Home / News / International / African oil sales hurt by U.S. shale boom
ship
The 'African Vision', an oil rig supply vessel registered in Lagos, Nigeria. Photo by Anne Burgess, CC-BY-SA 2.0 via geograph.uk

African oil sales hurt by U.S. shale boom

Shane Thielges | Shale Plays Media

Africa’s drilling industry is growing at a remarkable pace. Overseas investments in Sub-Saharan nations hit a record $43 billion in 2013, in part because of new oil and gas deposit discoveries. The continent supplies 6.5 percent of the world’s crude oil, and the Energy Information Administration says this number has grown by 3 percent each year for the past ten years.

Despite this promising growth, however, Africa faces a looming crude oil sales problem. Channel NewsAsia reports that U.S. oil imports from Africa have dropped to their lowest point in decades since the advent of hydraulic fracturing and horizontal drilling. The U.S. now produces enough oil to be nearly self-sufficient, harming smaller industries like those typically found on the African continent by removing a steady source of demand.

Losing a major buyer during a period of expansion could spell trouble for energy companies who have invested in the area. If revenue drops too far below new costs, corporations may consider the region too unprofitable.

There may yet be hope for African energy, however. Some industry leaders theorize that developing countries in the area may increase domestic demand as their energy needs grow. Others – including Kola Karim, CEO of Shoreline Energy International – say emerging overseas markets could make up the difference:

“In the last six months, the biggest buyers of Nigerian crude have been Brazil and India. So think about it. What America’s not bought, Brazil, India, China are taking in. So the only time we’ll feel an adverse effect on the continent is when all these countries slow down. If they do, then we have a problem.”

Unfortunately for African oil companies, this strategy is not foolproof either. If the U.S. eases regulations on allowing crude oil exports, as is rumored, it may be able to offer energy more cheaply than its competitors, leaving a gap that will be difficult to fill.

The Channel NewsAsia story can be found here: US shale boom could hit Africa’s oil producers

Related: Obama to announce $14 billion in U.S. corporate investments in Africa

2 comments

  1. Hell yeah that’s what I’m talking about

Leave a Reply

Your email address will not be published. Required fields are marked *

*