For all the many environmental headlines we’re used to reading about Africa, surprisingly few of them ever seem to concern oil.
We’re entirely accustomed to following the ups and downs of Africa’s environmental rollercoaster, from the successes of Fairtrade initiatives with local producers to the horrors of poaching and mass deforestation. But we seldom seem to associate Africa with controversy over drilling for fossil fuels – which is slightly odd, given that the continent is home to some of the fastest-growing oil and gas economies in the world.
However, African oil prospects have been making headlines this week, thanks largely to plans announced by the continent’s richest man, Aliko Dangote. Dangote, currently reckoned to be worth around $12.3bn, is currently finalising details of a project that will see him plough staggering sums into building one of the world’s biggest oil refineries outside Lagos, Nigeria.
In a recent interview with Bloomberg Markets, the magnate was asked a throwaway question that, once you strip out the headline-grabbing costs involved in the venture, must surely come before any other: why oil, and why now? We’ve all had dire warnings about impending oil droughts ringing in our ears for the best part of a decade now; in that context, a project of this size at this time seems borderline crazy.
The answer, it turns out, is that Dangote Group don’t currently see where else they can invest their vast capital within African infrastructure at present with returns to match. Farming has always been the traditional money-maker in Africa (at least in terms of non-government-owned businesses), but as an industry it just can’t turn over the sorts of figures Dangote are looking to pump in; oil, particularly in the current climate, is one of the very few global sectors in existence that can handle such a colossal funding injection and still stand to turn a profit.
That all makes sense to a degree, but it also leaves one glaring question unanswered: how close are we to hitting ‘peak oil’?
How much oil is left?
It’s the dreaded term that’s come to signify the slow-motion crisis we’ve been drifting towards for years now. In a nutshell, there will come a moment in the (presumably not too distant) future when current levels of oil production become suddenly unsustainable: the moment immediately before that is when we’ll have hit peak oil.
Earth scientists the world over are pretty unanimous in agreement that such a moment will come, sooner or later – the question causing arguments is precisely when it will happen.
The various predictions flying around tend to vary wildly, and not just depending on whether you’re talking to an environmentalist or a tycoon: recent high-profile estimates have put the potential date at anywhere between 53 years and a single decade at the current rate of extraction.
For the scientists tasked with putting a more concrete number on things, there are several factors complicating matters immensely. Firstly, the world’s reserves are not at all evenly spread; international diplomacy (or something like it, we hope) will inevitably have a colossal impact on how this whole situation plays out over the coming years.
Secondly, the Earth is unlikely to ever ‘run out’ of oil. Vast quantities of it sit safely locked in deep, rocky reservoirs all over the planet, dwarfing the percentage that we’ve successfully exploited to date. The trouble is, when we talk of dwindling ‘reserves’, we’re referring to the stuff that we currently have the capacity to reach. Since that keeps changing on an almost annual basis with the ongoing development of new drilling technologies, it’s a somewhat nebulous concept that’s difficult to attach a concrete figure to.
A race against time… and profit
Thirdly – and here’s the rub for companies like Dangote – we’re also developing sustainable energy mechanisms at a rate to rival our progress in deeper drilling.
In effect, it’s becoming a race: if we’re able to economise the wide-scale production and distribution of sustainable energy at a cost that eventually undercuts more complex fossil fuel extraction processes, then the bottom could fall out of the deep oil market very quickly.
If not, environmentally controversial modern drilling practices (such as the notorious fracking process involved in large-scale shale oil extraction) will likely continue to be the norm for some time to come. Whether this type of industry truly offers a route to prosperity for Africa, or simply more of the shocking, seldom-reported environmental ruin visited on places like the Niger Delta in recent decades, remains to be seen.
What we do know is that, for the time being, the oil companies don’t seem overly afraid of that ‘peak oil’ moment happening any time soon – thanks in part to African contributions, BP announced last year that global production had actually risen by 15 billion barrels.
In that context, it’s not so hard to see what’s motivating Dangote and other multinationals to continue investing… but at what cost or profit to Africa, and for how long?