China eyeing biggest new finds
By Richard Valdmanis
DAKAR, Nov 25 (Reuters) – African oil output will rise sharply in the coming years if new projects start up as expected and tensions continue to ease in heavyweight supplier Nigeria.
The outlook raises the continent's already high profile on the global market, dangles the prospect of increased development in some of the world's poorest nations, and promises to intensify a race for control of African reserves.
"Over the medium to long term we'll see the importance of African oil grow significantly," said Thomas Pearmain, analyst for IHS Global Insights in London.
"The recent big finds have created a lot of excitement and we're already seeing majors and national oil companies, including China, compete to lock it up," he said.
Oil output across the continent is expected to rise 6 percent by 2011, according to a Reuters poll of analysts, company reports, and government statements, with the bulk coming from sub-Sahara's top producer Nigeria where a rebel armistice is expected to reduce attacks on infrastructure.
"If the rabbit can be pulled out of the hat in Nigeria, we'll be looking at a fairly rapid uptick," said John Marks, director of consultancy Africa Energy in London.
Attacks on the oil industry in Nigeria's restive Niger Delta, where rebels have complained of unequal distribution of oil wealth, regularly knocked out 700,000 barrels per day of crude production prior to the government's offer in October of amnesty to fighters who laid down their arms.
Analysts are also looking at ambitious projects in Angola that could add between 0.5 and 1.0 million barrels to the nation's current 1.8 million barrels of daily output over the next five years.
Further out, this year's headline-grabbing finds in Ghana, Sierra Leone, and Uganda raise the possibility of a further continent-wide boost through 2015 that could raise Africa's share of the world market to 15 percent from 12 currently.
"This is significant for the United States, trying to diversify its sources of oil, and it is significant for China, which is poised to compete more forcefully with some of the traditional players in the market," said John Ghazvinian, author of Untapped: the Scramble for African Oil.
(For a graphics on African oil output projections, click here: http://graphics.thomsonreuters.com/119/AF_OILPRD1109.gif http://graphics.thomsonreuters.com/119/AF_OILSHR1109.gif )
RACE IS ON
The continent's new finds have already attracted the attention of the world's biggest private and state-owned energy companies – reflecting a sense that a big part of the world's energy future lies beneath African soil and water.
Among the biggest discoveries, the Jubilee field off the coast of Ghana has sparked a battle among oil giants from Exxon Mobil to China's CNOOC for a stake put on the auction block by privately-backed Kosmos.
First production from the Jubilee field, estimated to hold a billion barrels of crude, is scheduled for the end of 2010 with production of 120,000 barrels per day likely within the first six to 12 months, analysts have said.
Exploration companies Anadarko and Tullow, meanwhile, have also tapped potentially massive reservoirs further West in the Gulf of Guinea off Sierra Leone and Liberia that analysts say could open up a new productive frontier.
In East Africa, the industry has found large reserves under the Ugandan side of Lake Albert that the government hopes will produce commercial quantities of oil beginning in 2010 or 2011 — though output will be limited until pipeline or refining infrastructure is built.
Italian major ENI this week bought into the Ugandan find with a $1.5 billion purchase of Heritage Oil's interests, while China is reportedly in talks with the government on a refinery deal.
Many other mature oil producers in Africa, including Gabon and Equatorial Guinea, are adding new fields more slowly but still fending off significant declines.
The prospect of additional petrodollars in Africa has raised hopes for increased development in some of the world's most impoverished nations, deeply in need of revenues to fund infrastructure and education.
But it has also raised fears of deeper political unrest if the wealth is not distributed.
"The great tragedy of this is how little any of the oil has so far helped Africa's people," said Ghazvinian.
