The New Scramble for Africa

Africa has been at the centre of world interest and competitive power positioning by foreign States, interests and companies, as well as local ethnicities and elites for the last 150 years: from the Original Scramble from 1884 onwards, and through the Cold War and decolonisation.

Africa has now become a cockpit again for a new surge of interests – this time in respect of oil and gas resources as Great Powers, Mid-Range States, African polities and the Corporate Oil interests of global, regional and local players vie for position, privilege and ascendance.

This New Scramble for oil and gas involves a myriad of domestic and outside interests: Super-Majors, Independents, National Oil Companies (from Africa and elsewhere), Local Players, Heads of State, political and commercial elites, middlemen, financiers, lobbyists, contractors and companies of a multitude of types.

World powers (US, China, India Europe) see Africa as a diversified sourcing option against the MidEast, Companies are seeking new venture potential. African States are more reliant on oil now than ever before. Is there really enough oil there for the major importers, and what is future for the companies, and how might this impact the African States ?

Sub-Saharan Africa oil/gas reserve potential is both promising and with greater prospect over 2010-15, and towards 2025.

Global Pacific & Partners has undertaken estimates for Sub-Saharan Africa, and this profile emerges (MMBLS is Million, BBLS is Billion).

In Angola, reserves may be 12-15 BBLS proven and Sonangol has cited potential at 50-70 BBLS. Benin has 100 MMBLS, but the deepwater is untested. Cameroon is under stress and estimates of oil may only be 200-400 MMBLS, with similar potential. Central African Republic has no commercially proven reserves but industry sources indicate potential around 1-2 BBLS. In Chad, 1.0 BBLS is proven and another 1-2 BBLS may await discovery. Congo has suffered reserve downgrades recently but proven oil is around 1.3-1.5 BBLS, and new activity seeks potential of 1.0 BBLS, much in deepwaters. Cote d’Ivoire has recent discoveries with reserves of 500-1,000 MMBLS indicated. In DRC, 100 MMBLS may be proven now with potential at 150 MMBLS. In Equatorial Guinea, some 2-3.0 BBLS may have been proven, with potential possibly at 2-3.0 BBLS. Eritrea and Ethiopia have neither proven oil nor clear image of oil potential evident. Gabon has suffered decline, and 2.6 BBLS exists but with potential for another 5.0 BBLS. No oil has been discovered in The Gambia but claims of potential at 100 MMBLS are made. In Ghana, 50 MMBLS is likely now, with unclear potential for more. Guinea has no proven oil to date. In Guinea-Bissau, the Dome Flore may have 1.0 BBLS of Heavy Oil. Kenya remains a frontier with no proven reserves and potential is officially put up to 2.0 BBLS, a claim to be tested. Liberia has delineated offshore blocks and some place potential at 100-200 MMBLS. Madagascar has recorded Heavy Oil finds, suggesting potential up to 500-1,000 MMBLS. No one expects oil in Malawi now. Mocambique has been a gas play. Mali has no proven oil but one company reckons potential at over 2.0 BBLS. Mauritania has some 300 MMBLS and potential might reach 1.5 BBLS in time. In Namibia, it has been gas. In landlocked Niger, some 350 MMBLS exist, yet to be commercialised, and potential might be 1.0 BBLS. Nigeria’s Government reports 33 BBLS now with 40 MMBLS expected by 2007, and potential somewhere around another 25-40 BBLS to 2025. Rwanda only has methane gas in Lake Kivu. In Sao Tome & Principe, the talk is of 4-8 BBLS potential, untested. Senegal has only 10 MMBLS and an 85% share of Dome Flore. Seychelles has not shown any oil reserves. Sierra Leone is just starting to award blocks, and potential is unknown. Somalia is mostly under force majeure, has proven oil and potential, perhaps 100 MMBLS within ready reach in the near term, some saying 1.0 BBLS longer term. South Africa’s oil reserves stand around 40-50 MMBLS and potential is touted by State agencies at 1.0 BBLS in time. In Sudan, proven oil may be at 2.5 BBLS, and growing from recent discoveries, with potential up to 8-12 BBLS. Tanzania has been a gas play with deepwater under examination and potential at say 500 MMBLS. Togo has had no luck. In Uganda, operators reckon potential could reach 650 MMBLS. Zambia is a long shot. Zimbabwe has no hope.

These imperfect estimates suggest proven oil in Sub-Saharan Africa might measure 56-60 BBLS now. This is still not a new MidEast.

Yet, Africa’s geopolitical locus and character have attributes that make it an attractive hunting ground. For the long-term, the upside might be the main prize, with oil potential to 2025 possibly in the range of 100-120 BBLS - this considerable even on a discounted basis.

Over 2003-2025, Africa will witness new basin openings, new discovery zones, basin maturations, a more extensive deepwater game, greater testing on interior basins, and more countries becoming oil producers. Some traditional stars will fade by 2025 (Cameroon, Gabon) or well before, to rely more on EOR, marginal field deals, and the intensive exploitation of old fields to sustain volumes and oil status.

In the Maghreb, sizeable oil reserves are found: Algeria has 10-12 BBLS, Egypt some 3.5 BBLS, Libya the largest with 30 BBLS, Morocco only a miniscule 2 MMBLS, and Tunisia around 320 MMBLS. Here another 44 BBLS appears on the Africa-wide radar screen, with upside and future potential substantial, especially if and when Libya might be fully re-opened.

With different oil producers, no OPEC-Hawks (Nigeria may leave the fold), a myriad of exploration landscapes, and more countries open, Maghreb and Sub-Saharan Africa is witnessing a New Scramble for oil and gas. Shifting geopolitical realities reinforce this trend, and may do so more in future

The period 2004-2010 will be a major development phase in the key producer countries, especially in offshore and deepwater zones, and interest will be high in the ultra-deep, with EEZ openings. Large discoveries will encourage this pattern.

The opening of North West Africa is still in its early days, and likewise Eastern African deepwaters. These areas will capture increased attention in time, as will Rift Valley ventures.

In future much of Africa will be a deepwater game, and the Continent will in effect bifurcate further into deepwater and interior basin plays, as the shallow offshore becomes more mature and subject to exploitation deals.

Now the African Oil Locomotive has arrived at the station. It is the main generator of economic change and growth on the Continent. Oil’s relative scale by weight of foreign investment, revenues, fiscal receipts, strategic import, regional spread, and potential impacts, dwarf any other industry upon which the Continent relies.

Will it though be able to carry the African train along the track ? Or will the Oil Locomotive steam off on its own to leave an Africa in 2025 that has had its oil day, having exploited the best of its promising but ultimately limited hydrocarbon potential ? Indeed, will Africa be found floundering in Year 2025 as it is in 2003 ?

The answer to this domain question – maybe the key one for Sub-Saharan Africa, a world adrift – lies in the interactions of global competitors in the current Scramble for Africa (Super-Majors, Independents, Governments), and the highly turbulent terrain of competition landscapes in which this Great Oil Game is to be played out.

Dr. Duncan Clarke, Chairman & CEO, Global Pacific & Partners, The Third Scramble For Africa: Origins, Insights & Dynamics To 2025. Contact: Tel: 44-207.487.3173

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