Promoting International Energy Security: Volume 4, The Gulf of Guinea

Abstract : Nigeria and its neighbors in the Gulf of Guinea are important sources of petroleum for the Atlantic Basin (Figure 1.1). In 2010, production was about 3.1 million barrels per day (bpd), the bulk of which was exported (Energy Information Administration [EIA], 2011). This amount is 3.5 percent of the global output of liquid fuels. Proven reserves of crude oil in this region represent 3.3 percent of the global total. With large untapped resources of oil and natural gas, these nations have the potential to expand their output significantly. For example, an oil field estimated to hold well over 2 billion barrels of crude oil has recently been found off the coast of Ghana, indicating that the proven reserves in the western part of the Gulf of Guinea could increase significantly over the next few years. As a major energy-consuming country, the United States stands to benefit from diversification of energy supplies, which helps lower energy prices and strengthens energy security. In the short term, the nation s interest is to ensure reliable production and secure transit of oil from the region up to the full potential of its existing infrastructure. Stable production in the Gulf of Guinea would lessen price volatility and reduce the magnitude of price shocks in the global market for crude oil. Over the longer term, the United States would like to see the region attract the investment required to expand production both by tapping the considerable proven energy reserves and by exploring promising new areas. Expanded production would lessen global dependence on Persian Gulf suppliers and thereby exert downward pressure on crude oil prices. Advancing these interests requires a stable operating environment, and here the picture is mixed. Nigeria, by far the largest producer, suffers from attacks on and theft from its energy producing infrastructure. The shut-in (lost) production in 2009 was estimated to be 1.1 million bpd (EIA, 2010).