West Africa investment: Money for resources

West Africa

With extensive oil reserves in Nigeria and Angola, West Africa is resource-rich and as such, has attracted lots of attention from international governments and companies. Over the years, the likes of China, the US and Russia have put billions of dollars in aid, investments and military support into the region in a bid to secure the resources on offer, not unlike the current power play in the Arctic.

However the race for West Africa has not yet reached the levels of political one-upmanship that the Arctic has seen, but this is expected to change over the next few years.

According to a report from UK's Chatham House, there is a large amount of Western interest in Africa's oil and gas industry, but Asian firms have increased their investment in recent years.

The report, entitled 'Thirst for African Oil: Asian National Oil Companies in Nigeria and Angola', goes on to describe Western fears about an Asian takeover in the Nigerian and Angola oil sector as "highly exaggerated".

While the likes of Russia has already set up deals for Nigeria oil through term supply contracts or spot buying rather than through direct investment, owing to the country's political instability, Angola has seen more attention from the likes of China, who has been reaching out to oil-rich countries the world over to increase demand.

China's deals in order to secure oil blocks in Nigeria and Angola, has caused controversy in both countries and concern in Western capitals who fear 'internal meddling' from Beijing. However, China aren't the only one.

The past decade has seen India, South Korea and Taiwan acquire oil blocks in Nigeria in return for their commitment to invest in infrastructure projects worth a total of US$20 billion. Western oil companies allegedly complained saying that had been shut out of potential deals.

It is different in Angola where China has dominated deals, shutting out the likes of India and Japan. By investing in joint ventures with Angloa, China's Sinopec group has obtained oil equity through the Sonangol Sinopec International (SSI) business vehicle in a valuable deep water block, operated by BP, against Indian competition.

But what does this Asian domination mean for Russia and the US.... and West Africa?

If the Arctic is anything to go by, then expect aggressive competition in the upcoming years with all countries showing that in return for oil and gas, they have a lot to offer Africa. It has already worked for Russia who signed a deal in June to receive oil and gas in return for a a US$500 million package to assist Africa's economic development.

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