IHS CERAWeek 2013 Preview: Energy in Africa

Africa (beyond the Middle East) has long served as an important source of oil and gas. North Africa has supplied crude oil to global customers and natural gas to a predominantly European customer base for decades. However the last decade has seen a significant increase in supply from Sub-Saharan Africa. Deep-water offshore developments in Nigeria, Angola, and other West African countries have been augmented with new discoveries - onshore East Africa, offshore East Africa and offshore sub-salt West Africa (similar to major finds in offshore Brazil).

With opportunities come challenges. These new discoveries offer tremendous opportunities for the resource holders as well as the oil and gas industry. While Nigeria and Angola have experience in developing hydrocarbon resources, East African countries are in early stages of developing regulatory frameworks and supporting services that are critical for development of these resources.

In addition to the logistical and regulatory challenges, there are growing security concerns in some parts of Africa. The recent attack on foreign oil workers in Algeria demonstrates the new security risks facing foreign energy companies operating in North Africa. The spread of Islamic fundamentalism is a recent development and will remain a concern for the foreseeable future.

Optimism tempered by past experience. From the African perspective, the optimism brought about by the economic potential of the new energy opportunities must be tempered by past experiences. One hopes that the new entrants will be able to shake off the resource curse. As countries with limited experience in the energy market begin to develop their resources, they will learn from past experiences and develop regulatory frameworks and the legal infrastructure needed to capture the benefits for their entire population.

African Energy Summit at IHS CERAWeek 2013. On March 4, IHS CERA will be convening an African Energy Summit to explore these issues as part of the annual IHS CERAWeek conference. This event will bring together African leaders and senior policymakers as well as senior industry participants to discuss Africa's role in the coming decades as a major actor in the global energy industry. Among the issues to be discussed are opportunities and barriers to resource development as different countries experience different facets of the same challenge: how to accelerate development of resources to generate revenues for improving social and economic welfare.

In addition the Summit will include a discussion on how the nations of Africa can best capture the economic benefits of energy development as energy and economic development are intimately linked. Traditionally, companies and governments have focused on the dimension of employment generated from investments in energy development. However, this Summit will examine which development models are most appropriate for African countries looking to maximize the benefits of resource development to their economies as a whole.

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.