Management of the Emerging Oil and Gas Industry in Ghana - Essay Example

Ghana became Africa’s newest oil-producing country in December 2010, and the industry should soon bring around $1 billion in annual revenue to the West African nation. However, given the experiences of other West African oil producers, and particularly Nigeria and Angola, commentators have begun to question whether this new industry might prove more of a curse than a blessing.

In the past few decades, West Africa has experienced an oil boom, and in 2005 it was reported that production would double by 2010. A long-term project to build an oil pipeline from landlocked Chad to coastal Cameroon, and new explorations for potential oil fields on the Atlantic coast were signs that the region was becoming one of the West’s major oil suppliers. There is a general consensus that the proven reserves of West Africa are greater than those of either North American or Eastern Europe and Russia, and current major suppliers are Nigeria, Angola, Congo (Brazzaville), Gabon, and Cameroon. Indeed, Nigeria is the world’s sixth-largest provider of oil, and Angola will probably prove to have more oil than Kuwait. In response to increased Western demand for oil, it is expected that Nigeria and Angola, the region’s two biggest producers, will double or even triple their output in the course of the next decade.

During the Cold War, the United States, in particular, was heavily engaged in Africa in a strategic and military capacity, as part of its fight against global communism. Its administrations were determined that the Soviet Union would be able to find extensive allies in the region. Economic assistance was offered through the World Bank and the International Monetary Fund (IMF), both of which are heavily influenced by the United States government. United States engagement also the form of military intervention, in regions where Communist insurgencies threatened capitalist governments, regardless of whether or not the latter was setting an example of good governance. In Angola, for example, the United States launched covert and overt CIA and special forces operations, in collusion with several different groups, and was concerned above all that Communist forces in the country should not gain control over the oil reserves. This often involved supporting unrepresentative governments in Luanda or the provinces.

Western engagement with Africa dropped off as the Cold War came to an end, but has now taken a different turn, with private sector investment in its growing oil industry. Indeed, before this new engagement, Dao felt able to describe Africa as ‘the neglected stepchild of American diplomacy. Oil demand in the West has been growing apace, and it is estimated that US demand for oil will grow from 19.7 billion barrels in 2001 to 26 billion barrels by 2020, but the domestic oil-producing industry, largely focused on Texas and the Gulf of Mexico, was not expected to see a major increase in production.