PETROANALYSIS || ARTICLE
Oil in West Africa: Part One 1999 to 2010
Both the United States and China are dependent on their petroleum imports. Both countries need safe and secure suppliers who have long-term in situ reserves.
This article is the first of a brief series that will look at the role that West Africa has played in the international petroleum market during the last two decades and the importance of this area’s oil for both the U.S. and China.
It should be noted at this point that in the period covered at present, 1999 to 2010, there was a great euphoria in American political circles with regard to the possible results of their strategy of giving privilege to Angolan and Nigerian light sweet crudes. Later on, this situation would change with the impact of the “shale revolution” and the subsequent decrease in the importance of Angolan and Nigerian crudes destined to be refined in the United States.
Historically, petroleum exploration and exploitation in West Africa, in some countries, dates from the years previous to the Second World War, but in the cases of Angola, Gabon and Nigeria the nineteen-sixties were the start. In fact there was interest in oil exploration in Nigeria even in the first years of the twentieth century.
In terms of oil transport from West Africa to the United States and to China, one should note that the shipping distance from West Africa to the U.S. is half of that from the Middle East, and there are no maritime canals or security problems with respect to the Middle East. In contrast the shipping distance from West Africa to China is significantly longer than that from the Middle East, but in both cases entails passing through the Straits of Malacca.
West African oil played an integral part in political realities during the Cold War, the “New World Order” and the rise of China where petroleum was greatly needed.
In the case of the United States which depends on oil imports to cover domestic demand, it should be emphasised that the increase in weight given to West African oil corresponded to the criteria of security of supply that came to form a key part in U.S. petroleum strategy after the 2001 Twin Towers attack.
With respect to China, and given its insufficient petroleum production, its investments in oil in West Africa increased significantly, with the objective of securing sustained access to the resources of the region.
West Africa, then, has clearly important for both the United States and for China. This can be appreciated from the increases in petroleum imports from the region by both the U.S. and by China: U.S. imports increased 33.7% during the period in question, 1999-2010); and Chinese imports increased 917%. At the same time West African petroleum reserves, production and exportation rose by 52.6%, 50% and 67.6% respectively.
However, as hinted at the beginning of this article, only a few years later an important change would come to the international petroleum market, brought about by the development of shale oil and gas, and led by the United States itself.
In particular this new situation would lead to a decrease in U.S. imports from Angola and Nigeria whilst the country reoriented towards production in its own territory. The American euphoria for West African oil, which was both understandable and valid in its moment, dissipated. For China, West Africa continues to play an important role in its long-term strategy of obtaining secure sources of petroleum supplies.
“The growing importance of West African oil, 1999-2010”. Stuart Wilkinson, September 2013