It's no secret that global oil production is spreading rapidly. For instance, with most areas of the U.S. offshore prohibited from drilling activity, and the rendering of permits in the Gulf of Mexico having slowed to a snail's pace, the world will increasingly be forced to look to the likes of Brazil and Africa for its needed supplies of black gold.
Most people realize that Brazil's deepwater is yielding a steady stream of hydrocarbon discoveries. But Africa is something of a different story: The expanding list of oil-producing countries in the sub-Saharan portion of the continent is beset by challenges, and -- all too frequently -- dangers.
A new player in town
Just this week, Ghana became the latest African country to begin pumping oil. Three years after its discovery by a group led by Tullow Oil along with Anadarko Petroleum
Between its discovery and this week's first production, Jubilee was the subject of an effort by ExxonMobil
Perhaps even more promising, however, is Jubilee's location at the eastern edge of the Gulf of Guinea, with the potential of a huge 700-mile structure extending to the west as far as Sierra Leone. Indeed, in September, Tullow said it had found a second well, which it's dubbed Owo-Tweneboa. The first estimates have the new Gulf of Guinea well containing 1.4 billion barrels of oil.
Obviously, Ghana's reserve estimates, which top out at about 5 billion barrels, are easily dwarfed by Nigeria, which claims more than 37 billion barrels. Fortunately, however, Ghana is also significantly outdone by Nigeria's episodes of terrorism and violence, which have become regular occurrences in that country during the past several years.
Nigeria's violence isn't MENDing
As I told you last month, the latest attack involved Exxon's Oso platform in the Niger Delta. As is typically the case, the perpetrators were members of the seemingly ever-present Movement for the Emancipation of the Niger Delta (MEND), who reached the platform on five small, fast boats. After cutting power to the unit and abusing the workers aboard, they kidnapped eight members of the crew. The week prior, members of MEND had attacked and taken seven hostages from facilities operated by Afren, a London-based oil company.
All of the crewmen from the two companies were freed by Nigeria's armed forces, but not before Exxon's production from its Oso field was cut by 45,000 barrels per day. Nevertheless, with attacks having occurred regularly on a host of major companies, including Chevron
Even the infamous WikiLeaks has rendered a description of the frequent terrorism throughout Nigerian energy circles. It seems that amid the rampant corruption in the West African nation -- which is one of the five largest suppliers of oil to the United States -- the big integrated companies operating in the country frequently find themselves involved in ethical quicksand. For example, a March 2009 diplomatic report stated, "Shell and Total
Uganda: off to a bad start?
And then there's Uganda, with its own newly forming energy industry and a set of WikiLeaks-delivered charges. Among other things, the contention -- written in a classified but leaked 2009 cable by the U.S. ambassador to the country -- involved the possibility that two Ugandan ministers had been compensated illegally for supporting a $1.5 billion purchase by Eni
If true, Ambassador Jerry Lanier's claims likely would have frozen ExxonMobil out of an opportunity to participate in developing the blocks. All the parties involved in the allegations, including Eni, the ministers, and Heritage, have denied the charges.
The African star
Which brings us to Angola, perhaps the most ethical and most rapidly expanding oil producer in sub-Saharan Africa. The country has been the site of a steady string of offshore discoveries that have resulted in a 44% increase in daily production since 2006, versus levels that have at best remained flat in Nigeria.
One recent discovery offshore from Angola, the Mpungi-1 well, was completed in October in 1,050 meters of water. It was the eighth well and the seventh discovery drilled in Block 15/06 by a consortium led by Eni.
The above look at the changing African energy scene has not altered my recommendation to Fools regarding playing the world's primary production venues. I continue to believe that if you're selecting one stock, ExxonMobil remains the king, as it boasts the size and sophistication to operate in virtually all global locations, no matter how geopolitically and technologically challenging they may be.
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