How Did Africa’s Prospective Petroleum Producers Fall Victim to the Presource Curse

  • Mar 2020
  • David Mihalyi, Thomas Scurfield

 

This paper reviews resource sector developments in 12 countries in Sub-Saharan Africa that made their first (major) petroleum discoveries during the most recent commodity boom. The analysis, which goes back to 2001, looks at sector forecasts of international organizations, governments, and companies and compares them with the results that emerged. The paper finds that a third of the countries did not make any commercially viable discoveries. Among those that potentially had commercial finds, the latest timelines from discovery to production are 73 percent longer on average than initially expected. In the six countries for which there are comparable data, revenue collected thus far or the most recent revenue projections for countries yet to reach production are 63 percent lower on average than the initial forecasts. All 12 countries experienced a disappointment in at least one of the three dimensions analyzed—and these disappointments are likely to be exacerbated by the recent price crash. The paper also documents the various policies adopted in response to the discoveries and — with the benefit of hindsight — finds that, in some cases, this over optimism contributed to the ‘presource curse’: suboptimal policymaking that did not align with the new realities. Some recommendations are provided on how better to navigate the inherent uncertainties in developing the sector.

The paper is available at the link below.

Related

Covid-19 Impact on the Oil and Gas Sector The global health crisis caused by the COVID-19 pandemic has required extraordinary measures across the world and led to unprecedented disruption in global oil markets. This policy brief gives an overview of the oil market price crash, the.... 20 February, 2020
Fostering Resilience in Emerging Oil Producers This paper draws from a fascinating series of virtual meetings the New Producers Group started in March 2020 to understand how the double crisis of Covid and the oil market crash would impact national aspirations for the petroleum sector..... 16 December, 2020