The west coast of Africa has traditionally been an oil hotspot in the global market, given the presence of Nigeria, Angola, Equatorial Guinea and Gabon, which are ranked among the world’s largest producers. Following the discovery of lucrative oil and gas fields further along the coast however, these experienced players look set to face some competition over the next decade as new producers in the region come on board. So promising are these prospects that analysts have begun to talk of a new oil province that hugs the coast of four countries: Ghana, Ivory Coast, Liberia and Sierra Leone.
This possibility of a hydrocarbon rich future is bringing with it the expectation of an economic renaissance, particularly seeing as these countries, with the exception of Ghana, are classified as some of the least developed in the world.(2) The realisation of this future is in no way guaranteed however, as these new players are facing growing security challenges for which they are ill-equipped in comparison to regional counterparts such as Nigeria and Angola. Major West African security issues, including piracy and terrorism, may therefore stunt the rise of this new oil province before revenues have even started to flow. Until these threats are addressed, the rise of West Africa as a renewed energy hub will remain a pipe dream.
This paper briefly outlines some of the discoveries along the west coast of Africa that have led to the identification of the new oil province in the region. The security risks which may impede West Africa’s second coming in the global oil and gas market are also discussed.
West Africa’s new oil province
In reference to Western Africa’s future in hydrocarbons, one of Africa’s leading energy experts, Dr. Duncan Clarke, recently declared that “no global player or emerging Independent with an international footprint, or even fast growing state oil company, can afford to underrate this world-class Western African play.”(3) This bold statement stems from the current oil rush along the west coast of Africa that has been driven by advances in offshore exploration technology.
One of the first significant discoveries that took place outside of the traditional oil hotspot in waters of the Gulf of Guinea was made by Kosmos Energy in what was believed to be an “unpromising deep water area off western Ghana,”(4) in June 2007. Ghana’s Jubilee oilfield subsequently became one of West Africa’s largest discoveries of the past two decades, further being classified as a world class, long-life production asset.(5) Two years later, a small American firm, Anadarko Petroleum, discovered oil and gas reserves, with the first deep water well drilled in what was said to be equally unpromising Sierra Leone.(6) This find was some 1,000 kilometres (km) away from Kosmos’ Jubilee field, and so unlocked a new way of thinking about the region’s petroleum potential.
By connecting the dots between these two discoveries, international majors and smaller firms have begun to trace a new oil province in the West African Transform Margin, an area between two tectonic plates, extending nearly 1,500 km along the coastline between Ghana and Sierra Leone (see figure 1 below).(7) With such a large area to drill along, the potential for West African oil is now practically limitless.
Figure 1: West African Transform Margin (8)
Ghana, for example, is already producing around 70,000 barrels per day (bpd) of oil from Jubilee field, currently its only operating oilfield, whilst output is expected to reach a 120,000 bpd “plateau” in 2013.(9) The nationwide projected growth path (10) suggests that Ghana stands in good stead to gradually join the ranks of mid-tier African producers such as Cameroon and the Republic of Congo. Notably, annual change in production could see Ghana outpacing some of the minor producers from sub-Saharan Africa within the next three years if more discoveries are brought to light.
In other developments within the new oil province, across the border from Ghana, the Ivory Coast has reported an average daily production of around 44,000 barrels for 2012. Moreover, although slow to come on board, Sierra Leone is estimated to hold reserves off its coast of around 450 million barrels, which is expected to bring in as much as US$ 100 million once production begins.(11) Similarly, Liberians were informed in 2012 that their country did indeed hold vast oil reserves, but that it could take between five and seven years before the first drop of oil is produced.(12)
Given that these discoveries have all been made offshore, the biggest security risk facing these countries is, of course, piracy. According to the Atlantic Council Counter-Piracy Task Force, pirate attacks in the Gulf of Guinea have “become more frequent, more violent, and are occurring father out from shore.”(13) In the first half of 2012, for example, 34 attacks were reported in the waters around West Africa, of which 24 were deemed ‘successful’.(14) This constitutes more than twice the number of attacks that occurred during the same period the previous year. Notably, most of these attacks have involved theft, particularly of large amounts of oil, rather than hijackings for ransom as is usually the case across the continent, off the coast of Somalia.
Piracy attacks have traditionally taken place within Nigerian waters. In 2011, however, such attacks extended further along the coast, to countries such as Benin, Ghana and Ivory Coast. With regard to this development, Oxford Analytica notes that, because Nigeria’s counter piracy efforts have been relatively successful, “one result has been to push gangs further along the West African coast – and further out to sea.”(15) Unlike the regional hegemon Nigeria however, other West African countries, including those of the new oil province, such as Liberia and Sierra Leone, in no way bear the capacity to effectively take on pirates, particularly seeing as many of these states remain weak in their governance, poor and are currently engaged with their own post-war reconstruction efforts.
The second, more indirect, security threat to the rise of new West African oil players is terrorism, particularly terrorism connected with Islamic religious extremism. Part of the reason why there have been significant oil and gas discoveries within the Gulf of Guinea over the course of the past decade lies with a shift in American energy policy post 9/11. In this regard, the United States (US) made a conscious decision to diversify its energy imports under the Bush administration following growing anti-American sentiments and greater instability in the Middle East in the early 21st century. West Africa subsequently became a priority given the attractive properties of its oil, and its geographic proximity to the US making for easy shipping routes. However, the past decade has also witnessed the rise of Muslim militant groups in this corner of Africa where two of the most prominent organisations include Boko Haram in Nigeria and the Al Qaeda in the Islamic Maghreb (AQIM) in Mali and the Sahel.
Although these entities do not operate within the four countries of the new oil province, West African rebel groups, of which there are many, seldom operate individually. Pro-Laurent Gbagbo supporters from Ivory Coast’s civil war of 2011, for example, currently reside in Liberia and Ghana from where they have attempted to launch numerous coups. A recent United Nations (UN) report has further revealed that these groups have been in contact with the Islamic militants that were involved in the revolt in the north of Mali after Malian soldiers toppled the president.(16) These forces have in turn jointly expressed a
n interest in supporting destabilisation operations throughout Western Africa.(17)
Should these rebels target regional infrastructure projects, West Africa’s second rise in the oil and gas industry will be greatly hindered. Even with new reserves lying offshore, the destruction of key facilities, such as oil refineries, remains a growing concern. Insurgents in Ivory Coast, for example, recently hijacked a power station in Abidjan as a clear demonstration of their growing capacity.(18) Cooperation among West African insurgents, particularly with Muslim militants, although minimal at present, may soon serve as a major obstacle to the development of the energy sectors and the future prosperity in the region’s new oil states.
The Gulf of Guinea’s traditional hydrocarbon producers, such as Angola and Nigeria, have always grabbed headlines. However, as advances in offshore technology promise to secure the rise of new regional players in the present decade, a shift in analysis is now required. Given the inflow of millions of dollars of oil revenues over many decades, regional powerhouses boast the capacity to counter security threats outlined above. The new oil players, facing similar challenges, are, on the other hand, starting off from a much lower base. The harnessing of hydrocarbons in Africa’s new oil province therefore seems to be littered with obstacles from the outset. This in turn threatens to derail the planned rise of Ghana, Ivory Coast, Liberia and Sierra Leone to the heights of major players in the global oil and gas market. The oil-producing countries in the region will therefore have to collaborate to offset these challenges before they become insurmountable. One such strategy would be to engage in joint military exercises to boost local capacity, whilst seeking the assistance of global players, such as the US Africa Command (Africom), to curb growing threats. An assessment of these options is imperative and begs future research.
(1)Contact Keri Leicher through Consultancy Africa Intelligence’s Africa Watch Unit (firstname.lastname@example.org).
(2) ‘Human development reports’, United Nations Development Programme, 2011,http://hdr.undp.org.
(3)‘19th Western Africa Oil and Gas Energy’, Global Pacific and Partners, 2012,https://www.petro21.com.
(4) ‘West Africa’s new oil province’, Petroleum Economist, 1 December 2009,http://www.petroleum-economist.com.
(5) ‘Operations: Ghana’, Kosmos Energy website, http://www.kosmosenergy.com.
(6) ‘West Africa’s new oil province’, Petroleum Economist, 1 December 2009,http://www.petroleum-economist.com.
(8) ‘Africa and Kurdistan show great oil and gas potential: Lionel Therond’, Ino.com, 27 October 2012, http://www.ino.com.
(9) ‘Ghana: Oil revenues starting to flow’, Oxford Business Group, 12 July 2012,http://www.oxfordbusinessgroup.com.
(11) Nair, A., ‘Evaluating the case for cash transfers of resource revenues in Sierra Leone’, Oil to Cash Initiative Background Paper, Center for Global Development, May 2012, http://www.cgdev.org.
(12) Rice, X., ‘Oil: Discovery of reserves may be a mixed blessing’, Financial Times, 14 September 2012, http://www.ft.com.
(13) ‘Piracy peril for West Africa’s oil boom,’ United Press International (UPI), 7 March 2012,http://www.upi.com.
(16) ‘Push to destabilize Ivory Coast highlighted,’ IOL News, 10 October 2012, http://www.iol.co.za.
(18) Bavier, J., ‘Gunmen attack Ivory Coast power station’, Reuters, 16 October 2012,http://www.reuters.com.
This article was originally published by Consultancy Africa Intelligence, here and is republished with permission from the organisation.