by Mondiu Jaiyesimi
Projected rise in oil find by the Nigerian government has been held back by reduced investment in exploration by the oil majors due to insecurity and uncertainty surrounding the effect of the petroleum industry bill which is waiting to be passed into law by the legislature.
Considering the ever present peak oil debate, valid concerns have been raised on the future of oil and the lack of an ideal alternative to the fossil fuel both in the short and long term. According to the International Energy Agency (IEA), global production of crude oil looks to have passed its peak and inevitably, souring oil prices are leading to new discoveries in sometimes the most obscure places. For example, the discovery of oil sands in commercial quantities and offshore deep water drilling in the Caspian Sea, Gulf of Mexico and Brazil are a testament to this notion.
This brings us to Africa, a continent described by British Petroleum as having 10% of global proved oil reserves. For clarity, proved reserves as explained in a study carried out by the Sussex Energy Group are quantities of oil in known fields which are considered to have a 90% chance of being technically possible and economically feasible to extract under defined conditions. This study will combine current data from diverse sources to produce a snapshot of top ten African countries holding the biggest oil reserves.
10. Chad and Sudan
Both Chad and Sudan tie in 10th position with 1.5 billion barrels of oil in proved reserves. According to the World Bank, prior to 2003 when they became an oil producing nation, Chad’s GDP per capita was $220 and had risen to $674 by 2010 which indicates the impact of oil revenues on the economy as a whole. It’s proved reserves also rose by 66% between 2002 and 2011. Prior to the secession of South Sudan in July 2011, Sudan had the 5th largest oil reserves in the continent at 5.0 billion barrels. Despite this setback for the Sudanese economy, it still maintains leverage over its landlocked neighbors in the south through its strategic transport channels and infrastructure for oil processing and exportation.
9. Republic of Congo
Similar to most resource rich countries in the third world, Congo relies heavily on petroleum earnings as it accounts for approximately 80% of government revenues. A 128% increase in oil reserves in a period of 20 years can only be good news for the Congolese economy where most of the oil exploration is carried out offshore. The US Energy Information Administration (EIA) also expects Congo to be one of the pioneer producers of oil sands in commercial quantities in Africa as there are potential large deposits available in the country.
8. Equatorial Guinea
According to the World Bank, Equatorial Guinea is the highest ranked African country in GDP purchasing power parity per capita. This is largely as a result of its low population (736,296, 2012 estimate) and revenue accruable from oil. This also helped the country achieve an impressive 26.2% annual growth rate between 2001 and 2005. The central African country’s crude reserves grew by approximately 466% between 1992 and 2012 despite reports of declining oil production due to maturing oil fields.
African Economic Outlook 2012 describes crude oil as the backbone of the Gabonese economy since it gained independence in 1960. Between 1992 and 2012, proved oil reserves in Gabon have more than doubled from 0.8 to 2.0 billion barrels. On the other hand, According to the IMF, the government of Gabon has already set policies in motion to achieve a fully diversified economy by 2025; impressive results have already been recorded in the non-oil sector with mining and construction in particular contributing to 7% real GDP growth in 2011.
6. South Sudan
Officially the youngest country in the world, South Sudan is a land locked country heavily dependent on Sudan for processing and exporting its crude oil. It now has 3.5 billion barrels of proved oil reserves with Asian energy companies dominating the market share of its fledgling energy sector.
The EIA describes Egypt as the biggest non-OPEC oil producer in Africa with 4.3 billion barrels of oil in proved reserves and the largest refinery capacity in Africa. New oil discoveries have helped increase Egypt’s proved reserves in recent years through the increased exploratory activities of American energy company, Apache Corporation. Since 2002, Egypt’s proved oil reserves have risen by 22.8%.
According to the Organization of Petroleum Exporting Countries (OPEC), Algeria’s oil and gas sector is the mainstay of the economy as it accounts for 35% of its gross domestic product. State owned oil company Sonatrach has the market share in the Algerian energy industry. It is the largest country in Africa and the biggest member of OPEC by area. In January this year, the Algerian government introduced a new national hydrocarbon law creating an enabling environment for further investment in the sector. Majority of the reserves in Algeria are held onshore due to limited offshore oil exploration thus a 32.6% increase in oil reserves since 1992 till date is promising.
Angola is the second largest oil producer in Africa after Nigeria. In recent years, Angola’s oil and gas sector has contributed significantly in the impressive economic turnaround witnessed after years of civil unrest. The state owned Oil Company, Sonangol has recently announced plans to embark on a large scale oil exploration offshore under salt layers deep in the sea bed which will be similar to the successful offshore drilling recorded in Brazil a few years ago. From 1.3 billion barrels in 1992, Angola’s proved oil reserves have risen to 12.7 billion barrels in 2012.
Second spot goes to Africa’s biggest oil producer. In 1992, Nigeria’s crude oil reserves were 21.0 billion barrels but they have since risen to 37.2 billion barrels, a 77% increase. The West African country’s oil reserves make up 2.2% of the global share and 28.5% of Africa’s total. Projected rise in oil find by the Nigerian government has been held back by reduced investment in exploration by the oil majors due to insecurity and uncertainty surrounding the effect of the petroleum industry bill which is waiting to be passed into law by the legislature.
Global oil output took a minor hit during the Libyan crisis in 2011 when General Muammar Gaddafi was ousted from power, both oil exploration and production were adversely affected. However, Libya still retains number one spot as the holders of Africa’s largest crude oil reserves. According to the Oil and Gas Journal, the North African country has a potential of increasing its reserves considerably based on the amount of possible reserves available as oil exploration has not taken place in majority of the country.
- British Petroleum: Statistical Review of World Energy 2013
- British Petroleum: “Making Sense of the oil market 2011”
- Energy Information Administration- Country Profiles
- International Monetary Fund
- OPEC Annual Statistical Bulletin 2013
- African Economic Outlook
Mondiu Jaiyesimi is an Energy Economist passionate about energy and public policy, empirical research and energy finance. He studied Energy Economics and Policy at the University of Surrey and has done extensive research work in Liquefied Natural Gas markets, UK energy markets, shale gas revolution and energy demand in developed countries.
He currently engages in independent energy consulting focusing on energy modelling, climate change and trends in oil and gas supply in Africa and other emerging markets. He is a member of the International Agency for Energy Economics and the British Institute of Energy Economics.
Op-ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija.