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International exploitation of oil reserves is influenced by the same strategic factors that have had a detrimental effect on international business penetration of the continent. Underdeveloped infrastructure, poor security and weak state structures have made this process both uncertain and expensive.
Nigeria is Africa’s biggest oil producer followed by Libya, Algeria, Egypt and Angola. However, Gabon, Congo, Cameroon, Tunisia, Equatorial Guinea, the DRC, Cote d’Ivoire, Ghana and Uganda also have reserves which, relative to their size, can have a significant impact on their economies. Equatorial Guinea has a GDP per capita higher than the UK – a result of huge oil discoveries in a country of 650,000 people. However, the vast majority of this wealth is exploited by a narrow political elite, and little is used for developmental purposes.
Angola is the second largest oil producer in sub-Saharan Africa. Its oil and oil derivatives industries account for over 90 percent of exports. This make up over 40 percent of GDP and 80 percent of government revenues. The Gulf of Guinea now provides almost a fifth of the oil consumed in the United States - and that proportion is likely to rise in the coming years. This is due substantially to the US’s desire to move away from dependence on Middle Eastern oil.
Nigeria’s Delta oil reserves are well-known, and the inequalities they have helped engender in the country well documented. Whilst oil cannot be blamed entirely for the failures of the Nigerian political system, its capacity to fuel corruption and violence in a politically volatile region must be recognised. Michael Peel’s A swamp full of dollars relates this crisis of politics to a Western dependence on oil that has placed the proceeds from vast contracts into the hands of unscrupulous leaders.
In this regard, Sudan’s current political machinations (including both the Southern Referendum and violence in Darfur) have been linked with both domestic and international desire for oil reserves. The majority of Sudan’s oil lies along the North-South border, and consequently was an important factor in negotiations over the South’s secession, and the demarcation of the border. However, despite the split, oil will have to be refined and transported out of the region through refineries and pipelines in the North. This will remain the case until a proposed pipeline running between the Southern capital Juba and the Kenyan port of Lamu is completed.
China has also played an important role in Sudan’s oil politics, although it is suggested - largely from Western sources – that weapons supplied to the Bashir regime with which to wage its war in Darfur are paid for with concessions to Sudanese oil. The relationship of China with African oil producers therefore closely follows the general continental paradigm of Chinese assistance to African governments in order to secure access to mineral, raw material and energy sources.
Whilst it may be stated that the vast majority of the major oil companies are present in Africa, some stand out more than others. Shell, for example, has long been associated with the Niger Delta, and its continued activities there have received criticism from many who believe they are engaged in a systematic exploitation of the region with little domestic benefit. Tullow has recently been prominent, presiding over the opening of the first wells in Ghana, and gaining licenses to expand exploration in Eastern Africa. Chevron has been operating in Angola for 50 years, and remains the country’s largest foreign oil industry employer. Newer Asian and BRIC players such as the China’s Sinopec, India’s Oil and Natural Gas Corporation (ONGC) and Brazil’s Petrobas, have become increasingly more significant in recent years. This has sparked what some have called a new ‘scramble’ for Africa’s oil reserves – the newer players competing with the more established Western multinationals.
It can be stated with some confidence that oil will remain a crucial factor in the interaction of the international community with the African continent. Whilst oil provides an opportunity for African governments to make vast revenues and pay of debts, the broader debate centres on how such revenues can be effectively utilised to improve the lives the communities from whose land oil is often obtained, for example the Ogoni in Nigeria. Questions also exist as to the responsibility corporations operating in Africa have to domestic populations, and whether they are able to act in a manner that is substantially beneficial to the goal of sustained economic development.
Read more on this RAS Analysis: Nigeria and Shell – a marriage on the rocks? Reuters: Ghana bids to break Africa's oil curse BBC World Service: New oil in Africa BBC News: Ghana's oil boom: blessing or curse? Bloomberg Business Week: New Rules for Tapping Africa's Abundant Oil Guardian: Oil may be a mixed blessing for impoverished Chad Guardian: Scramble for Africa Guardian: Cursed by oil- Angola Africa Confidential: Oil and optimism– Ghana Africa-Asia Confidential: Queuing up for Lake Albert’s oil– Uganda BBC: Can Sudan's oil feed north and south?
Recommended books Michael Peel – A swamp full of dollars: Pipelines and Paramilitaries at Nigeria's Oil Frontier Ricardo M Soares De Oliveira - Oil and Politics in the Gulf of Guinea
By Magnus Taylor, Royal African Society Tweet |
