Africa’s fabled mineral riches have excited foreign imaginations for centuries.
When in 1324, Mali’s king Mansa Musa, who had converted to Islam 18 years earlier, made his haj to Mecca, his 60,000 man caravan carried 12 tons of gold on the back of their camels, worth more than $531 million at current prices, so much so that it depressed gold prices in Cairo.
Seven centuries later, little has changed, except that it is now oil, “black gold,” which increasingly excites foreign companies.
Africa’s 54 countries have seen its oil and natural gas production centered in Nigeria, Libya, Algeria, Angola and Egypt, of which only Egypt not a member of OPEC. But the picture is changing, with the production in Kenya, Equatorial Guinea, Somalia and Ethiopia rising.
According to last year’s BP Statistical Energy Survey, Africa had proven oil reserves of 132,438 million barrels at the end of 2011, equivalent to 41.2 years of current production and 8.01 per cent of the world's reserves, with the continent producing roughly 8.8 million barrels per day in 2011, slightly more than 10 percent of world output.
Now, a newcomer may be about to join the ranks.
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On 21 May, after spending millions of dollars on exploratory drilling, Rio de Janeiro based Brazilian oil and gas exploration company High Resolution Technology (HRT) and Namibian businessman Knowledge Katti announced that they had found oil in one of its ten Namibian offshore blocs in the Walvis Basin off the central coast of Namibia. Namibia is the only West African where no petroleum discoveries have been made so far.
Interestingly, the announcement comes less than two weeks after HRT’s founder and president stepped down, as earlier in May HRT stocks tumbled nearly 25 percent on Brazil’s BOVESPA exchange, following the announcement that the company’s initial1-HRT-11-AM well in their 55 percent stake in 21 exploratory blocs in Brazil’s Amazon Solimões Basin had come up dry. Following the bad Amazon news, in a subsequent conference call with analysts HRT’s chairman of the board of directors of HRT, John Willott, tried to calm fears by ensuring that the transition in the command does not affect HRT’s oil exploration activities in Namibia, adding that the company intended to drill two more wells in its Namibian concessions by the end of the year.
But, let’s not dwell on the negativity. Despite market skepticism about the oil discovery announcement, Namibia’s Petroleum Commissioner, Immanuel Mulunga noted that the HRT announcement is the beginning of “good things for Namibia,” adding that the announcement was the “kind of news we were expecting for so long.”
Cautiously piling on the bandwagon, HRT exploration and production president Joe Paul told government officials in the Namibian capital Windhoek, “a multi-well offshore program in Namibia has found oil although not in commercial volumes,” causing a number of ministers and delegates to break into spontaneous applause.
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Quite a coup, as HRT began their offshore oil and gas drilling in Namibia only last month. The announcement caused HRT stock to soar more than 19 percent in Sao Paulo trading, quite a reversal as in the past year it had slid more than 90 percent from its all-time high after its other main project, the Amazon Solimões Basin joint venture with Russia’s state-owned NK Rosneft AO found only natural gas but no significant quantities of oil.
Bolstering Namibian optimism Angola, its northern neighbor, is Africa’s second largest oil producer in Africa after Nigeria.
While Namibia has gas reserves of 56.6 billion cubic meters, it currently has no oil production, nor proven reserves.
But, if HRT’s discovery does indeed pan out, then other companies with concessions in Namibia’s Atlantic offshore waters may soon be making similar announcements, including Brazil’s Petrobras and Spain's Repsol, which also have production licenses.
Whatever happens, will be interesting to watch.
By. John C.K. Daly of Oilprice.com