and the emergence of unconventional resources contribute to the outlook for continued growth in non-OPEC liquids production. [9]

Natural gas consumption in the non-OECD countries grows more than twice as fast as in the OECD countries. Consumption of natural gas worldwide will increase 63% until 2030. Natural gas remains the key fuel in the electric power and industrial sectors. Natural gas burns more cleanly than coal or petroleum products. The national/ regional plans to reduce carbon dioxide emissions encourage the use of natural gas to displace liquids and coal. Almost 75% of the world’s natural gas reserves are located in the Middle East and Eurasia. Russia owns 27.2% of the total, 1,680 trillion cubic feet of the world total 6,183[10]. Russia’s extensive pipeline network reaches into Europe and in the near future China and South Korea. In addition, Russia is beginning to enter LNG markets. It has traded pipeline gas for Atlantic LNG cargos, has plans to develop LNG export facilities to serve the Atlantic market, and soon will start exporting LNG from its Pacific coast.[11] The major part of gas reserves is located in the Middle East (Iran 15.8%, Qatar 14.7%, Saudi Arabia 3.9%, United Arab Emirates 3.5%, Iraq 1.8%, and Kuwait 0.9%) contributing about 40% of the total[12]. The Middle East already exports significant quantities of LNG. In 2005, 15% of the LNG exports from the region went to North America and Europe and 85% to Asia. Africa is expected to be important sources of natural gas production in the future. About 50% of the production from Africa is exported. In 2030, the export share of production from Africa is projected to increase. Several pipelines from the North Africa to Europe are under consideration, and LNG export capacity in the West Africa continues to expand. Reserves in the world are fairly evenly distributed on a regional basis. Despite the increase in natural gas consumption, regional reserves-to-production ratios are substantial. Worldwide, the reserves-to-production ratio is estimated at 65 years. [13] The leading regions in the ratio are: Middle East 100 years, Africa 88 years, Russia 80 years, and Central and South America 52 years.

The industrial sector will account for 43% of world natural gas consumption in 2030. With world oil prices expected to remain high, natural gas is projected to displace liquids in the industrial sector to some extent. The OECD countries are projected to rely increasingly on imports to meet natural gas demand, with a growing percentage of traded natural gas coming in the form of LNG. Natural gas is expected to be the fastest growing fuel source in the OECD Europe. Growth in natural gas use for power generation is projected to account for the majority of total incremental gas use to 2030. Natural-gas-fired generation is less carbon-intensive than oil- or coal-fired generation and is expected to remain more cost-competitive than renewable energy, making natural gas the fuel of choice for new generating capacity in OECD Europe.[14] Led by demand in China and India, natural gas consumption in Asia is projected to expand rapidly. In both China and India, natural gas currently is a minor fuel in the overall energy mix. Historically, the US has been the large producer and consumer of natural gas. Canada’s unconventional and Arctic production both are expected to increase until 2030. An Alaska pipeline is expected to begin transporting natural gas from Alaska to the lower 48 States in 2018, contributing significantly to US domestic supply.



2 Africa’s oil industry: diversification and new oil field discoveries

Libya's crude oil reserves (41 billion barrels) are 3 % of world reserves and natural gas (1420 billion cubic meters) reserves are the third largest in Africa. Because of the sanctions against Libya since the early 90s, 75 % of Libya's territory that covers a major part of Sahara has remains unexplored. Libya exports over 80 % of its oil production but only 5 % of its gas production, mainly to Europe. In 2006, Libya accounted for about $37 billion from exports of crude oil, natural gas and refined petroleum products. The industry represents 30-40 % of Libya’s GNP and about 95 % of its total exports. Libya produces high-quality, low-sulphur crude oil that is highly valued by markets. Libya’s government expects that FDI inflows into the Libyan oil and gas industry will reach $10 billion in the next 10 years. Gas is exported to Italy via the newly-installed ‘Green stream’ gas export pipeline (520 km) under the Mediterranean Sea. Libya has a total of five oil refineries of which two are relatively large.[15] Libya is building its infrastructure from the ground up. Most country risk analysts are reluctant to improve the political risk rating of Libya. Libya needs foreign investments and technologies. Political or even military conflicts could destroy the investment climate. Political and economic stability in Sahara and Sahel-Sahara fulfil the best interests of both Libya’ leaders and investors[16].

Algeria’s known oil reserves are important (12 billion barrels) but not in the level of Libya. The natural gas reserves (4.5 billion cubic meters) are the fifth biggest in the world and the second in Africa. The oil and gas industry is also the key pillar of the Algerian economy, representing 25% of GNP and 70% of exports. In 2006, Algeria exported $38 billion from exports of crude oil, natural gas and refined petroleum products. Algeria exports 70% of its crude oil production and 75% of its gas production, also mainly to Europe. Algeria has created the oil and gas industry cluster that is well integrated to global markets, with pipelines reaching Europe, maritime routes to the US and Asia, and an important knowledge base in the industry[17]. Algeria has succeeded to use oil and gas incomes to lift the standards of living of the Algerian population. The challenge of Algeria is the diversification of the industrial structure to other export industries to create a real economic profile as an industrialized nation. The proven oil reserves in Algeria are consumed in a decade. This is the time span that Algeria has to attract foreign investments and technologies in the industries that diversify the exports industries out the oil and gas dependence.

The OPEC-members are dominating the energy sector in the North Africa. Egypt has oil producers besides its borderlines (Saudi Arabia, Libya and Sudan) and a good geographic location for the oil-related industries. China and India needs the Middle East and the North Africa as the oil suppliers to continue their ambitious growth[18]. In 2005, the oil and gas exports were $5 billion accounting for 40% of exports. Egypt’s trade deficit was $6 billion[19] but incomes from tourism ($6.4 billion) and Suez Canal receipts ($3.3 billion) lifted the balance of payment in a surplus of $ 4.5 billion[20]. With increasing domestic demand and maturing oil fields in the Gulf of Suez, Egypt has not chances to compete with its neighbours in the oil exports. The increasing international activity in the sector is indicative of confidence for Egypt[21]. International oil extraction and refining firms have long been in Egypt and promising new sources of crude have been found in the Western Desert. Egypt’s known oil reserves are 15.5 billion barrels. Egypt’s gas reserves are estimated to be 120 billion cubic metres[22] that have about the same energy content than 20 billion barrels crude oil.[23] Natural gas is found mainly in the Nile Delta. Egypt’s government has good reasons to encourage the production of natural gas for increasing domestic energy consumption that now accounts for almost 50% of all hydrocarbon usage in Egypt. Egypt is a major player in energy sector although the known oil reserves are moderate. Industrialization in global terms is an important target to diversify the economy and to strengthen the export sector.

Mauritania is a new oil producer that has crude oil reserves at the level of 600 million barrels[24]. This is smaller than the annual crude oil production of OPEC-members. Mauritania is one of the world’s poorest countries and hopefully benefits from the crude the oil price boom. Tunisia's oil reserves are 394 million barrels and gas 100 billion cubic metres[25]. Morocco and Tunisia have built up compensation funds that are used to subsidize oil and gas prices when they exceed a certain price. Tunisia has already raised gasoline prices several times. Morocco has been more reluctant to follow that path because a great deal of the Moroccan population may not be able to spend more on energy[26]. The North Africa is well equipped to utilize global energy markets. The diversification from the basic production towards an energy cluster is going on. Because of favourable location and well-developed infrastructure, Egypt is the potential country for the global growth of new related clusters like the plastic cluster. All nations in the region need FDI inflows and technology transfers. The political, military and social stability is important to be maintained in the region. The US, the EU and Asia are reliant on the North Africa’s oil because of its high-quality and low-sulphur. The North African nations have already revised oil law which restored state-control to exploration projects. Algeria has planned a new windfall tax[27]. They are all good instruments to motivate international actors to develop their business in the region from the long run perspective.

The proven oil reserves in the Gulf of Guinea are 50 billion barrels, when Saudi Arabia has alone 261 billion. The proven gas reserves are big but difficult to estimate. Most of the reserves in the region are offshore. The location of oil and gas fields out of the coastlines is an advantage for oil and gas extractors. Big oil tankers can tank crude oil directly from oil platforms and navigate across the Atlantic towards America, Europe or Asia. Along the coast of West Africa from Mauritania to Angola, off-coast exploration is yielding major results. Oil industry experts predict that by 2022 the industry will invest over $40 billion in the Gulf of Guinea[28]. Because the oil logistics in the ocean is isolated from the land, oil extractors can contract directly with governments. Oil spills and natural gas flaring[29] in the Niger River Delta are horrible. This is a sad story of corruption and military ruling[30]. Farmers and fishermen in the region have lost their living[31]. Air pollution from natural gas flaring leave the region shrouded in smog. Although the situation is improving with regulations, the marine pollution is a serious problem. The key challenge is to manage their oil wealth in a sustainable manner. Good governance, accountability and transparency in the oil and gas industry should be possible since since the oil extractors are well-know firms from Europe (e.g. TotalFinaElf and Royal Dutch Shell) and the U.S. giants (e.g. ExxonMobil and Chevron).

The proximity to the US is a relevant issue[32]. To protect its oil logistics in the Gulf of Guinea, the US plans a permanent military base[33]. The US naval ships constant patrolling in the waters of Gulf of Guinea could certainly increase the security of oil platforms and tankers. The Gulf of Guinea is a hot area in the global oil politics. The US is the leading importer of oil from the region, and the US multinationals dominate the oil business. One of the US firms’ advantages is their experience in deep water drilling in the Gulf of Mexico. According to a National Intelligence Council report, supply levels to the US are expected to grow from the current 16% of U.S. oil imports to 25% by the year 2015[34], increasing the strategic importance of the region in the US politics. The global military and security politics are built on the reasoning in the US[35]. The US is the major benefiters of the high quality oil from the Gulf of Guinea. Most Africans do hope that the US could do partnership with Africa for mutual benefit, not for exploitation. The US polics to get Africa’s oil at any price cannot be the historical hegemony politics. In our globe, the only choice for the survival is collaboration over continents, states, ideologies, religions, etc.

The growth of global energy consumption means that competition for energy reserves will become more and more intensive in the years to come[36]. The US is the world’s leading energy consumer. Rapid economic growth in China in the last 25 years has resulted in an accelerating demand for oil products. China imports about 50% of its crude oil from abroad. China contributed 35% of the worldwide demand growth for crude oil in the period 2001-05[37]. The International Energy Agency estimates that 80% of Chinese oil consumption will be met by imports in 2030, which increases China’s vulnerability to external supply disruptions[38]. The world’s refinery capacity is now insufficient for huge growth in the demand of refined products. The aggressive outward FDI by China, including state-owned enterprises in energy mean that China will be a major global player in the energy markets.[39] Africa is one of key regions for Chinese oil and gas supply. In seeking access to oil resources, Chinese companies are partners in extraction even in Sudan. In some African countries, China offers “soft loans” for infrastructure projects to secure its access to oil. China’s trade, investment and aid activities in Africa have been growing rapidly over the past decade. In 2006, China’s aid to Africa totalled $5.75 billion and trade between China and Africa reached $56 billion[40]. The West African crude oil is easily accessible by sea to the EU, the US and Asia. The high quality of the crude from West Africa makes it ideal for Chinese refineries, which have not the capacity to refine heavy, sulphur-rich crude from the Middle East, etc.

The Gulf of Guinea has strong ties to Europe. All states are former European colonies and orientate towards Europe e.g. in academic education. Migration to Europe is the dream that many of young people have. Family ties between migrants and relatives at home are strong. Some of the EU-states have major parts of their oil imports coming from the region. The EU’s historical role is in the institution-building. The states in the region are poor, their legitimacy is low and they have not the whole territory in their control[41]. Contracting with multinationals has been rewarding for political elites, not for citizens. Millions of poor households spend a big share of their expenditure on oil products or they have no access to oil. Achieving self-sufficiency in energy is an issue per se, especially in the land-locked West African countries. Higher oil and gas prices in recent years and the lack of intra-regional energy infrastructure have increased the cost of domestic energy supplies. The EU has launched its CRM (Civil Crisis management) that focuses on democracy institutions and civil administration. The states in the Gulf of Guinea have needs for economic institution-building that might include:

1. The development of uniform pan-African markets for energy products and other important commodities.

2. The development of win-win-models of how the states can build efficient partnerships with the big trade-blocks (the US, the EU and Asia) and multinationals.

3. The most critical question is: How Africa can utilize its oil and gas wealths to find its way to industrialization and entrepreneurship[42] in the shortest possible time?

The Gulf of Guinea has not its own refineries when in the North Africa large-scale refineries are in governmental control and national oil companies have hired competent management that enables them to extract much of the oil resources without assistance from the international oil companies. In the Gulf of Guinea multinationals dominate the business. The states have mainly small, inefficient, and outdated refineries in states’ control. The quality of the oil products produced in refineries does not meet international standards. The refining production mix is not either in balance with the oil product demand in export markets.[43] The Gulf of Guinea needs regionally integrated industrial policies to catalyst downstream investments in current of new oil plants to increase its refinery capacity. Because of technology barriers to be overcome and high investment costs to build up a new refinery, the Gulf of Guinea West Africa needs reliable partners. An investment in a new refinery producing 100,000 barrels per day of is estimated to be 1-$1.2 billion[44].

Nigeria, Africa’s most populous country, is experiencing a period of civilian rule since 1999. High oil prices have contributed to Nigeria’s GDP growth (4.5% in 2005 and 6.2% in 2006). In 2006, Nigeria accounted for $52 billion from exports of crude oil, natural gas and refined petroleum products, mainly to the US, China and Europe. Nigeria is an oil-dependent country, since the oil sector is 99% of Nigeria’s exports, 90% of the oil production is exported and government’s incomes are 75% oil-related. Nigeria has 60% of external dept in relation to BNP[45]. Nigeria has huge oil and gas reserves. Increased exploration in deep water is promising. The government expects that proven reserves could reach 40 billion barrels[46]. The production and consumption of energy in Nigeria is small[47]. In Nigeria, over 50% of the population is living on incomes below the internationally defined poverty line of $1 per day. Nigerias will increase its gas exports. FDI inflows by Royal Dutch Shell and ExxonMobil[48] in LNG (Liquefied natural gas) plants are a good beginning. Nigeria has got support to develop its infrastructure[49]. Nigeria's national oil company can take the control of oil and gas sector[50] and stop the pollution of old and new fields. Offshore Nigeria's gas previously flared will be soon be converted into the LNG and integrated with the West African Gas Pipeline (WAGP) for natural gas export to Benin, Togo and Ghana[51]. The West African Gas Pipeline (WAGP) is the flagship project of the ECOWAS.

Angola is a fast growing oil economy with huge offshore projects boosted by the government. Angola exports 95% of its oil production, mainly to the US and China, oil accounting for 40% of the country’s GDP. Both countries have roughly 40% shares of Angola’s oil exports. Angola has been a successful non-OPEC country in deep-water discoveries in the 1990s and the 2000s. Angola exports of crude oil, natural gas and refined petroleum products are $28 billion, 99% of Angola’s exports. The external debts are 50% of BNI[52]. Oil reserves are estimated to be $9 billion barrels[53]. However, 70% of Angola’s 12 million people live in poverty in a wealth country. China assists Angola in infrastructure reconstruction[54]. Angola’s oil production is expected to double in the near future. Angolan national oil company (Sonangol) is the one that grants exploration licenses[55]. Angola’s oil and gas industry will grow offshore that makes environmental issues sensitive[56]. Angola has emerged as the US’ and China’s loyal supplier, like Nigeria. Angola and Nigeria are claimed to be the most corrupted countries in the region. The loyal partner is not the nation but more the rulers.

São Tomé, a former Portuguese colony, consists of two small islands with a population of 200,000. São Tomé could become the Kuwait of Africa of having the biggest per capita income. São Tomé is in the focus of the US political-military interest[57]. The offshore blocks in the Gulf of Guinea between Nigeria and São Tomé hold $4-11 billion barrels of reserves at depths of between 1-1.5 miles. The treaty between countries provides 60% of the revenue to Nigeria and the rest to São Tomé. The proven crude oil reserves are $4 billion barrels[58] and the future estimations are much higher. The contracts with multinationals are unfavourable[59]. President of the republic has been accused of being part of the deals[60] that means that São Tomé will see only a part of oil income for many years. According to UNDP[61], São Tomé has "resource curse" of oil reserves. After the coup, São Tomé problems exist[62]. São Tomé has money but has not the political and financial institutions. São Tomé has hired experts to advice on how to deal with the windfall taxes and new oil law. What is needed is the EU’s CRM. São Tomé is an example of oil boom. In its neighboring countries the petro-wealths have been more often a curse than a blessing[63]. The US has a treaty making São Tomé a strategic regional base which is expected, within 10 years, to provide large amounts of oil to the US[64].

Equatorial Guinea with about 500,000 people consists of consists of the mainland Río Muni, islands of Bioko, Annobón and of some small islands. Oil-wealths have been both a curse and a blessing. The mainland and the islands are far apart in environment, population, economy and history. The country has became one of the largest oil and gas producers in region, when ExxonMobil, Marathon and some others invested $3 billion oil and natural gas extraction in the Atlantic[65]. GE Petrol, Equatorial Guinea’s national oil company manages the government’s interest stakes in production sharing contracts with international oil companies, although it participates in joint ventures and markets its share of crude oil production. Equatorial Guinea’s oil reserves are estimated to be $12 billion barrels. The average income is $5,000 per capita. In 2006, exports income from oil and gas was $9 billion. The stock of total external dept is 50% of BNP[66]. The major target markets were: the US 24%, China 28%, and Spain 11%. Oil dependence is 60% of government revenues. Equatorial Guinea is a target of investors and adventures. The major course is, however, the corruption that has claimed to be related to the top politicians in the country[67].

Gabon is a relatively wealthy country with many natural resources. In 2006, exports income from oil and gas was about $5 billion, 77% of total exports. The major target markets are: the US 53%, China 8.5%, and France 7.4%. Oil dependence is 50% of governmental revenues. The national debt is 40% of the annual government budget[68]. Oil reserves are 2.5 billion barrels. The average income is $7,200 per capita[69]. This is a good level, but incomes are unevenly distributed to just over 1.4 million people. Gabon has been in the oil business since the late 1960s. The oil incomes have been used to the huge governmental spending, the state bureaucracy and construction of the capital, Libreville. Gabon has no state-owned oil firm. Gabon’s basic problem is that one family controls the economy and politics[70]. That is the major reason why governmental spendings are out of control.

Congo began to develop its oil industry in the 1980s, which is the primary source of economic growth, accounting for 94% of exports. The timber industry is the second best in exporting. Congo relies on oil for more than 60% of its annual budget. Congo's national oil company, the Société Nationale des Pétroles du Congo (SNPC), regulates the oil production and exploration in the country. SNPC develops production sharing agreements (PSAs) with each foreign company that operates in Congo to ensure a constant minimum flow of revenue to the government.[71] Congo’s crude oil reserves are 1.6 billion barrels. The majority of these reserves are located offshore. About 75% of Congo’s territory has remained unexplored. Congo ships 46% of its oil exports to China. The civil war in Congo-Brazaville destroyed the infrastructure. 70 % of the population earns less than $1-a-day and 50% has no access to clean water. While the country’s oil exports are valued at more than $3.5 billion, its per capita income keeps going down. Congo has one of the highest debt-to-GDP ratios in the world. Total is the leading oil producer and foreign investor in Congo, producing 60 % of oil output. Like other countries in the region, Angola’s oil and gas industry will grow offshore in the near future and environmental issues are vital[72].

Cameroon is an oil producing country, although reserves, production and exports are in decline. In 2006, exports income was $4 billion. Oil is a key economic sector along with cash crops and wood. Oil incomes were $2 billion. A fairly large gas field has been found at Sanaga that could supply the planned thermal power plant at Kribi.[73] GDP per capita was $2,400. The sectors in relation to GDP are dominated by agriculture, about 45% and industry is only 16%. The 16 million people of Cameroon are will hopefully benefit from the Chad-Cameroon pipeline that leads the 1,000 km-pipeline in Cameroonian territory. The transit fees are supposed to be $500 million. One of the contractors, ExxonMobil is accused of undertaking illegal practices in the pipeline project, including pollution of Lake Chad’s international fishing, drinking water and farming industries. The World Bank has conditioned its involvement on transparency. There are good reasons since Chad ranks 157 in the Transparency International Corruption Perceptions index. The World Bank can assist in assuring the participatory quality of the process while staying clear of influencing the outcomes.[74] In Ghana, Tullow Oil[75] has proclaimed the discovery of world-class oil field off the coast of Ghana. The size of the field is 800 million barrels[76]. State-owned Ghana National Petroleum Corporation has attracted foreign partners, with new business arriving from the UK, the US, Australia and Korea. The government has planned to privatise Tema Oil Refinery (TOR) and oil marketer Ghana Oil (Goil). Ghana’s stock of total external dept was 120% of BNP in 2002[77]. In Ghana, it is important and also intended that the ordinary people could benefit from the economic growth[78].

Sudan is a sad serious example of what the political involvement of big oil consumers (the US and China) means. In 1995, China’s National Petroleum Corporation began oil exploration in Sudan and has expanded steadily. In 1997, the US imposed economic and trade sanctions on Sudan and China filled the gap to diversify its oil resources[79]. Sudan has a reliable economic partner that does not question the politics[80]. Sudan is Africa's largest country and has a long history of bloody internal conflicts. China has supported the Sudanese government and ignored ethical issues of democracy and human rights. Sudan has relatively developed economy. Sudan’s oil reserves are moderate, estimated to be 5 billion barrels. The GDP is about $80 billion (2004) and GDP per capita $1,900. Exports are $3.4 billion (2004). In addition to petroleum products, Sudan exports cotton, sesame, livestock, groundnuts, gum arabic and sugar. Oil exports to China accounted for 64% of Sudan’s oil exports. Japan’s share of export is 14%. Chinese companies have secured significant rights to oil, while the US and others are seeking UN sanctions in response to the war in the South of Sudan.

[1]http://www.africa-union.org/.../Conferences/Past/2006/November/infrastructure/doc/en/AU_EXP_OG_5_Fuelling_Eng.doc
[2]“Worldwide Look at Reserves and Production,” Oil & Gas Journal, Vol. 104, No. 47 (December 18, 2006), pp. 24-25.
[3] International Energy Outlook 2007. Chapter 3: Petroleum and Other Liquid Fuels www.eia.doe.gov/oiaf/ieo/oil.html
[4] International Energy Outlook 2007. Chapter 2: Energy Consumption by End-Use Sector. www.eia.doe.gov/oiaf/ieo/pdf/enduse.pdf
[5] Energy Information Administration, Annual Energy Outlook 2007 , DOE/EIA-0383(2006) (Washington, DC, February 2007) www.eia.doe.gov/oiaf/aeo
[6] International Energy Outlook 2007. Chapter 2: Energy Consumption by End-Use Sector. www.eia.doe.gov/oiaf/ieo/pdf/enduse.pdf
[7] As compared with 130.8 million cars in the US in 2005, the number of cars in China is 4.5 million is modest. Asian Automotive Business Review, Vol. 17, No.2 (April 2006).
[8] International Energy Outlook 2007. Chapter 2: Energy Consumption by End-Use Sector. www.eia.doe.gov/oiaf/ieo/pdf/enduse.pdf
[9] International Energy Outlook 2007. Chapter 3: Petroleum and Other Liquid Fuels www.eia.doe.gov/oiaf/ieo/oil.html
[10] Source of gas deposits: “Worldwide Look at Reserves and Production,” Oil & Gas Journal, Vol. 104, No. 47 (December 18, 2006), pp. 22-23.
[11] International Energy Outlook 2007. Chapter 4: Natural Gas
www.eia.doe.gov/oiaf/ieo/pdf/nat_gas.pdf
[12]Other resource-rich countries are: the US 3.3%, Nigeria 2.9%, Algeria 2.6%, Venezuela 2.5%, Turkmenistan 1.6%, Kazakhstan 1.6%, Indonesia 1.6%, Norway 1.3%, China 1.3%, Malaysia 1.2%, Uzbekistan 1.1%, Egypt 0.9% and Canada 0.9%. “Worldwide Look at Reserves and Production,” Oil & Gas Journal, Vol. 104, No. 47 (December 18, 2006), pp. 24-25.
[13] BP Statistical Review of World Energy 2006 (London, UK, June 2006), p. 22.
[14] International Energy Outlook 2007. Chapter 4: Natural Gas
www.eia.doe.gov/oiaf/ieo/pdf/nat_gas.pdf
[15]www.times-publications.com/publications/times_articles/corporate_africa_spring1999/petroleum_potential5.htm
[16] Since 1997, the Qadhafi regime has argued that the country is firmly rooted in Africa. Libya has become a player in Saharan and Sahelian affairs, through its role in CEN-SAD (Community of Sahel-Saharan States) that intends to work, together with the other regional economic communities and the Organization of African Unity, to strengthen peace, security and stability and achieve global economic and social development. http://www.iss.co.za/ASR/12No2/C2.html
[17]http://w01.international.gc.ca/MinPub/PublicationContentOnly.asp?publication_id=378190&Language=E&MODE=CONTENTONLY&Local=False
[18]India's largest firm Reliance Industries Limited (RIL) in the industry in terms of market capitalisation is looking into investing $10bn in Egypt's oil, petrochemicals and plastics sector. http://www.oxfordbusinessgroup.com/weekly01.asp?id=3186
[19]www.okaz-stockbrokers.com/Economy.pdf
[20]Egypt, Economics, 10/20/2005
[21]http://www.oxfordbusinessgroup.com/weekly01.asp?id=3186
[22]www.oecd.org/dataoecd/12/39/2498037.pdf
[23]Egypt, Economics, 4/19/2006
[24]http://www.eitransparency.org/section/countries/_mauritania
[25]w01.international.gc.ca/MinPub/PublicationContentOnly.asp?publication_id=378190&Language=E&MODE=C...
[26]http://www.north-africa.com/blog/?page_id=10
[27]www.aspo-usa.com/index.php?option=com_docman&task=doc_view&gid=435
[28] West African Oil, U.S. Energy Policy, and Africa’s Development Strategies by J. Anyu Ndumbe
http://muse.jhu.edu/journals/mediterranean_quarterly/v015/15.1ndumbe.html
[29]Nigeria flares more natural gas than any other country in the world, with 43 % of its total annual natural gas production being flared. Nigerian flared natural gas accounts for 20 % of the world total. Nigeria is working to end natural gas flaring by 2008. http://www.oilgasarticles.com/articles/89/1/Natural-Gas-Reserves-in-Nigeria/Page1.html
[30] In 1998, when Nigeria's military ruler, General Sani Abacha, died he was found to have stolen $4 billion from Nigeria's budget that is not the only case.
http://www.time.com/time/magazine/article/0,9171,901021028-366267,00.html
[31]The so-called oil pipeline vandalism, including foreign oil worker kidnappings, has increased in both frequency and volume of products and crude oil losses in the Niger Delta. From 1,121 cases in 2000, it increased in two fold to 2,258 in 2005.
http://www.gasandoil.com/goc/company/cna64184.htm
[32]The US government has defined African oil as a "matter of strategic national interest in which the US might choose to use military force" (2001 National Energy Policy).
[33] The US has 1,500 troops stationed in Africa, principally at its military base in Djibouti. The US has naval exercises in the Gulf of Guinea. The increased US military presence means that the US has opened up another front in its war on terrorism. http://www.algeria-watch.org/en/analyses/scramble_oil_africa.htm
[34]Reginald Dale, "An African Answer for U.S. Oil Woes," International Herald Tribune, 1 February 2002.http://www.iht.com/articles/2002/02/01/think_ed3_.php
[35] The Gulf of Guinea is more potential than the Middle East because there is not combative political culture (radical Islam) or ideology (communism) in the region. U.S. Moves to Protect Interest in African Oil," Alexander's Gas and Oil Connections, 1 October 2002. http://www.gasandoil.com/
[36]Klare, Michael (2001) The New Geography of Conflict, Foreign Affairs, June 2001. www.foreignaffairs.org/2001/3.html
[37]www.cmi.no/publications/file/?2438
[38]http://www.gasandoil.com/ogel/samples/freearticles/article_15.htm
[39]www.newstatesman.com/200706180024
[40]About 80 % of China Exim Bank’s projects in 36 African countries are committed to infrastructure development, such as railways (Benguela and Port Sudan), dams (Merowe in Sudan; Bui in Ghana; and Mphanda Nkuwa in Zambia), thermal power plants (Nigeria and Sudan), oil facilities (Nigeria), and copper mines (Congo and Zambia).
www.wilsoncenter.org/index.cfm?topic_id=1421&fuseaction=topics.event_summary&event_id=224956
[41]In the Niger Delta violent clashes between armed groups and government forces take place from time to time while in the Angolan enclave of Cabinda the militant Front of Liberation of the State of Cabinda (FLEC) continues to operate. www.isis-europe.org/ftp/Download/FORESIGHT.%20REPORT%20October%202006.pdf
[42]Angola as case: At the microeconomic level, despite the signs of recovery in the private sector, risk taking and entrepreneurship continue to be stifled by high de jure and de facto barriers to entry, including privileged access tomarket opportunities and finance for a small number of business people. Some important reforms have been made – for instance, to accelerate the procedures for establishing new companies – but implementation has been delayed in practice by the poor state of the bureaucracy.
www.oecd.org/dataoecd/26/16/38561655.pdf
[43]www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/trade_text.htm [44]www.africa-union.org/.../Conferences/Past/2006/November/infrastructure/doc/en/AU_EXP_OG_5_Fuelling_Eng.doc
[45]www.oecd.org/dataoecd/33/56/36741748.pdf
[46]Commercial discoveries by Triton, Chevron, Shell, Exxon-Mobil, and Texaco.
muse.jhu.edu/journals/mediterranean_quarterly/v015/15.1ndumbe.html
[47]www.oilgasarticles.com/articles/88/1/Downstream-Oil-and-Gas-and-Refining-in-Nigeria/Page1.html
[48] Royal Dutch Shell, which produces nearly half of Nigeria’s oil, will invest $10 billion in the near future to develop another deep offshore hub and other prospects including natural gas. ExxonMobil will raise Nigeria’s about $10 billion investments in Nigeria of which $3 billion would be invested in gas flaring tomweston.net/West%20Africa.pdf
[49] In October 2005, the 15-member Paris Club announced that it would cancel 60 % of the debt owed by Nigeria.
[50] Nigeria's national oil company, formed through the restructuring of the country's oil and gas sector, will be a fully integrated oil and gas company competing internationally in all sectors of the industry. http://www.rigzone.com/news/article.asp?a_id=50540
[51] www.oilgasarticles.com/articles/90/1/West-Africa-Nigeria-LNG-Natural-Gas-Production/Page1.html
[52]www.oecd.org/dataoecd/37/35/36734978.pdf
[53] Major oil companies include Chevron-Texaco, Exxon-Mobil, and BP.
[54] In 2004, China offered Angola $2 billion ‘soft’ loan without political strings attached. The money was earmarked for reconstruction in railways, electricity and administration. China employs its own labor force, not the local one in major construction projects. Judith van de Looy (2006) Africa and China: A Strategic Partnership? ASC Working Paper 67/2006. www.ascleiden.nl/Pdf/wp67.pdf
[55]A joint venture (Sonangol Sinopec International) was created between Chinese Sinopec (75% of the consortium) and the Angolan national oil company (Sonangol) to operate stakes in offshore oil blocks and to build a $3 billion refinery at Lobito.
coombs.anu.edu.au/SpecialProj/ASAA/biennial-conference/2006/Alves-Ana-Cristina-ASAA2006.pdf
[56]The Rosa field is located 200 km offshore Angola, at water depths of up to 1,700 m. Kissanje and Dikanza fields are part of the Kizomba B project and are located in block 15 in water depths of approximately 1,000 m. tomweston.net/West%20Africa.pdf
[57] The US has initiated a maritime-cooperation agreement with 11 West African states.
http://www.secureenergy.org/site/page.php?node=364&id=7
[58] Simon Robinson, "Black Gold," Time Europe, 28 October 2002
www.time.com/time/magazine/europe/0,9263,901021028,00.html
[59]Big oil companies such as ExxonMobile, ChevronTexaco and Royal Dutch/Shell have expressed interest in bidding for exploration licenses that would pour millions of dollars into the islands. The oil will take a long time and substantial investment to extract and is unlikely to reach the market before 2007 or 2008. But arguments over oil revenues have fuelled political and social disputes in recent months. www.iags.org/n0805035.htm
[60] Fradique de Menezes was elected president in 2001. After meeting President Bush at the White House in 2004, a small army group made a bloodless coup during a state visit to Nigeria. Eventually Nigeria negotiated a better deal and oil was in the background. http://www.politicianonline.net/archive2003.htm
[61]UNDP notes that $35-$40 million a year in aid money to São Tomé in 2004 disappeared. www.igac.net/pdf/publications_adb_manyfacesofcorruption.pdf
[62]The U.S, the UN, Portugal and the African Union all condemned the coup. An agreement negotiated between the coup leaders and international envoys, called for a new government, remained de Menezes as president and separated powers of the presidency, parliament and other state institutions. www.iags.org/n0805035.htm
[63] The list of problems includes e.g.: massive corruption and human rights abuses perpetrated, environments wrecked and coups and militarization common. http://www.africafiles.org/atissueezine.asp?issue=issue3
[64] www.just-international.org/commentary/e%20news%20Apr%2005.pdf
[65] www.africafiles.org/atissueezine.asp?issue=issue3
[66]www.oecd.org/dataoecd/35/1/1824667.pdf
[67] Catholic Relief Services (CRS) says that without fundamental changes by international actors in Equatorial Guinea "the current mix of oil dependence, neglect of agriculture, corruption, poor administration and authoritarian rule are the recipe for a bleak future." www.africafiles.org/atissueezine.asp?issue=issue3
[68] http://ded.mo.gov/researchandplanning/indicators/international/cty7550.stm
[69] http://strategis.ic.gc.ca/epic/site/imr-ri.nsf/en/gr-05087e.html
[70] According to Le Monde (Dec. 16-22, 2005), the extended Bongo family has such a grip on power "that its control of the country’s fabric is more glaringly obvious than anywhere else in Africa… " www.africafiles.org/atissueezine.asp?issue=issue3
[71]commercecan.ic.gc.ca/scdt/bizmap/interface2.nsf/vDownload/CABS_0027/$file/congo.pdf
[72]The Congolese authorities have given Total permission to begin developing the Moho-Bilondo project, located around 80 km offshore in water depths ranging from 600 to 900 m. tomweston.net/West%20Africa.pdf
[73]www.oecd.org/dataoecd/37/2/36735844.pdf
[74] http://www.africafiles.org/atissueezine.asp?issue=issue3
[75] Tullow Oil Plc is a leading independent oil and gas exploration group, which has interests in 120 exploration and production licences across 23 countries.
[76]http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article2305305.ece [77]www.oecd.org/dataoecd/24/28/32429910.pdf
[78] President Kufuor gives hope: "Oil is money, and we need money to do the schools, the roads, the hospitals…"www.globalpolitician.com/articles.asp?ID=2997&print=true
[79]China National Petroleum is the biggest shareholder in Sudan’s energy sector. China paid most part of the $15 billion 932-mile pipeline to Port Sudan. About 10,000 Chinese workers employ in Sudan. Africa and China: A Strategic Partnership? Judith van de Looy, ASC Working Paper 67/2006 www.ascleiden.nl/Pdf/wp67.pdf
[80] The UN Security Council passed Resolution 1556 that demanded that the Sudanese government disarm the Janjaweed. China threatened to use its veto power and urged the West to ‘cool down’. http://sudanwatch.blogspot.com/2004_09_01_archive.html