Plunging Oil Prices Africa Feels the Pinch
Logistics Update Africa|November - December 2016

Although there is demand for oil and gas from markets in Africa, low crude prices combined with poor physical infrastructure, inadequate logistical solutions and burdening government regulations have blunted investment in oil and gas field development.

Surya Kannoth
Plunging Oil Prices Africa Feels the Pinch

The world’s oil and gas industry is back in the midst of turbulent times similar to the infamous oil crisis of 1973. Despite severe oil shortages, the current market turmoil is inversely proportional - Middle East and African oil wells pumping at maximum capacity at concomitant low prices.

Africa holds at least 8 per cent of world oil reserves and represents 10 per cent of global production. But low crude prices combined with poor physical infrastructure, inadequate logistical solutions and burdening government regulations have blunted investment in oil and gas field development. As a result, some African governments such as Tanzania and South Africa are reappraising their oil and gas legislation.

“Oil & gas business in Africa is currently down as with most regions operating in this sector throughout the world but we are ready and waiting for when this sector grows,” said Jamie Peters, cargo head at Hunt & Palmer, which offers charter services for oil & gas logistics.

The traditional large producers of Nigeria, Algeria and Angola where economies are very oil and gas dependent have seen significant negative impacts on their economy at the new market prices. These economies are in the process of realigning government expenditure to match their new income levels, seeking to diversify their economies from the historic dependence on oil and gas and focusing on reducing their production cost and price to market.

However, the energy resources remain in place and significant. In the medium term, these producers will recover and again become amongst the strongest economies in Africa. However, the position currently for these traditional producers remains very challenging so there is currently limited progression in new projects in these markets.

Diese Geschichte stammt aus der November - December 2016-Ausgabe von Logistics Update Africa.

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Diese Geschichte stammt aus der November - December 2016-Ausgabe von Logistics Update Africa.

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