Energy in Africa


Africa hosts the great oil debate
Special correspondent
Published: 28-MAR-06

Simply by being in the middle of it all as hosts to the World Petroleum Council (WPC) Congress, South Africans learned more about the international oil and gas industry than they’d ever been inclined to before. At the end of it, their verdict was divided and opinion was both sunny and clouded, but tending towards the latter.

The WPC is largely unknown in the non-oil African community. OPEC (Organisation of Petroleum Exporting Countries), on the other hand, is more familiar and largely unkindly thought of by any African who owns a car or lights his or her home with paraffin.

For nearly a week, there was no escaping the daily gush of news and clamour from the congress held at Johannesburg’s Sandton Convention Centre in the city’s swanky northern suburbs.

For four days from 26 to 29 September, nearly a thousand delegates, media representatives and dignitaries from state and industry exchanged views, updated on technical oil and gas extraction and refining matters, and oil companies sharpened their spin on how to convince the world that oil is a beautiful thing.

Not that that was an easy sell. WPC president, Eivald Rřren, told the opening session that a new price level for oil had been established and would be sustained for years to come. “We will hardly see those days of $18-$20 a barrel come back soon. And we will have to live with these new levels for years to come.”

Ayanda Mjekula, chairman of the WPC’s South African National Committee, accepted that the tone of the congress would be set by oil’s rollercoaster ride. “The debate over the price of oil rages on,” he said, “and it is something the world is increasingly concerned about. The Congress offers a real chance to deliberate on some of the solutions to this global dilemma.”

For the most part, it was intensely a members’ affair with more than half the activity given over to techno-speak discussions and workshops, and the rest to panel-led sessions peppered with pronouncements on transparency, good governance and cleaner air through the development of better-burning fossil fuels.

The Congress was also an opportunity for those maligned bodies in the sector to state their case and protest their innocence, and proclaim that they are largely misunderstood by an oil-consuming, air-breathing public.

Responding to British-led charges that oil producers tend to withhold information about reserves, adding to oil-price volatility, Adnan Shihab-Eldin, secretary-general of OPEC (Organisation of Oil Exporting Countries) asserted that “this is not the case at all”. He insisted, “We have been as transparent as you can expect. Where (transparency) can be improved, we will continue to work to improve it.”

Some in the industry want to know whether OPEC members have the financial resources to meet the forecast demand of 110 million to 115 million barrels a day by 2025. OPEC insists it can.

The problem, it argues, is not with the organisation’s members’ ability to make the necessary investment to meet production goals, but that countries don’t want to invest for forecast demand in 2015 when it’s not certain what the demand picture will look like.

OPEC’s most oft-heard refrain was that it does not manipulate prices by turning the oil taps on and off, and that the current spike in prices is the fault of poor planning and underinvestment by refineries, resulting in a lack of capacity to meet demand. And also, the organisation reminded the Congress, prices were spooked by hurricanes Katrina and Rita that lashed both producing platforms in the Gulf of Mexico and refineries on the US gulf coast.

And with those two terrifying weather phenomena coinciding with the Congress, it was fair to look askance at the gathering of oil luminaries who might collectively be to blame, seeing the part their product plays in global warming. It’s spent fuel emission, after all, that heats the atmosphere and creates the climate in which hurricanes thrive.

“There’s no doubt that that the climate is changing and that humans are partly responsible,” Kevin Trenberth at the US National Centre for Atmospheric Research (NCAR) told Time magazine, a sentiment bought into by NCAR meteorologist Greg Holland who noted: “The odds have changed in favour of more intense storms and heavier rainfalls. These are not small changes. We’re talking about a very large change.”

But are the oil industry-induced greenhouse gases to blame? Scientists concede that they don’t know for sure. “The variables are many,” they say.

Considering the fact that oil is a finite resource and sooner, apparently, rather than later, the wells will run dry, not enough discussion – in the opinion of many Congress attendees – was given to debating the forms of energy that will follow it. Christopher Flavin, president of the World Watch Institute, an environmental research body, says the oil industry is seriously underestimating the role of renewable energy resources and called for greater development of fuel derived from such organic materials as maize, sugar and soya, and from wind and solar sources.

Will the industry listen, and will energy consumers care enough to force the pace? Only time will tell.

This report was first published in Energy in Africa Magazine, November 2005 - January 2006. To subscribe click here

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