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Are there any ‘success stories’ of African oil production?

It is easier to find examples of African countries that seem to be afflicted by the ‘natural resource curse.’  Africa’s largest producers—Angola, Nigeria and Sudan—are regularly cited as countries where oil production has brought harm, and the ‘curse’ label is often also applied to Equatorial Guinea, Gabon and Chad. However, these countries have different histories and current situations, and their future is hard to foresee.  It is therefore perhaps too soon to say with certainty what role oil will have played in their development paths.

As relative scarcity pushes forward exploration frontiers, many other African countries are searching for oil and gas.  Countries as diverse as South Africa, Madagascar and Ethiopia have small reserves but are considered ‘under-explored’ and may have significant potential for new finds.   Mozambique has recently made substantial offshore gas finds and is looking for more.  Tanzania also has gas fields and is thought to have oil potential.  Kenya, hoping to share their East African neighbour’s luck, is prospecting.  Further north, various international oil companies were prospecting Somalia before that country’s prolonged period of civil strife, and an outbreak of peace there would doubtless bring them back.

Among newcomers to oil production, Ghana is frequently cited as a success story in the making.   The country, whose reserves are thought to be about twice those of Uganda, is credited with good standards of transparency and regulation, and saw a change in government through peaceful elections at a time when oil was coming on-stream.  São Tomé and Príncipe’s 2004 Oil Revenue Law has also been praised for including many elements of ‘best practice.’  Botswana, although not an oil producer, is even more widely commended for its management of diamond resource wealth.

Ghana’s experience is promising but it has not yet had to cope with the difficulties of on-shore oil production and it is too early to declare the country a success story. Nevertheless, the examples above may point towards better practice that the new generation of African oil producers could emulate.

Beyond Africa, Malaysia is often cited as a country that used oil revenues to diversify its economy, developing capacity in hi-tech industries and becoming a successful, middle-income country.  In the 1970s, China, in an oil-for-technology swap that played a significant part in China’s economic take-off, gave most of the output from its north-eastern oilfields to resource-poor Japan, in return for multi-billion dollar credit lines to buy in Japanese technology.  Both Malaysia and China created state-owned companies to develop their oil fields and these have since become important players in exploring and developing oil prospects elsewhere.