Is Africa the next oil giant?

Mar 23, 2006 01:00 AM

by Lynn Bolin

The Director General (DG) of the country's Department of Minerals and Energy, Sandile Nogxina, has called for increasing investment in energy resources on the African continent and the creation of an intra-African energy trading market. Speaking at the opening of the Oil Africa 2006 conference and exhibition in Cape Town, Nogxina noted that the "time to invest is now" in the energy sector, given the strong demand and weak supply conditions.
"The return to investment in the energy sector is at an all-time high," he told conference participants. "The time for cheap oil is over. Africa must invest in the acquisition of energy resources to secure these resources."

He also called on governments to explore the possibility of developing an intra-African market for trading energy, based on individual African countries' needs.
"Global primary energy demand is expected to rise by two-thirds over the next three decades -- this will include rising demand from African countries as their economies expand and require more energy resources. The time to invest is now in the sector," stated Nogxina. He noted that the African continent currently accounted for 7 % of global energy resources and 10 % of output. Discoveries of new reserves were on the rise as well, meaning Africa could only become more important as an energy source for the rest of the world.

Meanwhile, conference keynote speaker Rodney Ellis, a Texas State Senator and member of the US National Commission on Energy Policy, pointed out that US President George Bush had called for 27 % of US crude oil supplies to come from Africa as part of the country's supply diversification policy in his February State of the Nation address. He believed that there was currently a competition for Africa's energy resources underway between China on one side and the West on the other. China had recently signed two oil supply agreements with Angola in its quest to secure steady energy supplies for its rapidly growing economy, he pointed out.
"China's influence will make Africa even more important in terms of supply of oil and gas globally," he commented.

Ellis also noted that West African oil and gas exploration and production operations centred on the Gulf of Guinea could learn much from historical events in the Persian Gulf, thus avoiding the pitfalls seen in that region of the world over the past three decades. He mainly called for transparency in the West African oil and gas industry, "so everyone would know where the money comes and goes".
He also said the offshore nature of much of the West African oil and gas resources meant they were better positioned than their in-land counterparts in the Middle East for easy, less costly transport.

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