South Africa's return to world petroleum markets, coupled with other southern African countries' gradual adoption of market economies, promises new opportunities for oil and gas companies.
John P. Ferriter, deputy executive director of International Energy Agency, Paris, told a Johannesburg conference this month that because most sub-Saharan African countries depend heavily on imported oil they should take measures to ensure their energy security.
Ferriter said investments in the energy sector are needed to fuel the region's economic growth. Sub-Saharan Africa needs exploration and development of oil, gas, and coal resources; upgrades and extensions of energy and transport infrastructure; electrification; and programs to ensure sustainability of traditional fuels, such as wood.
"As an example of the size of investment needed," Ferriter said, "World Bank estimates at least $17 billion will be required for new electricity projects in sub-Saharan Africa, excluding South Africa, by 2005.
"Governments and donors will be in a position to provide only $5 billion of this and lenders only another $2 billion. This means $10 billion will have to be sought from the private sector."
Angola's experience
Jose Mangueira, national director of petroleum at Angola's Ministry of Petroleum, told delegates how his country had boosted its economy by inviting foreign firms to help revitalize its upstream oil and gas sector.
Mangueira said sub-Saharan Africa involves 45 countries. They have huge economic difficulties and low energy consumption.
"High population growth rates and the pressing need for economic development are a good indication of how high future energy demand will be," Mangueira said.
"All these countries face lots of economic difficulties and reduced means to promote their development. Petroleum exploitation could be a good source of revenue to assist in solving many problems.
"We speak from experience because in 1975, when we gained our independence, Angola was producing only 173,000 b/d of oil. Today our production has reached 700,000 b/d."
Independents
Southern Africa's downstream sector is still largely state controlled, but upstream projects are increasingly open to foreign firms. Many areas hold virgin hydrocarbon plays (see related story p. 23).
John Bentley, managing director of Energy Africa SA, the new exploration and production unit of Engen Ltd., Cape Town, said majors and state oil firms dominate Africa's upstream sector.
"Things are changing and quite rapidly in certain countries," Bentley said. "A handful of independents have established successful operations over the last couple of years."
Bentley said one attraction for independents to sub-Saharan Africa is maturity of some producing areas. Firms with low overheads can profit by taking over small or declining fields from major operators.
He said,"The other side of the coin is growing realization that political risk in many countries in Africa is much diminished from a decade ago and probably compares favorably with other oil producing provinces such as areas in the former Soviet Union."
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