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Oil and Gas in Congo
Congo's economy consists mainly of village agriculture, an urban informal sector or "grey economy" (i.e. unregulated business, commercial,
and service activities), and an industrial sector dominated by oil and oil-related services with few linkages to the rest of the economy. Since
the 1980s, the oil industry has provided the major share of government revenues and exports, replacing timber production and exports as
the principle growth sector. Oil accounts for about 67% of Congo's real gross domestic product (GDP) - about 78% of the government
budget - and about 95% of Congo's export earnings.
In spite of its oil wealth, Congo has experienced budgetary shortfalls as a result of public sector expenditures, slumps in world oil prices
(1998-1999), and armed conflicts (1997, 1998-1999, and 2002). Congo's business and administrative infrastructure was badly damaged
during the recurrent fighting, increasing the petroleum sector's dominance of the economy (since oil production was not directly harmed by
the fighting). Rebel attacks and subsequent shut-downs along the CFCO railway, which runs from the port of Pointe Noire to the capital
Brazzaville and the interior, severely curtailed the movement of goods and people. Economic activity was further hampered by the fact that
over 800,000 Congolese, nearly 30% of the population, fled their homes during the conflicts.
The Congo is the fifth largest oil producer in sub-Saharan Africa, producing an average of 222.1 thousand barrels of crude oil per day in
2007, 0.29% of the world total and a change of -15.3 % compared to 2006 (2008 BP Statistical Energy Survey). Oil accounts for a large
portion of Congo's GDP and the majority of the country’s exports. According to the 2008 BP Statistical Energy Survey, Rep. of Congo
(Brazzaville) had proved oil reserves of 1.94 billion barrels at the end of 2007 or 0.15 % of the world's reserves. The Congo also has large
reserves of associated natural gas. Congo is one of the West African countries where Energy Africa is active. Congo contains the fourth
largest proven natural gas reserves in sub-Saharan Africa.
The downstream oil industry is also an important element in the country's economy. The oil industry is predominantly run by foreign
companies and is centred on the coastal city of Pointe Noire where the Congolaise de Raffinage (Coraf) operates the 21,000 bpd Pointe
Noire refinery. The refinery has been out of commission for four years and has only recently started operating again.
The labour situation in the Congo is sensitive and investors should consider this. Obligations on employers are considered onerous and
political restructuring is largely dictated by organised labour. Despite the potential barriers to investment in the Congolese oil industry,
however, the sector is experiencing a period of growth.
DR Congo Ready to Profit From its Oil
Resources.
Kinshasa, 7/04/2007
It is time DR Congo awakens and draws from the consequent incomes of its oil resources. As much as Angola, Congo-Brazzaville or
Gabon, the DRC, located on the same perimeter of coast, must exploit its oil resources fully. From this point of view, a commission on the
development of laws on hydrocarbons has just been installed. Beyond the need for a code for the oil industry, the DRC must include its
sovereignty in the management of its oil resources.
By a decree signed last on Thursday April 5, the Minister for Hydrocarbons, Mende Lambert, set up a Commission in charge of the
development of the Code of Hydrocarbons for the DRC and its application.
In the long term this text will be a law of the government of the Republic. This Commission is chaired by the Minister for Hydrocarbons and
composed of five experts of the ministry, two from the presidency of the Republic, two of Primature, one of the ministry for Justice, and four
of the teaching staff from the universities. This team of experts has a one year renewable mandate.
As such, it is time the DRC is committed to working out an outline law on the management of its hydrocarbon resources as much as it is
time that the policies give a strong signal on the need for a beneficial policy to the DRC and the Congolese. Indeed, at the time when the
creed of the modern government is good governorship and durable development, it is time to cease the opacity which exists in the
exploitation of the DRC's oil resources . Also, it is not acceptable that the local communities livingin misery are given social and
environmental impacts only in the zones where oil companies carry on their activities .
The DRC contains 6% of the oil reserves of Africa, according to data's available. (Emphasis mine-Editor.) However, up to now, oil
exploitations are made only in the coastal basin, work in the Central Basin and the basins of the western branch of the East-African Rift are
still only at the exploration stage. It should be noted that to exploit its oil, the DRC chose concession agreements with economic operators
of the sector who, for the majority, are multinationals. According to certain analyses, these are the agreements which are at the base of the
climate of secrecy that surrounds the exploitation of Congolese oil.
In his book “Oil Industry in DRC”, Jose Bafala, noted that “the DRC controls neither the produced quantities nor the prices. In the same
way, the communities living in the immediate environment of the sites of exploitation bathe in poverty while these oil companies thrive."
In his work, the author showed the weakness of oil agreements signed in DRC and called for a rationalization of the agreements in the
future.
THE CONGOLESE OIL CIRCUIT
Oil activities in DRC are organized around exploration/production, refining, transport, storage, and distribution of the petroleum products. To
date, the hydrocarbons in the upsteam sector are controled by Ordinance law N° 81-013 of April 2, 1981, which regulates the granting of
mineral rights by convention. They are granted only to moral people whose goals are limited to the recognition, he exploitation and refining
of hydrocarbons without causing damage to the rights of state-owned property.
The individuals of the upstream oil chain in DRC are respectively, the State which plays the part of regulator, dictates the laws and also
proceeds to the control of their applicability and the multinationals. They are associated with the acquisition of the licences in the zones
open to exploration/production on the three sedimentary basins (coastal basin, Central Cuvette, Albertine Grabens and Tanganyika). The
State holds 20% stakes in each operational company. To date, three oil conventions are in force in the only coalfield, the coastal basin,
located in the west of the DRC.
The national company has, inter alia like mandate, the application of the national oil policy in this sector of exploration/production. It must
develop its activities, alone and with joint ventures. It is within this framework that it participated in the PERENCO REP-LIREX association.
The companies supporting the petrolum business, made up mainly of a multitude of sub-contracting international companies, ensures
various support services for the exploration/production of patents of mining claims.
Downstream, the activities obey a common de jure system. The State regulates economic activities in connection with the marketing of
petroleum products. The prices are fixed by the Ministry for the Economy after dialogue with the commercial companies. Here, there are
several categories of companies: multinational subsidiary companies gathered in GPDPP (Professional body of the distributors of
petroleum products), COBIL (a limited liability company born of ashes of the MOBIL OIL company), CONGO-OIL (a Swiss limited liability
company [X-OIL: 50%] and Congolese [COHYDRO: 50%]), SONANGOL (a limited liability subsidiary company of the Angolan company
SONANGOL in which the Congolese State holds 40% stakes) and COHYDRO, the Congolese state company.
DRC: Oil Palm Invasion Era
Thursday, 06 January 2011
Palm oil is the most consumed vegetable oil in the world (25%) - 42 million tons in twelve months in 2008-2009 according to USDA). It is
now used primarily by the industry: 80% in food, cosmetics 19% and 1% for bio-fuels. But palm oil is particularly preferred for its low
production cost. The yield per hectare of palm oil is indeed ten times higher than soybeans. 100 kg of fruit yields about 22 kg of oil”.
If ethnic rivalry in the DRC has attracted worldwide attention, fighting for the economic wealth of this country, which was the largest exporter
of cobalt, the fourth largest exporter of diamonds and one of the top ten world producers of uranium, copper, manganese and tin, still
remain hidden. In 2009 the State Minister of Agriculture, Fisheries and Livestock had signed, on behalf of the DRC, a Memorandum of
Understanding with the Chinese company ZTE Telecommunications International, which is a project of production and operation of the
palm oil. At a cost of one billion U.S. dollars, this project will extend over three million hectares in the Bandundu and Equateur provinces,
Orientale Province and part of the province of Kasai West. Today, society Atama Plantation of Malaysia will invest 300 million dollars to
develop 470.000 hectares, including 180 000 of palm groves, and 290. 000 for ancillary industries, for industrial production of palm oil
estimated at 90. 000 tonnes per year ", in northern Congo, said Minister of Agriculture, Rigobert Maboundou. The Minister concluded with
the CEO of the Malaysian company, Seong Yong Chua, a concession contract to operate an agro-industrial palm oil activity for 15 years.
The areas to exploit, said the minister, are spread over the regions of Cuvette (north) and Sangha (North-western). Mr. Seong Yong, for its
part, said that "Atama Plantation provides for the development of downstream industries such as edible oils and pharmaceuticals. He
added that plantation development will create 20. 000 jobs in the regions concerned. Until then Malaysian companies were present in the
Congo in forestry, especially in the South. The Congo has 10 to 12 million hectares of usable land. But its food imports are estimated by
FAO at 198 million Euros per year. However, What does not emerge from the foregoing is that the expansion of palm oil is one of the main
causes of deforestation, leading to significant changes in land use and resources, radical changes in vegetation and local ecosystems, with
substantial investment and new infrastructures, movements and relocation of populations to large changes in the local and international
trade that affect local communities.
Congo Wants Oil, Gas Pipelines From Eastern
Border to Atlantic
By Michael J. Kavanagh - Feb 16, 2011 9:05 AM GMT+0200
Democratic Republic of Congo wants to build a pipeline network to transport oil and natural gas from the east of the country to the Atlantic
Ocean, Oil Minister Celestin Mbuyu said.
The Central African country is aiming to increase its oil production and is currently allocating blocks of land to companies for exploration. In
October Congo signed an accord with Uganda and Kenya to study the construction of a pipeline that will transport crude oil from deposits
near its eastern border to ports on the Indian Ocean. Congo’s only coast is on the Atlantic.
The Ugandan pipeline is a temporary solution, Mbuyu said in an interview on Feb. 14 in Kinshasa, Congo’s capital. “In the long term, we
want an integrated industry. We need a network of pipelines for gas and oil” to the Atlantic. Congo’s main ports are Banana on the Atlantic
coast and Matadi and Boma, on the Congo River, which flows into the Atlantic.
Congo currently produces about 25,000 barrels of oil a day and plans to increase production through drilling near its eastern borders with
Tanzania, Burundi, Rwanda, and Uganda, as well as in its central basin and along its western coast bordering Angola. The distance
between the eastern deposits and the Atlantic coast is about 2,150 kilometers (1,336 miles).
Angola is the second-biggest oil producer in Sub-Saharan Africa after Nigeria and Uganda will begin exporting oil from estimated reserves
of 2.5 billion barrels next year from wells owned by Tullow Oil Plc. Most of Uganda’s reserves lie in a geological feature known as the
Albertine Graben, which straddles its border with Congo.
Methane Gas
Eni SpA of Italy bought a stake in an oil block owned by Surestream Petroleum Ltd. last year, and Paris-based Total SA is expected to
complete a deal shortly with South Africa’s SacOil Holdings Ltd. for a percentage of its oil block along the Ugandan border, Mbuyu said.
The pipeline network may take 15-20 years to build, need financing from oil companies and the country would also want to establish
refineries both in the east and west of the country, he said.
Congo and Rwanda are also nearing an agreement to exploit methane gas under Lake Kivu, Mbuyu said.
“We think we’ll make a call for offers soon and we’re looking for a serious company,” he said, without giving more detail.
The project will generate about 200 megawatts of electricity, distributed equally between both counties, a Feb. 11 statement e-mailed by
Rwanda’s ministry of infrastructure said.
Congo is recovering from more than 40 years of dictatorship and war. The country was ranked the 175th most difficult country in the world
in which to d0 business according to rankings compiled by the World Bank that surveyed 183 economies.
Last year, Congo’s senate passed a new oil code that will regulate the industry and should increase investment, Mbuyu said. The code is
now under consideration by the country’s national assembly.
Total eyes Congo JV with Tullow Oil
Tue Mar 16, 2010
* Total wants to replicate proposed Uganda deal in Congo
* Tullow, DIG both claim valid licences to Block 1
* DIG has paid $4.5 million signature bonuses, Tullow $500,000
* Several oil companies still await presidential decrees
By Katrina Manson
KINSHASA, March 16 (Reuters) - France's Total wants to explore for oil in eastern Democratic Republic of Congo with Britain's Tullow Oil,
a company official said, potentially boosting the latter's bid for key blocks there.
"The idea is to partner with Tullow in Congo just as we are in Uganda," Philippe Hergaux, project director for new ventures and asset
management at Total, told Reuters by telephone from Paris late on Monday following a visit to Kinshasa.
Total and Tullow last week agreed a three-way deal with China's CNOOC over Tullow's Uganda oil assets, subject to government approval,
to up output from three Ugandan oil blocks on Lake Albert, which straddles Congo and Uganda.
Congo has parcelled its own adjoining oil-rich zone into five blocks along Lake Albert and further south, but several companies have been
waiting years for exploration licences to be ratified and some are contested.
"The presence of Total will help solve the situation for the best of the country and we will help the government to settle these issues," said
Hergaux. "There is three years of delay compared to what has been done in Uganda."
Tullow has been in the running for Congo Blocks 1 and 2 with partner Heritage Oil.
"We are not looking to exit DRC, we are not selling our interest," Paul Atherton, Chief Financial Officer of Heritage Oil, which would have a
39.5 percent stake in the two blocks with Tullow Oil on the Congo side, told Reuters.
"If Tullow is looking to reduce its interest and sell a portion to Total it would just mean a (another) company would come in on the licence,"
said Atherton of Total's interest.
Among competitors for Congo's blocks is Divine Inspiration Group (DIG), part of a South African consortium that paid $4.5 million in
signature bonuses for Blocks 1 and 3.
"Any third party laying claim to Block 1 is misrepresenting the current status," said Andrea Brown, CEO of DIG and director of SacOil, in an
email to Reuters. "...(W)e have validly executed and legitimate rights and we are confident the DRC government will respect our contracts."
DIG says its consortium, backed by Investec Bank and JSE-listed SacOil Holdings, with South African state oil company PetroSA as its
technical partner, is ready to spend $200 million on exploration over three years, pending a presidential decree.
Tullow's deal for Blocks 1 and 2 was cancelled in 2007 after the government said it was signed with an unauthorised deputy minister and
that its $500,000 signature bonus could not cover both blocks at once.
In 2009, however, a mining minister who has since been replaced announced Tullow had been given back its concession.
"Tullow signed a contract for Blocks 1 and 2 in 2006, and still awaits the sanction from President Kabila," Tullow spokesman Tim O'Hanlon
told Reuters by telephone, declining to comment on the proposed partnership with Total.
ENI
Italian oil major Eni could also be in the running for Congo oil assets. The company signed a strategic deal with Congo in August last year,
naming northern Kivu and the great lakes, which include Lake Albert and Lake Edward.
Eni, which pulled out of a deal to buy Heritage Oil's assets in Uganda last month, declined to comment.
Congo Oil Minister Celestin Mbuyu, new to the post following a cabinet reshuffle last month, said discussions underway would result in a
positive conclusion, but declined to add details.
"Usually we would expect oil majors to come in much later, but it's going to be very expensive so it needs majors with long pockets," Jon
Marx, editorial director of African Energy newsletter, told Reuters, citing Lake Albert's remote shores.
Total said Congo stands to benefit from "synergies" should the same team take on both sides of the lake, but detractors said Congo would
risk losing out to a monopoly controlled by the Uganda side.
"(President) Kabila knows that however much you do on mining, the real game-changer is oil and I think he's watching it like a hawk and
that's why he is taking his time," said Marx.
Democratic Republic of Congo's oil output
Thu Aug 14, 2008
(Reuters) - Democratic Republic of Congo held its first oil and gas conference this week, seeking to boost investment in a sector dwarfed
by huge amounts of money pouring into the country's mining industry.
Congo began exploring for oil in the 1960s and started offshore production in 1975, reaching a peak of 27,000 barrels per day in 1984.
Onshore production began in 1980, peaking in 1986 with eight fields in production.
In 2007, the former Zaire produced roughly 25,000 barrels of oil per day. Here are some facts about companies involved:
PRODUCTION
Production is dominated by Perenco, a European independent exploration and production company, which bought Muanda International Oil
Company (MIOC) from Chevron in 2004.
Perenco operates four concessions, both onshore and offshore, in the southwest Bas-Congo province, which is sandwiched between
neighbouring Angola and Republic of Congo.
Perenco's partners in Congo are Teikoku Oil Co. Ltd., part of Japan's biggest oil and gas exploration company INPEX, and ODS. Perenco
said 2007 production was about 25,000 barrels per day.
EXPLORATION
Lake Albert -- Blocks 1 and 2
Tullow Oil signed a production sharing agreement with the government in July 2006 for a 48.5 percent operating interest in Blocks 1 and 2
on the Congolese side of the Lake Albert Basin, which sits in the northwest of the country, on the border with Uganda.
Its partners in this deal are London-listed Heritage Oil with 39.5 percent and COHYDRO, the Congolese state oil company, with 12 percent.
Tullow hopes to combine its Congolese operation with its set up in Uganda, where it has successfully drilled for oil, believes it could be
sitting on about 2 billion barrels of oil and is due to start producing next year.
Before Tullow could secure a presidential decree confirming the concessions, Congo's oil minister revoked the deal on Block I and has
awarded it to a rival consortium.
The rival consortium includes South Africa's state oil company PetroSA, H Oil and South African-based Divine Inspiration Group.
Divine Inspiration is a partner in the creation of the South Africa Congo Oil Company (SacOil) which agreed in March to be bought out by
Johannesburg-listed SA Mineral Resources Corporation (Samroc).
H Oil's website describes the company as an oil and gas exploration company specialising in Africa and the Balkans that was founded in
1987 by senior members of Glencore.
Lake Albert - Block 5
To the south of blocks 1 and 2, London AIM-listed Dominion Petroleum has signed a production sharing agreement with Soco International
(38.25 percent) and COHYDRO (15 percent) to explore block 5, also on the border with Uganda.
Uganda-Congo relations
Kinshasa and Kampala's relationship has long been strained by clashes over resources. Uganda sent its army into Congo during the wars
of the 1990s under the pretext of hunting down rebels but was later accused of exploiting Congo's resources.
The prospect of oil riches fuelled further tensions last year and violence broke out in August and September, in which several Congolese
civilians and a British oil worker employed by Heritage were killed in the shooting.
Atlantic coast
Surestream Petroleum - Chaired by Moustapha Niasse, a former Senegalese prime minister who helped negotiate Congo's peace deal,
Surestream secured in 2006 a presidential decree on two production sharing agreements with the government in Kinshasa.
The first is for the Ndunda block and the second is for the Yema and the Matamba-Makanzi blocks, all of which are onshore in the
southwest of the country.
FURTHER PROSPECTS
Brazil's High Resolution Technology and Petroleum is surveying the Cuvette Centrale Basin in central Congo, which it says could hold one
of Africa's last giant to supergiant light oil, condensate and gas accumulations.
Oil in Congo in 2008
Natural Liquified
Refinery Motor Aviation Other Gas/ Fuel
Crude Oil Gas Naphtha Petroleum Jet Kerosene
Feedstocks Gasoline Gasoline Kerosene Diesel Oil
Liquids Gases
Unit -
1000 tonnes
Production 12091 89 0 0 5 46 0 31 17 109 327
From Other Sources 0 0 0 0 0 0 0 0 0 0 0
Imports 0 0 0 0 4 54 0 41 0 145 0
Exports -11393 -84 0 0 0 0 0 0 0 0 -282
International Marine
0 0 0 0 0 0 0 0 0 -42 0
Bunkers
International Aviation
0 0 0 0 0 0 0 0 0 0 0
Bunkers
Stock Changes -74 16 0 0 0 -1 0 0 0 -10 -24
Domestic Supply 624 21 0 0 9 99 0 72 17 202 21
Transfers 0 0 0 0 0 0 0 0 0 0 0
Statistical Differences -68 -21 0 0 0 -1 0 -1 0 39 0
Transformation 556 0 0 0 0 0 0 0 0 0 0
Electricity Plants 0 0 0 0 0 0 0 0 0 0 0
CHP Plants 0 0 0 0 0 0 0 0 0 0 0
Heat Plants 0 0 0 0 0 0 0 0 0 0 0
Oil Refineries 556 0 0 0 0 0 0 0 0 0 0
Other Transformation 0 0 0 0 0 0 0 0 0 0 0
Energy Industry Own
0 0 0 0 0 0 0 0 0 0 0
Use
Losses 0 0 0 0 0 0 0 0 0 0 0
Final Consumption 0 0 0 0 9 98 0 71 17 241 21
Industry 0 0 0 0 0 0 0 0 0 0 21
Transport 0 0 0 0 0 98 0 71 0 241 0
Residential 0 0 0 0 9 0 0 0 17 0 0
Commercial and Public
0 0 0 0 0 0 0 0 0 0 0
Services
Agriculture / Forestry 0 0 0 0 0 0 0 0 0 0 0
Fishing 0 0 0 0 0 0 0 0 0 0 0
Other Non-Specified 0 0 0 0 0 0 0 0 0 0 0
Non-Energy Use 0 0 0 0 0 0 0 0 0 0 0
- of which
Petrochemical 0 0 0 0 0 0 0 0 0 0 0
Feedstocks
Note: Data are also available for: Additives/Blending components, Input of origin not Crude or NGL, Refinery Gas, Ethane, Gasoline
Type Jet Fuel, White Spirit, Lubricants, Bitumen, Paraffin Waxes, Petroleum Coke and Non-Specified Oil Products
at http://data.iea.org
For time series and more detailed data, please consult our on-line data service at http://data.iea.org.
Coal and Peat in Congo in 2008
Anth- Coking Coal Other Bitu- Sub-Bitu- Lignite/ Peat Patent Coke Gas Coal BKB Gas Coke Blast Oxygen
racite minous minous Brown Fuel Oven Coke Tar Peat Works Oven Furnace Steel
Coal Coal Coal Coke Briquettes Gas* Gas* Gas* Furnace
Gas *
Unit kt kt kt kt kt kt kt kt kt kt kt TJ TJ TJ TJ
Production 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
From Other
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Sources
Imports 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Exports 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Stock Changes 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Domestic
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Supply
Statistical
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Differences
Transformation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Electricity Plants 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
CHP Plants 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Heat Plants 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Other
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Transformation
Energy
Industry Own 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
use
Losses 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Final
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Consumption
Industry 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Transport 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Residential 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Commercial and
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Public Services
Agriculture /
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Forestry
Fishing 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Other Non-
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Specified
Non-Energy
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Use
- of which
Petrochemical 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Feedstocks
*Gases are expressed in terajoules (TJ) on a gross calorific value basis.
For time series and more detailed data, please consult our on-line data service at
http://data.iea.org.
Renewables and Waste in Congo, Democratic
Republic of in 2008
Municipal Industrial Primary Biogas Liquid Geothermal Solar Hydro Solar Tide, Wind
Waste* Waste Solid Biofuels Thermal Photovoltaics Wave,
Biomass** Ocean
Unit GWh GWh GWh GWh GWh GWh GWh GWh GWh GWh GWh
Gross Elec. Generation 0 0 0 0 0 0 0 7484 0 0 0
Unit TJ TJ TJ TJ TJ TJ TJ
Gross Heat Production 0 0 0 0 0 0 0
1000
Unit TJ TJ TJ TJ TJ TJ
tonnes
Production 0 0 869791 0 0 0 0
Imports 0 0 0 0 0 0 0
Exports 0 0 0 0 0 0 0
Stock Changes 0 0 0 0 0 0 0
Domestic Supply 0 0 869791 0 0 0 0
Statistical Differences and
0 0 0 0 0 0 0
Transfers
Transformation 0 0 39903 0 0 0 0
Electricity Plants 0 0 0 0 0 0 0
CHP Plants 0 0 0 0 0 0 0
Heat Plants 0 0 0 0 0 0 0
Other Transformation 0 0 39903 0 0 0 0
Energy Industry Own Use 0 0 0 0 0 0 0
Losses 0 0 0 0 0 0 0
Final Consumption 0 0 829888 0 0 0 0
Industry 0 0 178938 0 0 0 0
Transport 0 0 0 0 0 0 0
Residential 0 0 650950 0 0 0 0
Commercial and Public
0 0 0 0 0 0 0
Services
Agriculture / Forestry 0 0 0 0 0 0 0
Fishing 0 0 0 0 0 0 0
Other Non-Specified 0 0 0 0 0 0 0
Non-Energy Use 0 0 0 0 0 0 0
- of which
0 0 0 0 0 0 0
Petrochemical Feedstocks
* Municipal Waste: the split for renewable and non-renewable waste is also available
** Primary Solid Biomass: data are also available for charcoal
For time series and more detailed data, please consult our on-line data service at http://data.iea.org.
Congo, Republic: Thousands of hectares of land
for eucalyptus, oil palm and mining
Between 1991 and 2001, Shell Renewables -a division of Shell Oil International- implemented a forestry operation based on the planting
and harvesting of fast-growing cloned eucalyptus trees (see WRM Bulletin 46), with the aim of establishing a high-yield source of biomass
for future energy generation.
Later on, Shell sold its plantations. Very recently MagForestry -the forestry division of MagIndustries, a Canadian company involved in
industrial and energy projects in Central-Africa (most notably the Republic of Congo and the Democratic Republic of Congo)- took over
control of the former Shell’s 68,000 hectare eucalyptus plantation through the acquisition of all the shares of Eucalyptus Fibre Congo S.A.
(EFC), the lessee of the industrial plantation.
EFC currently holds an exclusive 50 year forestry concession agreement with the Government of the Republic of Congo, which is
renewable by EFC for an additional 21 years. This enables MagForestry to appropriate thousands of hectares of land to carry out not only a
forestry activity that produces very few jobs, but also to secure long term land rights for its mining branches: MagMining's brine well mining
field, MagMinerals' potash plant and MagMetals' magnesium smelter.
The eucalyptus plantations lay near the Congo’s Atlantic port city of Pointe-Noire, from where MagForestry can send its shipments to the
seaports of Antwerp in Belgium and Rotterdam in the Netherlands, ready to be distributed all over Europe or to be re-exported to anywhere
in the world.
Another budding business adds to the package. The biomass fuel boom prompted MagForestry to begin the construction of a 500,000
tonne per year wood chipping plant on those lands, aiming at becoming a major supplier for the rapidly growing global biomass market.
At the same time, the Spanish company Aurantia is investing in a cluster of palm plantations in the Republic of Congo with the aim of
producing biodiesel from the oil. Feasibility studies are already underway to analyse the different plantation and mill sites, and to assess the
state of the existing logistical infrastructure in the country.
The actual size of the investment has not been disclosed and the company did not offer any insights into how it sees itself within the context
of sustainability and of the fragility of Congo's environment, neither into how it would guarantee its palm oil is produced in an
environmentally friendly manner.
Meanwhile, dangerous outcomes from a study commissioned by the EU and carried out by the CIRAD, announce that Congo “has around
12 million hectares of land suitable for the establishment of woody energy crop plantations (such as eucalyptus and acacia)”. This may
entail that private groups take over those 12 million hectares of land to carry out their business.
Big business in the Congo’s lands… for big companies.
Article based on: “500,000 tonne mill for energy wood chips in the Republic of Congo”, Biopact, http://biopact.com/2006/11/500000-tonne-
mill-for-energy-wood.html; “Une société espagnole veut investir dans l'exploitation de l'huile de palme au Congo”, Congoplus.info,
http://www.congoplus.info/tout_larticle.php?id_article=2269; “Spanish company Aurantia to invest in Congo's palm oil sector for biodiesel”,
Biopact, http://biopact.com/2007/03/spanish-company-aurantia-to-invest-in.html
Source: WRM's bulletin Nº 120, July 2007
YES to Oil – NO to Environmental Destruction
Kampala, Uganda, January 21 2011
Oil means a lot. It can bring development, it can bring total destruction. In either way, oil changes a country. The discovery of oil raises an
immense hope for the better, for prosperity and development, particularly in poor countries.
Gatherings like the East African Petroleum Conference and Exhibition, which is to take place from 2 nd to 4 th February 2011 in Kampala,
spread an infective enthusiasm about the prospective chances of “harnessing East Africa’s oil and gas potential and utilizing the resources
to create lasting value”. But how capable are Uganda and the Democratic Republic of Congo really to manage their potentially very large oil
fields in the Albertine Rift?
Both Uganda and DRC are still learning about the oil business and have no coherent petroleum bill in place. In Uganda, a law is in
progress, but has been postponed again and again, recently because of the approaching elections. Matters such as the revenue
management of oil exploration, drilling waste, oil spill, gas flaring and environmental impacts remain unsettled on a national level. This is
dangerous, as it can trap the Ugandan government into highly unfavorable contracts with drilling companies, which can have a devastating
effect on livelihoods and the environment. The oilenvironment discussion has been on the table for a long, long time. Because wildlife is so
easily disturbed by noise,
pollution, extending infrastructure and human presence, oil production has in many parts of the world, especially in natural ecosystems,
been seriously harmful for the environmental balance, just think about the recent giant oil spill in the Golf of Mexico. This has, though often
denied by radical oil-supporters, an immense effect on national incomes, particularly in countries where people depend on natural
resources like Uganda and DRC. Petroleum exploitation has polluted waters, which impacts fisheries and peoples’ health – a realistic threat
around the chain of rivers and lakes along the Albertine Rift, leading to degraded vegetation and decrease the income from wildlife tourism
and people’s livelihoods. Already the test drillings in Murchison Falls National Park have caused an outcry from tour companies when
popular safari circuits had to be closed during the testing activities. Oil is indeed an incredible income potential, but the Uganda’s reserves,
for instance, are predicted to last between 15 and 20 years only – while wildlife can stay and be used forever if managed properly.
Can successful nature conservation and the petroleum industry coexist? ARCOS says YES, but it needs a high degree of efforts, discipline
and transparency from oil companies and the national government. “Environmental Impact Assessments are the key to choosing adequate
sites for dwells, and they have to be done vigorously. Companies have to accept the ecological sensitivity of some spots which makes them
unsuitable for production and strictly minimize the impacts of drilling in national parks and other conservation areas and corridors”, says Dr
Sam Kanyamibwa, Executive Secretary of ARCOS. While developing the industry, governments and petroleum companies have to work in
close consultation with environmental institutions and have their activities monitored by independent observers. The East African Petroleum
Conference and Exhibition, as a premier international forum for those working in the upstream petroleum sector, has to fulfill its
responsibility to promote not only an increased oil production, but also the environmental consciousness which is so important.
The DRC and Uganda can expect quite a change from the oil in its land. But just as the countries cannot afford to leave millions of dollars
just lying in the ground, they cannot afford to develop a petroleum industry at the expense of people and the environment. Ultimately we
cannot forget that oil, in contrast to wildlife resources, is not renewable.
For more information please contact the ARCOS Communications and Information Assistant – Julia Ritsche,
jritsche@arcosnetwork.org, +250 785 426 277 – or visit our website www.arcosnetwork.org
Prospects in oil and Gas Exporting SubSaharan
Africa
Oil and gas supply and infrastructure in sub-Saharan Africa
Cumulative government oil and gas revenues in assessed sub-Saharan African countries, 2006-2030
HIGHLIGHTS
Conventional oil production in the ten largest hydrocarbon-producing countries in• sub-Saharan Africa reached 5.6 mb/d in 2007, of which
5.1 mb/d was exported. In the Reference Scenario, output grows to 6.9 mb/d in 2015 and then rises more gradually to 7.4 mb/d in 2030. Oil
exports climb to 6.4 mb/d in 2030. Gas production in these countries increases from 36 bcm in 2006 to 163 bcm in 2030. Most of the
increase is exported. These projections hinge on a reduction in gas flaring, adequate investment and avoidance of disruption to supplies
through civil unrest.
The cumulative government take from oil and gas revenues in the ten countries analysed here is projected, in aggregate, at $4.1 trillion
over 2006-2030. Nigeria and Angola remain the largest exporters, with combined cumulative revenues of about $3.5 trillion. Oil accounts for
the bulk of these revenues. Taxes on oil and gas production account for more than 50% of total government revenues in most of the oil-
and gas-rich sub-Saharan African countries.
Despite the vast hydrocarbon wealth of these countries, most of their citizens remain poor. As a result, household access to modern energy
services is very limited. Two-thirds of households do not have access to electricity and three-quarters do not have access to clean fuels for
cooking, relying instead on fuelwood and charcoal. Unless there are major government initiatives to address this problem, the number of
electricity-deprived people is projected to increase over the projection period. More than half of the total population of these countries still
relies on fuelwood and charcoal for cooking in 2030.
Tackling energy poverty is well within these countries’ means. We estimate the capital cost of providing minimal energy services (electricity
and liquefied petroleum gas stoves and cylinders) to these households over the Outlook period to be about $18 billion. This is roughly
equivalent to only 0.4% of the governments’ take from oil and gas exports over the Outlook period.
An improvement in the efficiency of revenue allocation and the accountability of governments in the use of public funds would improve the
likelihood of oil and gas revenues actually being used to alleviate poverty generally and energy poverty specifically. Energy is key to
sustainable development, bringing major benefits to public health, social welfare and economic productivity. Since affordability is the main
barrier to access, efforts to tackle energy poverty need to go hand in hand with broader policies aimed at raising incomes and promoting
economic development.
Overview1
This chapter provides an outlook for oil and gas production, government take and household energy access in the ten largest hydrocarbon-
producing sub-Saharan African countries (Table 15.1).2 These countries account for 99% of the region’s proven3 oil reserves and 97% of
its gas reserves. They also produce 99% of the region’s oil and 93% of its gas. Worldwide, these countries contribute 7% to global output of
oil and 12% of oil trade. Gas exports from these countries represent about 5% of global gas trade. Exports of both oil and gas (in the form
of liquefied natural gas, LNG) are set to grow rapidly.
Production and reserves in assessed sub-Saharan African countries (ranked by oil reserves)
* Also referred to as Congo-Brazzaville or the Republic of Congo. ** LNG exports commenced in 2007 from Equatorial Guinea. Sources:
Production and exports — IEA analysis; reserves — O&GJ (2007). For production, oil data is for 2007 and gas data is for 2006. All reserves
data are for end-2007.
The economies of these countries are heavily reliant on the oil and gas sector (OECD, 2008). Oil and gas contributed 87% to GDP in
Equatorial Guinea in 2006, while oil contributed 57% to Angolan GDP in the same year. Oil accounted for over 70% of GDP in Congo in
2006. Taxes on oil and gas production constitute a very large portion of total government tax revenues in these sub-Saharan African
countries. Except in Cameroon, Côte d’Ivoire and Mozambique, oil and gas sector revenues account for more than half of total government
revenues (Figure 15.1). In Congo, the figure is over 80%. The share of the value of oil and gas exports in total exports is also very high. Oil
exports alone constitute over 90% of total exports in Angola, Equatorial Guinea and Sudan.
Share of oil and gas in total exports and of oil and gas revenues in government revenues in assessed sub-Saharan African
countries, 2006
Note: No information is available for share of total exports in Mozambique. Source: Information provided to the IEA by the African
Development Bank.
Despite the wealth these resources represent, household energy access in the countries assessed here is very limited. Less than a third of
households in Angola, Cameroon, Chad, Congo, Equatorial Guinea, Gabon, Sudan and Mozambique have access to electricity (Table
15.2). Electricity access in rural areas is even lower in all countries: it is estimated to be only 16% in Côte d’Ivoire and 26% in Nigeria. Other
modern forms of energy are also scarce. Fewer than 25% of households in Angola, Cameroon, Chad, Côte d’Ivoire, Congo and Sudan
have access to clean fuels for cooking, like liquefied petroleum gas (LPG), kerosene, biogas and ethanol gelfuel. The majority of
households cook with fuelwood and charcoal over open fires or in inefficient stoves. Over 95% of rural households in Angola, Cameroon,
Chad, Congo and Sudan rely on fuelwood and charcoal for cooking, a share comparable to that applying in Benin, Ghana and Zambia.
Oil- and gas-rich countries could use the proceeds from taxes and royalties on production to pay for wider energy access and to meet other
basic needs of their poorest households. Sharply higher revenues from the high oil and gas prices which have prevailed recently are
making this more affordable. In addition, these countries could make direct use of their gas resources, for example, by using currently flared
gas for power generation or distributing it in cities. The LPG extracted from natural gas or produced in refineries can provide a low-cost
source of supply for distribution networks. Yet the use of oil and gas resources for domestic consumption is rarely a government priority in
these countries, while companies usually have little interest in getting involved in small-scale energy-distribution projects in immature local
markets because of the cost.
Number of people without access to electricity and relying on fuelwood and charcoal for cooking in assessed sub-Saharan
African countries
* Most recent estimates. Sources: Population statistics are from UNPD (2007). The number of people without electricity access and relying
on fuelwood and charcoal is from IEA analysis, based on national surveys and information provided from the World Bank, United Nations
Development Programme and World Health Organisation.
In brief, energy poverty is stark in the ten countries analysed here, as stark as in other countries in sub-Saharan Africa. In the absence of
new policy initiatives, the number of people living without electricity and exposed to the health risks associated with the burning of fuelwood
and charcoal for cooking will actually rise over the Outlook period, as the population grows. Tackling this problem will require
comprehensive and co-ordinated economic and social development plans and policies, with a much greater focus on effective management
of the wealth generated by hydrocarbon resources. A first requirement is to make oil and gas revenues transparent to the public. They will
ultimately hold governments accountable for the allocation of these revenues.
Outlook for oil and gas production, exports and government revenues
Resources and reserves
Proven oil reserves in the ten sub-Saharan African countries assessed here are estimated at 57 billion barrels, some 4% of world reserves.
At a current production level of 5.6 million barrels per day (mb/d), these reserves would sustain production for another 28 years. Significant
offshore undiscovered oil resources lie in water between 2 000 metres and 4 000 metres deep in some areas, especially offshore Angola
(USGS, 2000). Proven gas reserves amount to 6 trillion cubic metres (tcm) or about 3% of world reserves. Undiscovered resources are
particularly abundant in the Niger and Congo deltas.
Nigeria has the largest proven hydrocarbon reserves of any African country, which stood at 68 billion barrels oil equivalent at end-2007.
They amount to 73% of all the oil and gas reserves of the ten sub-Saharan African countries assessed here (Figure 15.2). The Nigerian
government plans to expand its proven oil reserves, which currently amount to 36 billion barrels, to 40 billion barrels by 2010. Most of the
reserves are found along the country’s Niger River Delta, in southern Nigeria and offshore in the Bight of Benin, Gulf of Guinea and Bight of
Bonny. Virtually all of the large discoveries in recent years on the west coast of Africa have been made in deepwater offshore fields.
Proven oil and gas reserves in assessed sub-Saharan African countries, end-2007
Sources: O&GJ (2007); IEA analysis.
Oil and gas production and exports
There is considerable difference in production maturity among the oil-rich sub-Saharan African countries. In Table 15.3, we classify the
countries into three categories, according to the percentage of initial 2P reserves already produced: new producers; steady and rising
producers; and declining producers. The largest oil producers — Nigeria, Angola and Sudan — are expected to increase their production
capacity significantly, while Chad is only now beginning its production cycle.
Aggregate oil production in these sub-Saharan Africa countries was 5.6 mb/d in 2007. Conventional oil production is projected to increase
to 6.9 mb/d in 2015 and to
7.4 mb/d in 2030 (Figure 15.3). Production in Nigeria and Angola combined represents 84% of total production in 2030, compared with
about three-quarters today. All of the sanctioned and planned projects in these two countries — 15 projects in Angola in fields holding some
5.4 billion barrels and 11 projects in Nigeria with 5.1 billion barrels — are offshore. All of the identified reserves with no firm projects
planned are offshore in Angola, while over 65% of the identified reserves in Nigeria are in onshore fields.
Oil production maturity of assessed sub-Saharan African countries, 2007
Sources: O&GJ (2007); IEA databases and analysis.
Oil and gas production in assessed sub-Saharan African countries
Sub-Saharan African countries exported 5.1 mb/d of oil in 2007, or about 91% of total production. Most of these exports were crude oil.
Despite rising local demand for oil, driven in large part by the economic boost provided by rising oil-related earnings, exports are projected
to rise to 6.4 mb/d in 2030. Oil exports from Angola, Sudan and Nigeria are expected to continue to grow steadily over the Outlook period.
Cameroon becomes a net oil importer after 2020.
Gas production and exports, largely as LNG, are also expected to grow strongly. In the Reference Scenario, the marketable gas production
of the complete group of countries increases from 36 bcm in 2006 to 82 bcm in 2015 and 163 bcm in 2030. The largest gas producers in
2030 are Nigeria, Angola, Equatorial Guinea and Mozambique. Most of the increase in gas output is exported. Exports rise from 21.6 bcm
in 2006 to 63 bcm in 2015 and 130 bcm in 2030. Nigeria’s gas exports are expected to reach 101 bcm by 2030, while Angola’s reach 7 bcm
in 2012. A reduction in gas flaring is expected to make a major contribution to marketable gas supply (Box 15.1). Primary oil and gas
demand in these countries is projected to grow on average by 3.5% per year over the Outlook period.
Gas flaring: what are the costs?
Worldwide, 150 bcm of associated gas was flared in 2005, emitting 400 million tonnes of carbon dioxide into the atmosphere (W orld Bank,
2007). The sub-Saharan African countries assessed here flared 40 bcm — a level unchanged since 2000 (Figure 15.4). This is almost three
times the region’s gas consumption. Nigeria is among the world’s biggest flarers, with some 25 bcm flared in 2005, nearly half of its total
gas production.4 Nigeria’s ratio of gas flared to oil produced is 18 times higher than that in the North Sea. So much gas is flared because
there is no infrastructure to bring the gas to market, a consequence of the poor potential returns and high risks associated with building
such infrastructure.
Gas flaring wastes a valuable resource. Capturing and using the gas could bring large economic, social and environmental benefits. In the
case of Nigeria, the monetary value of the gas lost in 2005, at a price of $5 per MBtu, was about $5 billion. Nigeria is committed to reducing
flaring. It signed the Kyoto Protocol in December 2004 and its gas-flaring reduction projects qualify under the Clean Development
Mechanism (CDM), under which the flared gas has a potential value of $800 million, based on current Certified Emission Reduction prices,
as an addition to its market value. Options for reducing flaring include gas reinjection in oil and gas fields, distribution to local markets by
pipeline, and gas processing into LNG, LPG or GTL. But several gas-export projects have been delayed and Nigeria’s domestic market has
been very slow to develop due to domestic gas-pricing policies, which set prices too low to make investments in distribution networks
profitable, and poor payment discipline on the part of industrial and power consumers. Consequently, the initial target set by Nigeria to stop
flaring in 2008 will not be met.
In practice, reducing gas flaring will require the imposition and enforcement of strict environmental standards, penalties on flaring and
financial incentives to accelerate the development of domestic infrastructure and markets for associated gas. Emerging-country producers
need fully to consider the long-term economic value of associated gas when negotiating and executing contracts with operators.
Gas flaring in assessed sub-Saharan African countries
Source: World Bank (2007).
A significant portion of Nigeria’s natural gas is already processed into LNG. Nigeria completed the first phase of the Nigeria LNG Limited
(NLNG) facility on Bonny Island in 1999. In 2006, NLNG completed its fifth train, increasing annual production capacity to 24 bcm per year.
A sixth train was completed in late 2007, raising production capacity to 31 bcm per year, but this has not yet been brought into operation,
for lack of feedstock. Three other projects are under development — Brass LNG, Olokola LNG and a seventh train at NLNG — but a final
investment decision has not been taken on any of them, making it unlikely that any will be commissioned before 2012. In Angola, Chevron
and Sonangol, together with other shareholders including Total, BP and Eni, are planning to build a 7-bcm LNG plant, which is expected to
be operational in 2012.
The West Africa Gas Pipeline project was commissioned in December 2007, with commercial operation expected to begin in 2008. Initial
capacity is 2.1 bcm per year and it is expected to ramp up to a full capacity of 4.6 bcm per year within 15 years. The 678-km pipeline
carries natural gas from Nigeria to Ghana, Togo and Benin. It is intended to supply gas to power stations in all three countries in order to
reduce dependence on diesel. Nigeria and Equatorial Guinea are in discussion about a pipeline connecting the two countries to feed a
second train at Equatorial Guinea’s LNG plant on Bioko Island.
Nigeria and Algeria are studying the possibility of constructing a trans-Saharan gas pipeline. The 4 023-km pipeline would carry 20 bcm to
30 bcm per year of associated natural gas from oilfields in Nigeria’s Delta region to Algeria’s Beni Saf LNG export terminal on the
Mediterranean. It is estimated that construction of the $7-billion line would take six years. Current and planned oil and gas infrastructure in
sub-Saharan Africa is shown in Figure 15.5.
Civil unrest has bedevilled some of these countries at various times in past years, substantially increasing the risk associated with
exploiting their reserves and holding back investment. Civil conflicts at the Niger Delta have resulted in serious supply disruptions, as
attacks on oil facilities have forced companies to halt or slow production and delay loadings. Around 550 kb/d of Nigeria’s oil-production
capacity has been unavailable since 2006 as a result. The cost of deepwater exploration could rise further in the wake of general cost
inflation (See Chapter 13).
Oil and gas supply and infrastructure in sub-Saharan Africa
The boundaries and names shown and the designations used on maps included in this publication do not imply official endorsement or
acceptance by the IEA.
Sources: IEA analysis based on information provided by PFC Energy and Petroleum Economist.
Oil refining
There are 11 refineries in the assessed countries and another 10 in the rest of sub-Saharan Africa. Total crude distillation capacity at the 11
refineries is just over 800 kb/d. Nigeria has four refineries, but all of them operate well below their official capacity, leaving some 77% of
product demand to be met by imports in 2007. In the past, the government has opted to export crude oil and collect taxes on imported
refined products rather than invest in improving refining capacity. The Nigerian government has not been able to attract any significant
private investment in the refining sector.
The Angolan government is keen to attract investment in a second, greenfield refinery in Lobito. Refineries in Africa face difficulties in
competing with producers from the Middle East and Asia. They often do not enjoy the benefit of economies of scale, and their product slate
can be unsuited to local demand. India is emerging as a key exporter of refined products to Africa.
The lack of refining capacity is an important political issue in Africa. Most oil-producing countries would like to extract more of the value of
their crude oil by refining it locally, rather than exporting it and importing products. Increased local availability should also help to lower the
cost of supplying local markets.
Oil and gas export revenues
Based on projected exports and our assumptions for oil prices (see Chapter 1), the government take5 from oil and gas exports from the
assessed countries is estimated to rise from some $80 billion in 2006 to about $250 billion in 2030. Revenues in Nigeria and Angola dwarf
those in all the other countries. Nigeria’s revenues in 2030 reach nearly $150 billion and Angola’s some $80 billion. These two countries
account for 86% of the $4.1 trillion cumulative revenues of all ten countries over 2006-2030 (Figure 15.6).
Per-capita oil and gas revenues vary widely among the assessed countries. Revenue per capita over the Outlook period averages some
$515 in Nigeria but is close to $2 000 in Angola. In Gabon, average annual revenue per capita is some $2 700. It is over $5 000 in
Equatorial Guinea.
Cumulative government oil and gas revenues in assessed sub-Saharan African countries, 2006-2030
Managing revenues from oil and gas
Investments in expanding energy access can reap long-term benefits to sustainable development.15 But as long as affordability is a barrier
to the uptake of modern energy services, the private sector will not have sufficient incentive to invest on the scale required. Expanding
energy access, accordingly, needs to be a policy priority for governments. In most of the countries assessed here, this will entail
fundamental political, institutional and legislative reform, as well as efforts to strengthen the capability of regional and local authorities to
implement programmes and to expand access to credit. Successful strategies to improve domestic energy access require good information
on all the relevant topics, including plans for the development of domestic resources and infrastructure, and for hydrocarbon exports. High
priority needs to be given to energy alongside health, education and other development objectives.
The overall cost of expanding energy access, while large in absolute terms, is small compared with these countries’ potential earnings from
oil and gas exports. Hydrocarbon revenues provide the means by which energy poverty can be overcome. Moreover, the era of high energy
prices brings greater opportunity. Only a small proportion of the available revenues, after debt servicing, needs to be dedicated to energy-
poverty alleviation, rather than dissipated in subsidies, military spending or corruption.
Sound capture and management of hydrocarbon revenues requires efficient design of auctions and contracts, and transparent reporting by
producers and governments (Humphreys et al., 2008). It is important that international standards be applied for negotiating and finalising
contracts. Equally important are well-functioning systems for ensuring ethical conduct in the public service. Only one African country, South
Africa, features among the 37 countries that have ratified the OECD Anti-Bribery Convention — a major benchmark in the international
battle against bribery and corruption. These countries have introduced legislative amendments to strengthen their anti-bribery laws.
Several hydrocarbon-rich countries across the world have created sovereign wealth funds (SWFs) — state-owned investment funds
composed of financial assets such as stocks, bonds, property or other financial instruments — as a means of improving the standard of
living of every household in the longer term. The funding often comes from revenue generated from the export of natural resources. SWFs,
however, may not be the right solution for low-income countries, especially those with rigidities in labour and capital markets. In countries
without strong institutions, they may present undesirable opportunities for corruption and mismanagement. Given the scale of the challenge
of poverty and development, countries could be better off investing their oil wealth in infrastructure, education and health. After initial
mistakes in revenue management following the discovery of natural gas in the Netherlands (termed the “Dutch Disease”), the government
there spent gas revenues on physical infrastructure projects, such as bridges, roads and communication, paving the way for higher
economic growth (termed the “Dutch Cure”). An abundance of resource wealth offers an opportunity for economic development if
governments manage effectively the wealth and the economic impacts of its application (Box 15.6).
Revenue management in Botswana: a success story
One of the world’s poorest countries at independence in 1966, Botswana has done remarkably well in using its mineral wealth, mainly from
diamond resources, to transform the economy. Recognising that the revenues from diamonds represented sales of a declining asset, the
government of Botswana saw clearly the need for reinvestment of these revenues in order to sustain development.
Botswana adopted a policy which requires that all mineral revenues be re-invested and devised its own rule-of-thumb for tracking this re-
investment, the Sustainable Budget Index (SBI) (Lange and Wright, 2002). The amount of rent generated by mining and the share
recovered by the government are reported, and the way government has used mineral rents is assessed in terms of the SBI.
Botswana has used these revenues to effect remarkable improvements in infrastructure, human capital and the basic services supplied to
its population. GDP per capita in Botswana rose by 5.9% per year on average from 1996 to 2006, compared with an average decline of 7%
per year for sub-Saharan African countries. Some 95% of the population in Botswana has access to an improved water source. Electricity
access is estimated to be around 40%. Reliance on charcoal and fuelwood for cooking is some 65%, less than the share in seven of the
countries assessed here.
The share of the population relying on fuelwood and charcoal for cooking in urban areas is less than 20%. Botswana joined the World
Bank’s category of upper-middle-income countries in the 1990s.
Botswana is widely considered to be an excellent example of effective resource management with future generations in mind. As a result of
prudent management, not only has the domestic economy been developed but the country has also accumulated a substantial portfolio of
international financial assets.
Much valuable experience is available in the management of income-generated natural resources. Norway’s experience is being used to
help advance its Oil for Development programme. Another relevant initiative is the Extractive Industry Transparency Initiative (EITI),
supporting improved governance in resource-rich countries through the verification and publication of company payments and government
revenues from oil, gas and mining. Among the countries analysed here, Cameroon, Congo, Côte d’Ivoire, Equatorial Guinea, Gabon and
Nigeria have met the conditions to become candidate countries in the EITI. Public access to reliable, verified information is a basic
condition of improved accountability by governments for funds derived from resource exploitation; permitting public verification that
revenues from this source are actually used for the purposes of the fight against poverty and the implementation of the Millennium
Development Goals.
Oil Market report 2009
Africa
In contrast to growth of 65 kb/d assumed in the last MTOMR, total non OPEC African
production is now expected to decline by 140 kb/d to 2.41 mb/d by 2014. In Egypt,
decline over the 2008-14 period has been widened by 110 kb/d to 170 kb/d, in other
words shrinking to 480 kb/d in 2014, from 650 kb/d in 2008. Production prospects in
Congo were revised down too, by around 50 kb/d, and are now set to remain flat at 250
kb/d over the forecast period.Oil production in Sudan was also revised down, by around
40 kb/d, and is now projected to decline by 30 kb/d to 450 kb/d in 2014. Meanwhile,
Ghana will emerge as a new growth centre, where first oil from the Jubilee field is
expected in 2010 and will ultimately rise to around 120 kb/d after an expansion project,
set to commence in 2012. A group of new fields will significantly boost oil production in
Mauritania, now forecast to grow by 70 kb/d to 85 kb/d in 2014, despite disappointing
performance so far from existing assets. Lastly, this outlook has added Uganda,
ultimately set to become a small producer when a group of fields in the Albert Basin
come on stream, starting in 2011.
