Post by upfromsumdirt on Oct 3, 2006 15:38:04 GMT -5
the source: www.pinr.com/report.php?ac=view_report&report_id=460
''The Increasing Importance of African Oil''
frica is becoming an increasingly important factor in global energy markets. By the end of the decade, the continent's significance will rise dramatically. Africa currently contributes 12 percent of the world's liquid hydrocarbon production, and one in four barrels of oil discovered outside of the U.S. and Canada between 2000 and 2004 came from Africa. IHS Energy, an oil and gas consulting firm, calculates that Africa will supply 30 percent of the world's growth in hydrocarbon production by 2010. West Africa's low-sulfur oil is highly desirable for environmental reasons, is readily transported to the eastern U.S. seaboard, and can be easily processed by China's refineries.
Fifteen percent of U.S. oil imports come from Africa; by 2010 this could reach 20 percent. In this decade, US$50 billion will be invested in the Gulf of Guinea's energy sector, according to a recent report by the Council on Foreign Relations. While U.S. companies will account for 40 percent of this investment, other major players -- particularly state-owned energy companies -- will play a critical role in determining the shape of Africa's energy industry. From 1995 to 2005, national oil companies more than doubled the number of licenses they hold in Africa, from 95 to 216. China's energy firms are the largest state-owned investors, but India has also made significant investments and is looking to expand its presence in the region.
However, political instability, criminal syndicates and terrorism threaten growth in the region. These factors are the main reason the region's hydrocarbon industry has not fully developed in the past, but as China and India demand more oil and gas to fuel their rising economies and as major oil fields reach maturity in other regions, Africa's oil and gas supplies have become more attractive investments.
The rise of Africa's energy industry is changing the geopolitical landscape of the region. The West has found its leverage in the region challenged by China's willingness to invest in oil-producing states in order to ensure Beijing's energy security. For instance, a $2 billion low-interest loan from China has all but scuttled the International Monetary Fund's (I.M.F.) attempts to tie economic assistance to reform in Angola. In other areas, China and the West find their interests aligned, such as on the north-south peace accord in Sudan. In the coming years, Washington will be forced to adjust its policies toward Africa in order to compensate for China's rising influence.
China's Influence in Africa
China has been involved in Africa since before the 1960s, but, recently, the nature and level of its involvement has changed. China is primarily invested in Africa in order to secure access to the region's natural resources to fuel its expanding economy. Beijing is outbidding Western contractors on infrastructure projects, providing soft loans, and using political means to increase its competitive advantage in acquiring natural resource assets in Africa. [See: "Sino-U.S. Energy Competition in Africa"]
China's deputy foreign minister famously told the New York Times, "Business is business. We try to separate politics from business." This statement is not strictly true; China uses politics for different aims than does the West. China uses its geopolitical position in order to gain access to natural resources around the world without regard to the domestic political situation where these resources are located, making China an attractive partner for many countries marginalized by the Western powers for internal strife, corruption, and human rights violations.
India, South Korea, Malaysia and Brazil are following China's lead. China, however, also has an asset that these other states cannot exploit -- a permanent seat on the U.N. Security Council. Beijing's willingness to use its seat to protect states from international sanctions is welcomed in a region not lacking in egregious violations of international law and is undermining Washington's influence in Africa. This can be seen in Sudan, where Beijing has helped to prevent any meaningful Security Council resolution from emerging that would help to end the conflict in the Darfur region. [See: "The Darfur Question at a Time of Increasing U.S.-China Competition"]
Beijing has not shied from investing in countries that are being marginalized by the West in order to secure access to energy sources. In other regions, China has repeatedly lost contracts to large, multinational corporations. Russia's Siberian reserves were once thought to be all but wrapped up in a deal for China, but now Japan may win the contract. The Chinese National Offshore Oil Corporation's (C.N.O.O.C.) attempt to gain control of Unocal collapsed under pressure from the U.S. Congress. Such failures have pushed Beijing to take risks in unstable countries that it may not otherwise pursue, in part to avoid competition from the major multinationals.
The Financial Times reported on February 28 that Nigeria is shifting its sourcing for military equipment to China because U.S. concerns about corruption within the Nigerian security forces have delayed the delivery of equipment. In July 2005, China signed an $800 million crude oil agreement with Nigeria, and Beijing is considering $7 billion worth of investments in Nigeria. Ethiopia called China "its most reliable [trading] partner" after Western states criticized its recent election irregularities and its continuing border dispute with Eritrea. A Chinese company, earlier this month, started drilling the first exploration well in the Gambella basin, west Ethiopia. Angola has delayed implementing I.M.F. recommendations after receiving a $2 billion soft loan from China. China recently won the rights to oil-exploration blocks in Angola away from Total and Shell.
China, now the world's second-largest importer of oil, imports 28 percent of its oil from Africa, mostly from Sudan, Angola, Congo, and Nigeria. In each of these countries, a similar pattern emerges: China moves in after Western companies are forced to pull out because of domestic pressure, thus undermining the ability of Western countries to use economic isolation and economic aid to influence the policies of the oil-producing countries. China, however, is also buying oil that would otherwise be taken off the global market, which effectively reduces the price of oil for all oil-importing countries.
''The Increasing Importance of African Oil''
frica is becoming an increasingly important factor in global energy markets. By the end of the decade, the continent's significance will rise dramatically. Africa currently contributes 12 percent of the world's liquid hydrocarbon production, and one in four barrels of oil discovered outside of the U.S. and Canada between 2000 and 2004 came from Africa. IHS Energy, an oil and gas consulting firm, calculates that Africa will supply 30 percent of the world's growth in hydrocarbon production by 2010. West Africa's low-sulfur oil is highly desirable for environmental reasons, is readily transported to the eastern U.S. seaboard, and can be easily processed by China's refineries.
Fifteen percent of U.S. oil imports come from Africa; by 2010 this could reach 20 percent. In this decade, US$50 billion will be invested in the Gulf of Guinea's energy sector, according to a recent report by the Council on Foreign Relations. While U.S. companies will account for 40 percent of this investment, other major players -- particularly state-owned energy companies -- will play a critical role in determining the shape of Africa's energy industry. From 1995 to 2005, national oil companies more than doubled the number of licenses they hold in Africa, from 95 to 216. China's energy firms are the largest state-owned investors, but India has also made significant investments and is looking to expand its presence in the region.
However, political instability, criminal syndicates and terrorism threaten growth in the region. These factors are the main reason the region's hydrocarbon industry has not fully developed in the past, but as China and India demand more oil and gas to fuel their rising economies and as major oil fields reach maturity in other regions, Africa's oil and gas supplies have become more attractive investments.
The rise of Africa's energy industry is changing the geopolitical landscape of the region. The West has found its leverage in the region challenged by China's willingness to invest in oil-producing states in order to ensure Beijing's energy security. For instance, a $2 billion low-interest loan from China has all but scuttled the International Monetary Fund's (I.M.F.) attempts to tie economic assistance to reform in Angola. In other areas, China and the West find their interests aligned, such as on the north-south peace accord in Sudan. In the coming years, Washington will be forced to adjust its policies toward Africa in order to compensate for China's rising influence.
China's Influence in Africa
China has been involved in Africa since before the 1960s, but, recently, the nature and level of its involvement has changed. China is primarily invested in Africa in order to secure access to the region's natural resources to fuel its expanding economy. Beijing is outbidding Western contractors on infrastructure projects, providing soft loans, and using political means to increase its competitive advantage in acquiring natural resource assets in Africa. [See: "Sino-U.S. Energy Competition in Africa"]
China's deputy foreign minister famously told the New York Times, "Business is business. We try to separate politics from business." This statement is not strictly true; China uses politics for different aims than does the West. China uses its geopolitical position in order to gain access to natural resources around the world without regard to the domestic political situation where these resources are located, making China an attractive partner for many countries marginalized by the Western powers for internal strife, corruption, and human rights violations.
India, South Korea, Malaysia and Brazil are following China's lead. China, however, also has an asset that these other states cannot exploit -- a permanent seat on the U.N. Security Council. Beijing's willingness to use its seat to protect states from international sanctions is welcomed in a region not lacking in egregious violations of international law and is undermining Washington's influence in Africa. This can be seen in Sudan, where Beijing has helped to prevent any meaningful Security Council resolution from emerging that would help to end the conflict in the Darfur region. [See: "The Darfur Question at a Time of Increasing U.S.-China Competition"]
Beijing has not shied from investing in countries that are being marginalized by the West in order to secure access to energy sources. In other regions, China has repeatedly lost contracts to large, multinational corporations. Russia's Siberian reserves were once thought to be all but wrapped up in a deal for China, but now Japan may win the contract. The Chinese National Offshore Oil Corporation's (C.N.O.O.C.) attempt to gain control of Unocal collapsed under pressure from the U.S. Congress. Such failures have pushed Beijing to take risks in unstable countries that it may not otherwise pursue, in part to avoid competition from the major multinationals.
The Financial Times reported on February 28 that Nigeria is shifting its sourcing for military equipment to China because U.S. concerns about corruption within the Nigerian security forces have delayed the delivery of equipment. In July 2005, China signed an $800 million crude oil agreement with Nigeria, and Beijing is considering $7 billion worth of investments in Nigeria. Ethiopia called China "its most reliable [trading] partner" after Western states criticized its recent election irregularities and its continuing border dispute with Eritrea. A Chinese company, earlier this month, started drilling the first exploration well in the Gambella basin, west Ethiopia. Angola has delayed implementing I.M.F. recommendations after receiving a $2 billion soft loan from China. China recently won the rights to oil-exploration blocks in Angola away from Total and Shell.
China, now the world's second-largest importer of oil, imports 28 percent of its oil from Africa, mostly from Sudan, Angola, Congo, and Nigeria. In each of these countries, a similar pattern emerges: China moves in after Western companies are forced to pull out because of domestic pressure, thus undermining the ability of Western countries to use economic isolation and economic aid to influence the policies of the oil-producing countries. China, however, is also buying oil that would otherwise be taken off the global market, which effectively reduces the price of oil for all oil-importing countries.
