Africa can replace Persian Gulf oil, says US senator

Originally at http://www.miningweekly.co.za/min/news/today/?show=83161

The US wants to break Organisation of Petroleum Exporting Companies’ (Opec’s) hold over world oil supplies and sees Africa as a viable alternative.

That was the message from US senator Rodney Ellis, on Wednesday, when he addressed the Oil Africa 2006 conference currently under way, in Cape Town.

“There is a long-term strategy from the US government to weaken Opec’s hold on the market, and one way to do that is to peel off certain countries,” he quoted the Petroleum Finance Company MD Roger Diwan as saying.

Ellis said that America planned to replace over 75% of its oil imports from the Middle East by 2025 and that Africa had the opportunity to replace the Persian Gulf as America’s main foreign source of oil.

The US is currently the world’s largest consumer of oil and energy, accounting for some 25% of the global daily oil consumption.

He reported that Africa, with its resources and expansive geography, had always been considered strategically important to US global interests and, according to the latest oil-trade statistics, oil imports accounted for more than 70% of all US imports from Africa.

It was also estimated that the US would invest more than $10-billion a year in oil activities in Africa and that it could be importing as much as 25% of its oil from Central Africa by 2015, compared with the current 16%.

Ellis reported that the demand for oil from the US was expected to increase substantially over the coming years and, according to the Federal Energy Information Commission, the demand in the US was expected to grow by 40% – from 20-million barrels a day to 28-million barrels a day.

However, the increased demand for oil would not only be limited to the US, he said, adding that world demand, led by the rapid economic development of countries like China and India, was expected to increase by more than 50% from 78-million barrels a day to 120-million barrels a day.

Meanwhile, a recent study carried out by the National Commission on Energy Policy, showed that the oil price could surge by 177%, as a result of a temporary 4% global shortfall in daily supply.

The increased demand, but limited supply, had resulted in the need to diversify the world’s oil resources and reduced reliance on oil from a select few countries, Ellis said.

He reported that the global oil market was almost entirely dependent on Saudi Arabia’s ability to serve as a supplier of last resort to offset demand increases and supply shortfalls around the world.

“The fact that spare capacity is both extremely limited and concentrated in the Middle East leaves world markets extremely vulnerable to short-term disruptions, driving prices upward and increasing general volatility,” Ellis said.

Since September 11, 2001, and the uncertainty in Iraq and the Middle East, the world was increasingly looking for new sources of oil, he said, adding that political unrest and the uncertainty of oil productivity in the Middle East could create an energy problem in the near future – leaving African oil-producing countries with a supply opportunity.

Furthermore, Ellis also reported that Africa was holding around 8% of the world’s crude reserves – which made the continent an appealing alternative for countries seeking to diversify their oil imports.

Currently, Nigeria was the world’s eleventh-largest oil producer, with Angola, Sudan, Equatorial Guinea and Gabon also producing vast amounts of oil.

He said that Africa also had some political advantages to offer, with none of the African countries, apart from Nigeria, belonging to Opec.