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West Africa’s Energy Potential: Opportunities and Challenges for India

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  • September 05, 2014
    Fellows' Seminar

    Chair: Amb Niranjan Desai (Retd)
    External Discussants: Amb H H S Vishwanathan (Retd), Prof Girijesh Pant, Amb V B Soni (Retd)
    Internal Discussants: Dr Shebonti Ray Dadwal, Mr Nachiket Khadkiwala

    Presentation:

    Africa is not a monolith and there are seven regional groupings in the continent. The West African region is home to Africa’s largest population and fastest growing economies with largest proven reserves of energy resources. The region also offers some of Africa’s best examples of peacebuilding and regional integration. The West African states have formed the Economic Community of West African States (ECOWAS). According to Ms Beri, amid the current debate on the geopolitics of energy, the spotlight is shifting towards Africa as a source of oil. She, in her paper, attempts to assess the West African energy potential and describe the current Indian engagement regarding oil in the region. She also attempts to analyse the opportunities and challenges faced by India with regard to oil and energy cooperation in the region. Nigeria dominates in term of oil production in the West Africa as well as the whole of Africa. Equatorial Guinea, Ivory Coast, Gabon and Ghana are other oil producers in the region. Together they stand nowhere when compared to the amount of oil production only by Nigeria.

    India imports 75 per cent of its oil and its dependence on the resource is growing rapidly. Most of India’s crude import comes from West Asia through the Persian Gulf. So, India is trying to follow a twin strategy of diversifying its sources of oil supply and acquiring overseas energy assets. Currently, India imports around 20 per cent of its crude oil from Africa; and West Africa supplies almost half of it. Nigeria is the largest oil supplier for India from Africa. India’s interest regarding oil in Nigeria had begun in 2001 and now it has replaced the United States (US) as the top importer of the Nigerian oil. Although India has invested in several oil blocks in the region, only one block in Nigeria is producing currently. India also faces competition from China and other countries. The shale gas revolution in the US has fundamentally changed the widely held assumptions about both the future of energy imports and the role of West African states in supplying them. The question now is not whether the US will depend on West African oil, but whether it will import oil from West Africa at all. The decline in the US oil import from the region gives India a chance to increase its engagement with the region. The ECOWAS is also focused on improving energy access in the region. It has started the West African Power Pool (WAPP) and the West African Gas Pipeline programmes to increase electricity connections and natural gas transport in the region. It has also created the Regional Centre for Renewable Energy and Energy Efficiency (ECREEE) in Cape Verde. The Confederation of Indian Industries (CII) has undertaken several steps to increase energy and business engagements with Africa. It organises several regular business conclaves including the annual India-Africa Project Partnership Conclave. Recently, CII also helped facilitate the participation of some 30 Indian companies in the 11th West African Mining and Power Exhibition (WAMPEX) in Accra, Ghana to tap into Africa’s growing power and mining sectors. There is also a great potential of cooperation between India and Western Africa in the renewable energy sector.

    Despite all the potential for cooperation, the engagement with Western Africa faces many problems. The West African countries are riddled with the ‘resource curse’. Nigeria is an example of the problem of plenty. The Indian experience in West Africa tells that it is not easy to do business in the region. It remains doubtful if it can really depend on Nigeria for oil supply. Terrorism and piracy in West Africa are also important issues to be kept in mind. Most of the Western African sources of oil lie offshore and are especially threatened by piracy. There are doubts if the problems in the region can be solved in the short term. However, India should devise its policies keeping in the local sentiments in mind. It should also intensify its energy diplomacy in the region and look towards new energy producers like Niger and Ghana apart from Nigeria. It should be supportive towards the West African countries’ efforts for conflict resolution within the region. India should avoid delaying projects due to administrative reasons and should seek a partnership with the West African countries on the lines of the ECOWAS vision 2020 that promotes sustainable development.

    Major points of Discussion:

    • Although it may be good in long-term, just acquiring equity does not solve the energy security problem.
    • Although the United States (US) may not need oil, it will not lose interest in the region because it would need business for its companies.
    • India has a coordination problem among its own agencies and companies.
    • The difficulties created by the generator lobby in West Africa.
    • There remains uncertainty about the prevailing rules and regulations.
    • There are definitional problems regarding piracy as it is happening in territorial waters too.
    • There is a problem of oil bunkering in West Africa.
    • How much weightage should India give to hydrocarbons in its Africa Policy?
    • There is a need of comparative studies regarding West African oil.
    • Can India develop a proper supply-chain relationship with the West Africa?
    • Will India do better if it goes with an ideological or ideational mission in Africa?
    • Is there any possibility of India doing projects in collaboration with third countries in Western Africa?
    • Chinese sometimes put off Indian companies through tactical games.
    • Energy is not just hydrocarbons. India also needs to look towards the potential of biofuel in West Africa.
    • The oil demand in West Africa is also increasing. Probably there will be little or no oil available for export in future.
    • The issue of illicit financial growth due to the resource based economies in West Africa is also important.
    • Will the investment by European countries in the region increase? If yes, how will it affect India’s policies?
    • The biggest problem at the Indian side is about implementation and follow-up.

    Report prepared by Saurabh Mishra, Research Assistant, IDSA

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