At the end of 2016, British Petroleum announced to have signed a 1 billion dollars deal with an independent oil company, Kosmos Energy, “to acquire a 62% working interest, including operatorship, of Kosmos’ exploration blocks in Mauritania and a 32.49% effective working interest in Kosmos’ Senegal exploration blocks” .
In early June, Niger Delta militants – under the banner of a newly-formed group, the Niger Delta Avengers (NDA) – blew up two oil wells owned and operated by Chevron. The attack is the latest in a new phase of an ongoing insurgency in the oil-rich region (see the map above).
Algeria is one of the most important African producers and exporters of oil and natural gas. Discovered during the final part of the colonial era (1956), hydrocarbon resources were soon exploited by French energy companies (1958) and subsequently by the Algerian national oil company Sonatrach (1963), providing the necessary economic resources fora development strategy based on import substitution.
Geography makes Northern Africa a strategic region for Italy. Nowhere is this more evident than in energy relations, as large natural gas pipelines today run from Algeria (via Tunisia) and Libya over the Mediterranean seabed to reach Italy’s southern shores. These pipelines are the outcome of negotiations that lasted years and, at the same time, a testament to long-term relationships, almost unbroken by political ups and downs.
After the achievement of unification, one of the Italian political élite’s main aims was recognition of the country as a “great power” by the members of the international system. Such ambitions sharply contrasted with Italy’s political weakness, as well as with its economic and social backwardness. In spite of everything the Italian authorities began to dream of an African empire, on the model of the great European powers, which were involved in the “scramble for Africa”.
It is well known that the oil and gas sector is the backbone of the Algerian economy, accounting for about 35 per cent of gross domestic product, and two-thirds of total exports; that the first commercial oil discovery was in 1956 and that production started in 1958 during the bloodiest anti–colonial revolt of national liberation in Arab history. And that Italy was at that time – and still is - in great need of this resource for its own development.
Oil is the main pillar of Saudi Arabia’s economy and the cornerstone of its development. According to the IMF's latest data(1), oil receipts accounted for around 85% of exports and almost 90% of fiscal revenue, while the oil sector comprises over 40% of overall GDP.
After decades of unsatisfying performances, economic growth took off in many sub-Saharan states at the beginning of the 21st century. More recently, however, the end of the commodity cycle – particularly with the oil price drop – and the rise of jihadist violence rocked the “Emerging Africa” boat. Is this the beginning of the end for sustained growth in the region?
This Report investigates the economic impact of these new challenges upon Africa’s frontier markets. It shows that the positive economic trajectory of recent years is being negatively affected, particularly for oil-exporting countries. However, while more caution is needed, Africa’s growth prospects on the whole remain fairly good – at least for now.
But there is an increasing need to understand the specific risks that individual countries face and the opportunities that they offer, as well as to re-assess the potential of each specific sector of economic activity. The three largest economies in the region – Nigeria, South Africa and Angola – are all under pressure. Others, including Ethiopia, Mozambique and Kenya, are still projected to achieve remarkable growth rates.
The ground is shrinking beneath the feet of Venezuela’s president, Nicolás Maduro. Low oil prices have hastened an economic crisis in Venezuela, a country that was already on the brink of financial and political turmoil for more than a year. Not only have low oil prices precipitated a massive credit crunch within the country. They also put Petrocaribe, one of former President Hugo Chávez’s most prized international alliances, at risk.
Iraq is expected to be one of the fastest growing countries in the world and the country could experience further growth, if Oil & Gas legislation and regulatory reform are approved. Recent years have clearly shown that Iraq’s socio-economic problems can be attributed to the ineffective use of oil revenues and to weak institutions, which have become a constraint to delivering even basic services. This paper shows that Iraq has made limited economic progress and will demonstrate that without sound institutions and social cohesion it is impossible to make significant economic progress. Since oil is the country main drive for economic growth, the paper will discuss the potential of implementing the “National Energy Strategy” to meet domestic energy needs; foster the growth of a diversified national economy; improve the standard of living of Iraqi citizens and create employment. The analysis will also demonstrate that the new energy strategy could make Iraq one of the most powerful economies in the region but that this is highly contingent on its having sound and robust institutions. If this is not achieved, the country could move towards what is commonly referred to as the “Oil Curse”.
Kamal Field Al-Basri and Mudhar Al-Sebahi, Iraqi Institute for Economic Reform, Baghdad, Iraq.