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Africa’s oil boom shifts balance of power

Telegraph.co.uk

Africa’s oil boom shifts balance of power

In the coming decades, Africa’s oilfields may begin to rival the strategic significance of the Middle East’s reserves. As new discoveries elsewhere steadily diminish, the global balance of oil wealth shifts towards Africa with every passing year.

In the coming decades, Africa’s oilfields may begin to rival the strategic significance of the Middle East’s reserves. As new discoveries elsewhere steadily diminish, the global balance of oil wealth shifts towards Africa with every passing year.

Already, America buys more oil from Angola and Nigeria than it does from Saudi Arabia. Angola, the newest member of Opec, has overtaken Nigeria to become Africa’s biggest producer, turning out almost two million barrels a day.

In the next three years, Angola will probably raise its daily output to match Kuwait’s 2.6 million barrels.

By 2015, America will buy one quarter of all its oil from Africa, compared with about 15 per cent from Saudi Arabia, and the continent will become the superpower’s largest single supplier, with the sole exception of Canada. Two reasons lie behind this crucial change in the global pattern of oil production.

First, Africa possesses a large proportion of the world’s untapped reserves, mainly in offshore fields.

For decades, oil companies steered clear of Africa and conducted relatively little exploration. While new fields were discovered in the Middle East, the Gulf of Mexico, Alaska and South America, Africa was neglected.

Hence Africa now accounts for a high proportion of discoveries. Of the eight billion barrels of new reserves found in 2001, seven billion were in Africa.

While this figure was unusually high, at least one third of all global oil discoveries since 2000 have taken place in Africa, mainly in the Gulf of Guinea along the coastlines of Angola, Nigeria, Congo-Brazzaville, Gabon and Equatorial Guinea.

Thanks to high oil prices, it makes economic sense to develop these new fields and conduct further exploration. Angola’s proven reserves now exceed 11? billion barrels. But there could be two or three times as much oil still lying undiscovered along the country’s vast Atlantic coastline. The central goal of America’s energy policy is to diversify suppliers.

At present, Washington is happy to reduce its dependence on the Middle East by importing steadily more oil from Africa.

Yet by malign chance, the west African coastline is one of the world’s most unstable regions. Nigeria, torn by internal strife and waging an undeclared guerrilla war in the oilfields of the Niger Delta, is already losing at least 25 per cent of its production to sabotage by local militants.

Angola emerged from more than three decades of civil war in 2002.

President Jose Eduardo dos Santos leads a notionally Marxist government busily engaged in stealing and squandering the oil revenues. Angola’s cabinet, steeped in corruption, is filled with Marxist millionaires. Mr dos Santos himself is believed to rank among Africa’s richest men.

Experience suggests that oil bonanzas inflict nothing but harm on African countries. A tiny elite seizes the chance to enrich itself – and virtually nothing trickles down to the poor.

Meanwhile, oil revenues distort the entire economy, discouraging genuine entrepreneurs and undermining every state institution. Civil war becomes more likely because the incentive to take over the country and steal its resources is all the greater.

In the end, few will benefit from Africa’s oil boom. The lives of millions of ordinary Africans will either stay the same or grow worse.

Meanwhile, the world will become increasingly dependent on another deeply unstable, troubled region.

http://www.telegraph.co.uk/news/worldnews/africaandindianocean/angola/2306459/Africa%27s-oil-boom-shifts-balance-of-power.html

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