Energy in Africa


Africa’s new role in global energy security

Published: 09-FEB-05

There’s no doubt that African oil and gas is a key engine for economic and social development on the continent if managed half-decently.

Oil and production generate a large share of revenue in many African countries, with several new producers and prospective producers on the verge of entering the market up and down the Western coast.

Needless to say, these natural reserves are attracting the attention of global players. The United States, in particular, is starting to cast covetous eyes towards the continent as an increasingly important source of oil and natural gas to stabilize its energy market.

President Bush has apparently “recognized the importance” of the US’s relationship with the continent, with the US looking to “support more transparent, accountable and responsible use of oil resources in African producer countries to enhance stability and the security of trade and investment environments.”

What this means in plain English is that we can expect to see a steady rise in US interest in African affairs and politics to safeguard an important alternative source of oil and gas. As we have seen abundantly in the Middle East, the US is never shy to use its muscle when oil is involved.

Africa is currently producing well in excess of eight million barrels of Africa’s new role in global energy security oil per day and currently supplies the US with about 12% of its oil import requirements.

Some analysts believe production can rise as high as 11-13 million barrels per day in the next decade.

Over the past decade, non-OPEC oil production has more than kept pace with the rise in world oil demand, thereby limiting OPEC’s share of the market. Only three African countries - Algeria, Libya, Nigeria – are part of the 11- member OPEC.

But while West Africa is one of the world’s fastest growing sources of oil and gas, it is also a deeply confl icted region that is suffering the effects of years of corruption, political instability, border disputes, ethnic and religious strife, governance issues, and poverty.

As any businessman will tell you, conflicts produce risks. And risks have a destabilizing impact on the investment climate, as John R Brodman, deputy assistant secretary for international energy policy at the US Department of Energy, recently told a US Senate Committee.

He cloaked his analysis in diplomacy, saying the West African strife “threatened the social and economic development aspirations of the African people and on our energy security.” It is the second part of the sentence, “our energy security”, which holds the key. “Finding affordable and effective ways to help these countries overcome these barriers is one of the new challenges to our energy security aspirations,” said Brodman glibly.

Democratization and the development of responsible governing institutions are “particularly important in reducing oilrelated confl icts and promoting African supply stability.”

“Accountability and transparency are necessary to ensure that oil revenues benefi t the population and support economic and social development. Managed effectively,” he said, “revenues from expanding oil and gas production could be the engine for national and regional economic development and political stability in West Africa.”

He’s absolutely right, of course. But let us not think the US’s motives are in any way altruistic. All the US is interested in is that proverbial radio station, WIIFM – What’s In It For Me. The US has looked the other way for years while African countries tear themselves to pieces, but as soon as there’s oil to be had, then the tune changes.

Natural gas, in particular, is on the US agenda, as its dependence on natural gas rises steadily. US policy wonks believe that much of this new demand could be met by shipments from Latin America and Africa.

Print this page Send this article to a friend

Market news on your cellphone
Get live JSE listed shares, warrants, major indices, brent crude oil, international markets, agricultural futures & daily market analysis via SMS on your mobile.
Find out more...

Energy in Africa
Energy in Africa is an intelligent and in-depth look at how energy impacts people, places, projects, price and development around the African continent.
Subscribe now...

African Business Leaders Forum
African business and public sector leaders define and construct a prosperous future for the continent.
Find out more...

Online travel bookings
Planning to travel? Book accommodation in Africa & South Africa here.
Book now...

Contact us | Advertising | Subscriptions | Newsletter | About us | Employee Email

All material copyright Business in Africa. All rights reserved. Material may not be published or reproduced in any form without prior written permission. Read these terms & conditions. Read our privacy statement and security statement. Powered by Mail & Guardian Online & The domains, are owned by Business in Africa.