Despite challenges, Africa seen as future of oil, gas industry

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Despite challenges, Africa seen as future of oil and gas industry
Despite challenges, Africa seen as future of oil and gas industry

Africa has never really had a strong voice in shaping global oil and gas industry despite being home to 8 percent of the world’s proven crude reserves, after Middle East, Latin America, and North America.

This is because the continent is seen as a depot for natural resources; it has no any real control of the natural resources it has been blessed with, and does not consume a large part of the said resources.

Crude oil and natural gas are two of the most important resources extracted in the continent because of the immense economic benefits to be reaped from the exploration and production of crude oil and natural gas.

And experts have postulated that Africa could be the future of the oil and gas industry as most recent discoveries of oil have been made in African countries like Uganda, Kenya, Senegal, Ghana, Congo amongst others, but unless the countries take control by steering their oil and gas industries into the right direction, the resource might continue to be a “curse” rather than a “blessing.”

Guillaume Doane, chief executive officer of Africa Oil and Power in an interview asserted that “we have to be cognizant of the fact that Africa is the future of the oil and gas industry, where are the new oil and gas producers of the world coming from? They are coming from Africa.”

In the past decade, a number of African countries have discovered crude oil and natural gas in viable commercial quantities and are looking forward to exploration and production.

For example, in 2006, Harman Resources discovered commercially viable petroleum reserves in Uganda, and since then a total of 6.5 billion barrels of crude oil have been proven. Also, in Kenya, oil was first discovered in 2012, and the east African country hopes to produce as experts put its reserves estimate between 700 million barrels to 1 billion barrels of crude.

Senegalese government also discovered crude in commercially viable quantity in 2014 between 250 million to 2.5 billion barrels of crude oil.

A step in the right direction which most current and yet to start African oil producers have realized is the importance of forming coalitions. Despite the fact that these oil producers individually don’t produce record levels like the U.S., Saudi Arabia or Russia, it is starting to dawn on them that issues that concern Africa will not be addressed until African producers are seated at the table.

A prime example is the increasing African presence in the organization of petroleum exporting countries (OPEC).

On this Doane said that “we are in a global oil and gas situation, and African producers have realized that it is either you have a sit at the table or you are stuck between what is going in OPEC and North America which is a really push and pull situation, because non-OPEC production has been increased almost year on year since 2010.”

OPEC is a oil and gas cartel comprising 16 countries, from Latin America, Middle East and Africa, 7 out of the 16 countries are African, thanks to Congo the newest member of the group and this change has been described as “unprecedented” by Doane, because despite the fact that large producers will always have more pull, some African producers have never been given the opportunity to partake in that level of international oil and gas markets.

Also, according to U.S Energy Information Administration, currently Africa as a continent still has a small share of the total crude reserves in comparison with Middle East’s 43 percent and Latin America’s 20 percent of the world’s crude reserves, and a united voice is noted to have more pull than individuals.

“I think African producers have recognized the need to join other producers to pursue their strategic interests,” Doane explained.

“Let’s remember that maybe by themselves, Equatorial Guinea, Uganda, Cameroon and other small producers can’t say a lot but together, they put a really powerful message.”

The continent also produces about 10 percent of the world’s crude output, which is a significant amount when it comes to global oil prices; this is another reason for the pressing need for the oil producing economies to forge ahead and take control of their oil and gas industries, experts advised.

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