Africa is poised to become a major player in the global oil markets due to the discovery of new reserves and as it ramps up production to meet growing global demand, especially from China.
This is according to a report released by Standard Bank at the International Petroleum Week conference in London.
Africa, already a major source for oil exports to China, has shown huge potential in oil reserves and future production. According to the report, Chinese demand and African production will play an increasing role in the shaping of global oil markets in the years to come.
The report says dwindling supply from the traditional oil producing countries has seen Africa’s new oil sources increase in value, and the continent now holds the key to meeting increased future global demand.
Continuing growth in demand from China is expected to drive African oil production. While China’s oil production could remain stagnant, its demand could double to 17 million barrels per day (mbd) by 2030 — largely owing to surging transport-related demand. China’s oil imports are forecast to increase from 5 mbd in 2010 to about 7.5 mbd in 2015 and 13 mbd in 2030, with Africa supplying a major portion.
In 2009 Africa’s oil exports to China represented 60% of the total Sino-Africa trade flow. The International Energy Agency, as part of its 25 year “New Policies Scenario”, has also noted that 20% of the world’s total oil production in 2035 will come from sources that had yet to be found, including those in Africa.
Africa’s proven oil reserves have grown since 1989, spiking from 59.1 billion barrels to 127.5 billion barrels, an increase of a 116%. Currently, Africa’s net oil exporters include Algeria, Angola, Cameroon, Chad, Democratic Republic of the Congo (DRC), Republic of Congo, Equatorial Guinea, Gabon, Libya, Nigeria and Sudan. Of these countries, Libya, Nigeria and Angola hold the largest proven reserves.
Considering other African oil producers is proving increasingly important, particularly with new oil finds in countries such as Ghana and Uganda. Other African countries were deemed to hold cumulative proven reserves of approximately 600 million barrels, which is already said to be understated. Somalia, alone, is estimated to hold reserves of around 4 billion barrels. The list of new and emerging producers currently includes Ghana, Kenya, Liberia, Mozambique, Niger, São Tomé and Príncipe, Sierra Leone, Somalia, Tanzania and Uganda.
“Fast-growing emerging markets have been the most ambitious in unlocking these opportunities. Unsurprisingly, China has led the charge into Africa,” says the report. “It is clear that the convergences between China and Africa are meaningful and structurally robust. As it has done since the turn of the century, China will increasingly look to position itself as Africa’s premier partner as it seeks to unlock new sources of crude oil.”