Will Africa Rival the Middle East as a U.S. Oil Supplier?
Peter Kiernan / 31 Oct 2007 - World Politics Review Exclusive
Earlier this year, a significant fact went largely unnoticed in the media: Crude oil imports from sub-Saharan Africa (excluding the Arab North African producers of Algeria and Libya) to the United States surpassed those from the Middle East. According to data from the U.S. Energy Information Administration (EIA), the United States imported 1.736 million barrels per day (b/d) from Sub-Saharan Africa in February 2007 -- the bulk from Nigeria and Angola but also from Chad, Congo (Brazzaville), Equatorial Guinea and Gabon. This amount was slightly greater than imports from the Middle East -- Saudi Arabia, Iraq, Kuwait, and a small amount from Yemen -- which totaled 1.708 million b/d. In March 2007, the United States imported 2.194 million b/d from sub-Saharan Africa compared to 2.095 million b/d from the Middle East.
Since April 2007, available EIA data show that the Middle East has surged ahead of sub-Saharan Africa once again as a source of imported oil to the United States, largely because of a steep decline in Nigeria's exports due to extensive civil unrest in its oil-producing provinces. But the trend over the last few years is clear: Africa is becoming a more important source of crude oil for the United States and in the longer term likely will become a more important source for the American market than the Middle East.
In 2000, the United States imported 874,000 b/d of crude oil from Nigeria. This rose to 1.045 million b/d in 2006. In the first quarter of 2007 the total was still higher, at 1.152 million b/d. Similarly, the United States imported 294,000 b/d from Angola in 2000, and this rose to 512,000 b/d in 2006. In the first quarter of 2007, oil imports from Angola were still higher at 567,000 b/d. In addition, Equatorial Guinea and Chad are new sources of imported oil for the U.S. while a steady supply also comes from mature producers such as Congo (Brazzaville) and Gabon. Angola and Equatorial Guinea have rapidly increased oil output over the last few years while Nigeria, despite its current problems, is producing more than it was five years ago and has potential for further increases in output as well (from deepwater reserves).
Still, the Middle East remains a significant source of U.S. oil imports even though levels have been fairly stagnant in recent years. The growth in oil demand from non-OECD Asia, especially China, has provided adequate competition for crude oil from the Middle East. Given that oil demand growth in Asia is likely to remain robust for some time to come, the trend of Middle Eastern barrels heading eastward in greater volumes is likely to continue. This will further open up the U.S. market for West African producers. These countries are closer to the United States anyway, and they can supply the lighter, sweeter grades of crude oil that are more suitable for U.S. refiners to refine into gasoline.
As a top supplier to the United States, Saudi Arabia is also facing competition in the world's largest oil market from Mexico and Canada. In recent times, the share of Middle Eastern oil in the U.S. market has slipped due to greater supplies from the Western Hemisphere and West Africa, as well as growing demand from Asia taking a larger share of Middle Eastern oil. Though there has been much political rhetoric about easing U.S. dependence on Middle East oil, the United States' slightly lower imports from the Middle East are more a reflection of supply and demand than the result of any policy effort by the U.S. government to ease oil dependence on the Persian Gulf.
At any rate, the gap between Middle Eastern and African oil exports to the United States has been closing. In 2000, the U.S. imported 2.438 million b/d of crude oil from the Middle East, representing 26 percent of total U.S. crude oil imports (9.071 million b/d) and 12.3 percent of total U.S. oil demand (19.7 million b/d). In that year, the United States also imported 1.374 million b/d of crude oil from sub-Saharan Africa, representing 15.1 percent of total U.S. crude oil imports and 7 percent of total U.S. oil demand. By 2005 however, this picture had somewhat changed. The U.S. imported slightly less oil from the Middle East than in 2000 (2.242 million b/d), which represented a decline in that region's share of total U.S. crude oil imports (10.126 million b/d) to 22 percent and of total oil demand (20.80 million b/d) to 10.8 percent. But in 2005 imports from sub-Saharan Africa rose to 1.852 million b/d, a substantial increase over 2000. Subsequently, that region's share of U.S. crude oil imports rose to 18.2 percent, while its share of total U.S. oil demand increased to 8.9 percent. In the first quarter of 2007, the share of both Middle Eastern and sub-Saharan African oil imports was level at around 20 percent each. By 2015, the National Intelligence Council estimates that Africa will be supplying about one-quarter of the United States' oil import needs.
Africa is not just becoming a more important source of oil for the United States: it is also becoming an important source for China. Approximately one-third of China's oil imports now come from Africa, whose main suppliers on the continent are Angola, Congo (Brazzaville), Equatorial Guinea and Sudan. Although only 9 percent of Africa's oil exports are bound for China -- compared to 33 percent for the U.S. and 36 percent for Europe -- producers such as Sudan and Angola have become important suppliers for the rapidly growing Chinese oil market.
What is the significance of sub-Saharan Africa now rivaling the Middle East as a source of imported oil for the United States? There is no doubt that Africa has become strategically more important for the United States in recent years and the growth of African energy supplies is one reason why. Indeed the three key issues that define U.S. interests in Africa are counterterrorism (particularly in the Horn of Africa and the Sahel), energy supplies, and growing Chinese economic and political influence on the African continent.
According to the BP Statistical Review of World Energy, Africa's (including North Africa) proved oil reserves have doubled over the last twenty years to 117.2 billion barrels (bbl), which is about as much as Iraq's estimated level of proved reserves. The bulk of estimated reserves in Africa are in Nigeria and Libya and there is believed to be potential for further offshore discoveries in the Gulf of Guinea. Africa is also expected to be a significant source of growth in global oil supplies over the short to medium term.
Africa still lags behind the oil-rich Middle East, which is estimated to have around 742.7 billion bbls in proved reserves, or 61.5 percent of the world's total. But what makes Africa an attractive option is that its producing countries generally have more open investment regimes than in the Middle East, where reserves remain in the possession of state-owned oil concerns that in most cases allow little or no foreign investment.
Even so, when it comes to energy supplies, it is unlikely that the United States will shift its prime strategic focus from the Middle East to Africa. The fact is that the Middle East hosts the bulk of the world's proven oil reserves. Africa's reserves are equal to those in Iraq but less than those in Iran and Saudi Arabia. To be sure, Nigeria and Libya have substantial reserves and Angola's production is rapidly increasing. But the Persian Gulf remains key to supplying global markets. The narrow Strait of Hormuz on the southern edge of the Persian Gulf, for instance, is the passageway for between 14 and 16 million b/d of crude oil and is therefore the world's most crucial oil "choke point." By comparison, oil exports from West Africa amount to about 4.5 million b/d. While this is not insubstantial, the Middle East is still a more crucial oil supplier, and contains much greater levels of reserves, than Africa.
Furthermore, the rationale for the United States' strategic dominance in the Middle East is not driven by the need to secure crude oil for the American market per se, but by that region's role in supplying the entire global market. The U.S. is less oil-dependent on the Middle East than Europe and Japan, yet it is the major strategic player in that region because of its geopolitical importance.
Even if, as President Bush pledged last year, the United States was able to cut its oil import take from the Middle East by 75 percent, the region would still be of crucial strategic concern. A price hike or supply shock resulting from a series of terrorist attacks on oil facilities in the Middle East, or a regional war, would probably throw the global economy into recession, and this would ultimately affect the American economy no matter how much oil the United States actually imported from the Persian Gulf.
The fungible nature of the global oil market means that what happens in one oil-producing region affects other parts of the world as well, and this can't be avoided. It also means that the only way the United States can stop importing Middle East oil is to end oil imports overall -- an extremely unlikely scenario given that more than half the United States' oil needs are met by imports, a proportion which is forecast to steadily grow.
Africa's growing importance as an oil supplier to the United States is not an insignificant development, but it is unlikely to lead to any strategic American disengagement from the Middle East.
Peter Kiernan is an Associate at AALC, limited company, a consulting firm in the Washington, D.C. area. He writes on Middle East and energy issues.
Earlier this year, a significant fact went largely unnoticed in the media: Crude oil imports from sub-Saharan Africa (excluding the Arab North African producers of Algeria and Libya) to the United States surpassed those from the Middle East. According to data from the U.S. Energy Information Administration (EIA), the United States imported 1.736 million barrels per day (b/d) from Sub-Saharan Africa in February 2007 -- the bulk from Nigeria and Angola but also from Chad, Congo (Brazzaville), Equatorial Guinea and Gabon. This amount was slightly greater than imports from the Middle East -- Saudi Arabia, Iraq, Kuwait, and a small amount from Yemen -- which totaled 1.708 million b/d. In March 2007, the United States imported 2.194 million b/d from sub-Saharan Africa compared to 2.095 million b/d from the Middle East.
Since April 2007, available EIA data show that the Middle East has surged ahead of sub-Saharan Africa once again as a source of imported oil to the United States, largely because of a steep decline in Nigeria's exports due to extensive civil unrest in its oil-producing provinces. But the trend over the last few years is clear: Africa is becoming a more important source of crude oil for the United States and in the longer term likely will become a more important source for the American market than the Middle East.
In 2000, the United States imported 874,000 b/d of crude oil from Nigeria. This rose to 1.045 million b/d in 2006. In the first quarter of 2007 the total was still higher, at 1.152 million b/d. Similarly, the United States imported 294,000 b/d from Angola in 2000, and this rose to 512,000 b/d in 2006. In the first quarter of 2007, oil imports from Angola were still higher at 567,000 b/d. In addition, Equatorial Guinea and Chad are new sources of imported oil for the U.S. while a steady supply also comes from mature producers such as Congo (Brazzaville) and Gabon. Angola and Equatorial Guinea have rapidly increased oil output over the last few years while Nigeria, despite its current problems, is producing more than it was five years ago and has potential for further increases in output as well (from deepwater reserves).
Still, the Middle East remains a significant source of U.S. oil imports even though levels have been fairly stagnant in recent years. The growth in oil demand from non-OECD Asia, especially China, has provided adequate competition for crude oil from the Middle East. Given that oil demand growth in Asia is likely to remain robust for some time to come, the trend of Middle Eastern barrels heading eastward in greater volumes is likely to continue. This will further open up the U.S. market for West African producers. These countries are closer to the United States anyway, and they can supply the lighter, sweeter grades of crude oil that are more suitable for U.S. refiners to refine into gasoline.
As a top supplier to the United States, Saudi Arabia is also facing competition in the world's largest oil market from Mexico and Canada. In recent times, the share of Middle Eastern oil in the U.S. market has slipped due to greater supplies from the Western Hemisphere and West Africa, as well as growing demand from Asia taking a larger share of Middle Eastern oil. Though there has been much political rhetoric about easing U.S. dependence on Middle East oil, the United States' slightly lower imports from the Middle East are more a reflection of supply and demand than the result of any policy effort by the U.S. government to ease oil dependence on the Persian Gulf.
At any rate, the gap between Middle Eastern and African oil exports to the United States has been closing. In 2000, the U.S. imported 2.438 million b/d of crude oil from the Middle East, representing 26 percent of total U.S. crude oil imports (9.071 million b/d) and 12.3 percent of total U.S. oil demand (19.7 million b/d). In that year, the United States also imported 1.374 million b/d of crude oil from sub-Saharan Africa, representing 15.1 percent of total U.S. crude oil imports and 7 percent of total U.S. oil demand. By 2005 however, this picture had somewhat changed. The U.S. imported slightly less oil from the Middle East than in 2000 (2.242 million b/d), which represented a decline in that region's share of total U.S. crude oil imports (10.126 million b/d) to 22 percent and of total oil demand (20.80 million b/d) to 10.8 percent. But in 2005 imports from sub-Saharan Africa rose to 1.852 million b/d, a substantial increase over 2000. Subsequently, that region's share of U.S. crude oil imports rose to 18.2 percent, while its share of total U.S. oil demand increased to 8.9 percent. In the first quarter of 2007, the share of both Middle Eastern and sub-Saharan African oil imports was level at around 20 percent each. By 2015, the National Intelligence Council estimates that Africa will be supplying about one-quarter of the United States' oil import needs.
Africa is not just becoming a more important source of oil for the United States: it is also becoming an important source for China. Approximately one-third of China's oil imports now come from Africa, whose main suppliers on the continent are Angola, Congo (Brazzaville), Equatorial Guinea and Sudan. Although only 9 percent of Africa's oil exports are bound for China -- compared to 33 percent for the U.S. and 36 percent for Europe -- producers such as Sudan and Angola have become important suppliers for the rapidly growing Chinese oil market.
What is the significance of sub-Saharan Africa now rivaling the Middle East as a source of imported oil for the United States? There is no doubt that Africa has become strategically more important for the United States in recent years and the growth of African energy supplies is one reason why. Indeed the three key issues that define U.S. interests in Africa are counterterrorism (particularly in the Horn of Africa and the Sahel), energy supplies, and growing Chinese economic and political influence on the African continent.
According to the BP Statistical Review of World Energy, Africa's (including North Africa) proved oil reserves have doubled over the last twenty years to 117.2 billion barrels (bbl), which is about as much as Iraq's estimated level of proved reserves. The bulk of estimated reserves in Africa are in Nigeria and Libya and there is believed to be potential for further offshore discoveries in the Gulf of Guinea. Africa is also expected to be a significant source of growth in global oil supplies over the short to medium term.
Africa still lags behind the oil-rich Middle East, which is estimated to have around 742.7 billion bbls in proved reserves, or 61.5 percent of the world's total. But what makes Africa an attractive option is that its producing countries generally have more open investment regimes than in the Middle East, where reserves remain in the possession of state-owned oil concerns that in most cases allow little or no foreign investment.
Even so, when it comes to energy supplies, it is unlikely that the United States will shift its prime strategic focus from the Middle East to Africa. The fact is that the Middle East hosts the bulk of the world's proven oil reserves. Africa's reserves are equal to those in Iraq but less than those in Iran and Saudi Arabia. To be sure, Nigeria and Libya have substantial reserves and Angola's production is rapidly increasing. But the Persian Gulf remains key to supplying global markets. The narrow Strait of Hormuz on the southern edge of the Persian Gulf, for instance, is the passageway for between 14 and 16 million b/d of crude oil and is therefore the world's most crucial oil "choke point." By comparison, oil exports from West Africa amount to about 4.5 million b/d. While this is not insubstantial, the Middle East is still a more crucial oil supplier, and contains much greater levels of reserves, than Africa.
Furthermore, the rationale for the United States' strategic dominance in the Middle East is not driven by the need to secure crude oil for the American market per se, but by that region's role in supplying the entire global market. The U.S. is less oil-dependent on the Middle East than Europe and Japan, yet it is the major strategic player in that region because of its geopolitical importance.
Even if, as President Bush pledged last year, the United States was able to cut its oil import take from the Middle East by 75 percent, the region would still be of crucial strategic concern. A price hike or supply shock resulting from a series of terrorist attacks on oil facilities in the Middle East, or a regional war, would probably throw the global economy into recession, and this would ultimately affect the American economy no matter how much oil the United States actually imported from the Persian Gulf.
The fungible nature of the global oil market means that what happens in one oil-producing region affects other parts of the world as well, and this can't be avoided. It also means that the only way the United States can stop importing Middle East oil is to end oil imports overall -- an extremely unlikely scenario given that more than half the United States' oil needs are met by imports, a proportion which is forecast to steadily grow.
Africa's growing importance as an oil supplier to the United States is not an insignificant development, but it is unlikely to lead to any strategic American disengagement from the Middle East.
Peter Kiernan is an Associate at AALC, limited company, a consulting firm in the Washington, D.C. area. He writes on Middle East and energy issues.