Africa is a big part of the future of natural resource exploration and production. Right now, Africa produces only about 12% of the world’s oil output. By 2012, that could be 30%. No wonder, then, it has become such a competitive battleground for the oil companies.
In the spring, Delhi hosted the first Indian-African summit. Trade between India and Africa tops $25 billion per year. Nigeria, for example, accounts for 10% of India’s crude oil imports. But China’s trade with Africa is a lot more – $55 billion annually. The reason for this boom in trade? A hunger for the natural resources of Africa.
The recent discovery of oil sands in the Congo by Eni (BIT:ENI), the big Italian oil group, lends more credence to the idea of Africa as the future of global oil supply. Eni potentially doubled its oil reserves with this one African find. And in a recent auction, India’s state oil company bid $321 million for an Angolan oil block. A Chinese oil giant bid $725 million.
It’s not just about oil, either. Africa holds tremendous amounts of natural gas, minerals, and natural resources of all kinds. Much of it is in places where it’s easy to do business. But there is often a fragile social fabric, which seems ever on the brink of a civil war or a coup or worse.
In Niger, for example, you will find some of the world’s largest deposits of uranium. Niger plans to double its output over the next several years. But the uranium deposits lie in the ancestral home of the nomadic Tuareg. The Blue Men of the Desert return to old ceremonial grounds to find red flags marking uranium deposits. The result is predictable – battles between the Niger army and Tuareg fighters, and bloodshed.
The race is on to extract the resources of Africa. The stampede of countries is getting louder. And yet, the people starve.