It was announced yesterday that offshore drilling operations by Pancontinental Oil and Gas near Malindi on the Kenyan coast have been successful in locating deposits of natural gas. The company’s shares surged 70% on the Australian Stock Exchange following the announcement. The discovery follows recent discoveries of oil in Kenya, giving the country the hope of becoming a net energy exporter rather than a heavy importer.
Although several African countries have been exporters of oil and gas for some time, the benefits for Africa have been mixed. In countries like Nigeria and Equatorial Guinea, vast oil wealth has been squandered by political elites, and ordinary citizens have seen few benefits; on occasion ordinary citizens have become worse off while the wealthy few have become even more exceedingly wealthy, and troubles and unrest have followed.
So far most of Africa’s oil has come from Libya, Nigeria, Algeria, Angola and Sudan. Natural gas has come mainly from Algeria, Egypt, Libya and Nigeria. Now, with discoveries of oil in Uganda, Kenya and Ethiopia, and with discoveries of substantial quantities of gas in Kenya, Tanzania and Mozambique, the picture is changing. Good governance will be critical for ensuring that the benefits of the resources are maximised.