Thursday, March 10, 2011

Survey of Oil Exports from North Africa

Twitter is ablaze with talk of the protests planned by some Saudi citizens next Friday. Saudi troops are already being deployed around the Kingdom. Before there was any sense that contagion might spread even to Saudi Arabia, some analysts were warning of $220 oil ….”only” if Libyan and Algerian oil production was affected. Now one analyst says this of the prospect of Saudi disruption: “this is when you can come up with pretty much any silly number you want.” from: A time of consequences
As we reach March 11, 2011, the designated “day of rage” in Saudi Arabia, and perhaps in other countries in the region, speculation is running rampant that oil will reach $200/b, and up, on fears that civil unrest will curtail the ~9 mbd of Saudi Arabia production, thereby causing oil exports to Europe, Asia and North America to sharply decline. 

This article rounds out my survey of petroleum export trends for the countries of the Middle East and North Africa.  In a previous article, I surveyed the 14 countries of the Middle East; this article surveys the 14 countries of North Africa. 

The survey examines the effects such a curtailment might have on oil exports from North Africa, and the Middle East. 

A Brief Geography Lesson
Solar navigator gives a concise definition for the MENA (Middle East and North Africa) countries:
Northern Africa is the northernmost region of the African continent, generally divided by the formidable barrier of the Sahara from Sub-Saharan Africa. Geopolitically, the UN definition of Northern Africa (which coincides with common reckonings of the region) includes the following seven territories:  Algeria Egypt  Libya Morocco  Sudan Tunisia  Western Sahara *

Geographically, the Azores, Mauritania, Mali, Niger, Chad, Ethiopia, Eritrea, and Djibouti are sometimes included.

The Maghreb includes Western Sahara (claimed by Morocco), Morocco, Algeria, Tunisia, Mauritania and Libya. North Africa generally is often included in common definitions of the Middle East, since they in many respects have closer ties to Western Asia than to sub-saharan Africa. In addition, the Sinai Peninsula of Egypt is part of Asia, making Egypt a transcontinental country.

For the purposes of these two articles, I have defined the countries of the Middle East and North Africa geographically, as shown in this map (from Nations online):

Survey of the North African Countries
Unless otherwise indicated, my data sources are the same as identified in the first article in this series.  Additionally, to better estimate the percentages of Middle East and North Africa exports going to EU and USA, I relied on 2009 data presented in the EU’s Market observatory: EU Crude oil imports and the EIA’s U.S. Total Crude Oil and Products Imports, respectively. I am not aware of similar statistics available for Asian countries.  However the EIA country analysis briefs gave enough commentary for me to make a reasonable estimate for Asia. 

For the graphs to follow, the left axis is in units of billions of barrels of petroleum per year (bbs/yr); the right axis is in units of millions of people.  Note that the vertical scale is not constant from country to country.

Religion: 99% Sunni Muslim (state religion)
Population: 34.6 million; growth rate 1.2%
GDP per Capita: $7,400 (2010 est.)
Public Debt: 25.7% of GDP (2010 est.)
Population below Poverty line 23% (2006 est.)
  • Hydrocarbons have long been the backbone of the economy, accounting for roughly 60% of budget revenues, 30% of GDP, and over 95% of export earnings. It ranks 16th in oil reserves. Thanks to strong hydrocarbon revenues, Algeria has a cushion of $150 billion in foreign currency reserves and a large hydrocarbon stabilization fund.
  • In 2008...Algeria was the fourth largest crude oil producer in Africa and the largest total oil liquids producer on the continent.  As a member of OPEC, Algeria's crude oil production can be constrained by the group’s crude production allocations, but Algeria also produced 450,000 bbl/d of condensate and 357,000 bbl/d of natural gas liquids, which are exempt from OPEC quotas, bringing total oil liquids production for the year up to a total of 2.23 million bbl/d. Domestic oil consumption accounted for about 13 percent of total production.
  • Top petroleum export destinations: Europe (34%); USA (28%)
Recent Petroleum Export Trend: Declining (production flat to declining; consumption increasing)

Religion: 51% Muslim, 35% Christian, 7% animist
Population: 10.5 million; growth rate 2%
GDP per Capita: $1,800 (2010 est.)
Public Debt: no data
Population below Poverty line 80% (2001 est.)
  • Chad's primarily agricultural economy will continue to be boosted by major foreign direct investment projects in the oil sector that began in 2000. At least 80% of Chad's population relies on subsistence farming and livestock raising for its livelihood.
  • A consortium led by two US companies has been investing $3.7 billion to develop oil reserves - estimated at 1 billion barrels - in southern Chad. Chinese companies are also expanding exploration efforts and are currently building a 300-km pipeline and the country's first refinery. The nation's total oil reserves are estimated at 1.5 billion barrels. Oil production came on stream in late 2003. Chad began to export oil in 2004.
no Country Analysis Brief

Recent Petroleum Export Trend: declining (declining production; no consumption)
Chad has very little domestic oil production and very low domestic consumption

Religion: Muslim 94%, Christian 6%
Population: 0.7 million; growth rate 2.2%
GDP per Capita: $2,800 (2010 est.)
Public Debt: no data
Population below Poverty line 42% (2007 est.)
  • Two-thirds of Djibouti's inhabitants live in the capital city; the remainder are mostly nomadic herders. Scanty rainfall limits crop production to fruits and vegetables, and most food must be imported.
  • Djibouti provides services as both a transit port for the region and an international transshipment and refueling center.
  • Djibouti is home to France's largest military base in Africa, and since 2001, the U.S. military's Combined Task Force, Horn of Africa, now numbering about 3,000 troops, has been based there. from Djibouti Rebels Threatening Stability in Strategic Country
no Country Analysis Brief

Recent Petroleum Import Trend: increasing (no production; increasing consumption)
Djibouti has no domestic oil production and very low domestic consumption.

Religion: Muslim (mostly Sunni) 90%, Coptic 9%, other Christian 1%
Population: 80.5 million; growth rate 2%
GDP per Capita: $6,200 (2010 est.)
Public Debt: 80.5% of GDP (2010 est.)
Population below Poverty line 20% (2005 est.)
  • Hydrocarbons play a sizeable role in Egypt’s economy both from oil and natural gas production and also in terms of revenues from the Suez Canal, an important transit point for oil shipments out of the Persian Gulf. Total oil production, however, has declined since the country’s 1996 peak of close to 935,000 barrels per day (bbl/d) to current levels of about 660,000 bbl/d. Egypt’s consumption is slightly higher than production and the country has begun to rely on a small volume of imports to meet domestic demand. Egypt also has the largest oil refining sector in Africa and since refining capacity now exceeds domestic demand, some non-Egyptian crudes are currently imported for processing and re-export
  • Decreases in oil production have been offset by the rapid development of the natural gas sector for both domestic consumption and export. Over the past decade, Egypt has become a significant natural gas producer and a strategic source for European natural gas imports. Egypt currently has a pipeline network for exports to Eastern Mediterranean countries in addition to liquefied natural gas (LNG) exports to Europe, Asia, and the Americas. However, increasing domestic demand for natural gas has led the government to stall natural gas export expansion plans. The government has been actively working to attract foreign investments in the sector to increase exploration, production and downstream activities.
Recent Petroleum Export Trend: Egypt hit net zero petroleum exports in 2009
 (decreasing production; increasing consumption)

Religion: Muslim, Coptic Christian, Roman Catholic, Protestant (no percentages given by the CIA)
Population: 5.8 million; growth rate 2.5%
GDP per Capita: $700 (2010 est.)
Public Debt: no data
Population below Poverty line 50% (2004 est.)
  • Like the economies of many African nations, a large share of the population - nearly 80% - is engaged in subsistence agriculture, but they produce only a small share of total output. Since the conclusion of the Ethiopian-Eritrea war in 2000, the government has maintained a firm grip on the economy, expanding the use of the military and party-owned businesses to complete Eritrea's development agenda
  • Eritrea has been accused by the West and the United Nations of supporting Islamist insurgents in Somalia as part of a proxy war against Ethiopia. from Djibouti Rebels Threatening Stability in Strategic Country
no Country Analysis Brief

Recent Petroleum ImportTrend: flat (no production; flat consumption)
Eritea has no domestic oil production and very low domestic consumption

Religion: Orthodox 43.5%, Muslim 33.9%, Protestant 18.6%, traditional 2.6%, Catholic 0.7%, other 0.7% (2007 Census)
Population: 88 million; growth rate 3.2%
GDP per Capita: $1,000 (2010 est.)
Public Debt: 39.3% of GDP (2010 est.)
Population below Poverty line 38.7% (FY05/06 est.)
  • Ethiopia's poverty-stricken economy is based on agriculture, accounting for almost 45% of GDP, and 85% of total employment; Under Ethiopia's constitution, the state owns all land and provides long-term leases to the tenants.
  • Ethiopian troops, backed by the USA, moved into Somalian territory from 2006-2009 at the invitation of the Transitional Federal Government (TFG) and Somali troops from Puntland in a failed attempt to overcome the Islamic Court Union (ICU), and other affiliated militias for control of the country. War in Somalia (2006–2009)
no Country Analysis Brief

Recent Petroleum ImportTrend: strongly increasing (no production; strongly increasing consumption)  Ethiopia has no domestic oil production and increasing domestic consumption, probably due to a rapidly increasing population

Religion: 97% Sunni Muslim
Population: 6.5 million; growth rate 2.1%
GDP per Capita: $13,800 (2010 est.)
Public Debt: 3.3% of GDP (2010 est.)
Population below Poverty line 33%
  • The Libyan economy depends primarily upon revenues from the oil sector, which contribute about 95% of export earnings, 25% of GDP, and 80% of government revenue. The weakness in world hydrocarbon prices in 2009 reduced Libyan government tax income and constrained economic growth.
  • Substantial revenues from the energy sector coupled with a small population give Libya one of the highest per capita GDPs in Africa, but little of this income flows down to the lower orders of society.
  • The Libyan economy is heavily dependent on the hydrocarbon industry which, according to the International Monetary Fund (IMF), accounted for over 95 percent of export earnings in 2010
  • Top petroleum export destinations: Europe (85%); USA (3%)
Recent Petroleum Export Trend: Flat (production and consumption both flat)

Religion: Muslim 90%, Christian 1%, indigenous beliefs 9%
Population: 14 million; growth rate 2.6%
GDP per Capita: $1,200 (2010 est.)
Public Debt: no data
Population below Poverty line 36.1% (2005 est.)
  • Among the 25 poorest countries in the world, Mali is a landlocked country highly dependent on gold mining and agricultural exports for revenue.
no Country Analysis Brief

Recent Petroleum ImportTrend: increasing (no production; increasing consumption)  Mali has no domestic oil production and very low but increasing domestic consumption.
Religion: Muslim 100%
Population: 3.2 million; growth rate 2.4%
GDP per Capita: $2,100 (2010 est.)
Public Debt: Mauritania qualified for debt relief under the Heavily Indebted Poor Countries (HIPC) initiative and nearly all of its foreign debt has since been forgiven.
Population below Poverty line 40% (2004 est.)
  • Half the population still depends on agriculture and livestock for a livelihood, even though many of the nomads and subsistence farmers were forced into the cities by recurrent droughts in the 1970s and 1980s.
  • Oil production from the country's only oil field, the Chinguetti Field, has been disappointing. Production at the field plummeted from an estimated 30,620 b/d in 2006 to 14,900 b/d in 2007, according to the Energy Information Administration (EIA). Output at Chinguetti struggled from the outset of production in 2006 due to a complex, fractured reservoir. Production is expected to fall further. from Petronas Hits Gas Offshore Mauritania
  • Petronas has failed to find hydrocarbons in the Gharabi-1 well in Block 6 offshore Mauritania. The well has been plugged and abandoned. from Petronas Drills Duster Offshore Mauritania
no Country Analysis Brief

Recent Petroleum ImportTrend: increasing (a brief spurt of production is rapidly declining and consumption is slightly declining constant) Mauritania has little domestic oil production and very low domestic consumption

Religion: 98.7% Muslim, 1.1% Christian
Population: 32 million; growth rate 1.1%
GDP per Capita: $4,900 (2010 est.)
Public Debt: 58.2% of GDP (2010 est.)
Population below Poverty line 15% (2007 est.)
  • Morocco's market economy benefits from the country's relatively low labor costs and proximity to Europe, which aid key areas of the economy such as agriculture, light manufacturing, tourism, and remittances.
  • Morocco is the world's largest exporter of phosphate, which has long provided a source of export earnings and economic stability.
no Country Analysis Brief

Recent Petroleum ImportTrend: increasing (almost no production and increasing consumption) Moroco has no domestic oil production and low domestic consumption

Religion: Muslim 80%, other (includes indigenous beliefs and Christian) 20%
Population: 16 million; growth rate 3.7%
GDP per Capita: $700 (2010 est.)
Public Debt: 58.2% of GDP (2010 est.) Niger qualified for enhanced debt relief under the International Monetary Fund program for Highly Indebted Poor Countries (HIPC) and concluded an agreement with the Fund on a Poverty Reduction and Growth Facility (PRGF).
Population below Poverty line 63% (1993 est.)
  • Niger is a landlocked, Sub-Saharan nation, whose economy centers on subsistence crops, livestock, and some of the world's largest uranium deposits. Drought, desertification, and strong population growth have undercut the economy. 
  • Niger is one of the poorest countries in the world with minimal government services and insufficient funds to develop its resource base.
no Country Analysis Brief

Recent Petroleum ImportTrend: increasing (no production and increasing consumption) Nuger has no domestic oil production and low domestic consumption

Religion: Muslim Sunni Muslim 70% (in north), Christian 5% (mostly in south and Khartoum), indigenous beliefs 25%
Population: 44 million; growth rate 2.5%
GDP per Capita: $2,200 (2010 est.)
Public Debt: 94.2% of GDP (2010 est.)
Population below Poverty line 63% (1993 est.)
  • Military regimes favoring Islamic-oriented governments have dominated national politics since independence from the UK in 1956.  The Darfur conflict, the aftermath of two decades of civil war in the south, the lack of basic infrastructure in large areas, and a reliance by much of the population on subsistence agriculture ensure much of the population will remain at or below the poverty line for years to come despite rapid rises in average per capita income.  
  • While the oil sector continues to drive growth, services and utilities play an increasingly important role in the economy with agriculture production remaining important as it employs 80% of the work force and contributes a third of GDP.
  • In 2009, according to the International Monetary Fund, oil represented over 90 percent of export earnings. For South Sudan (Juba), oil represented 98 percent of total revenues for the year compared to Khartoum at 65 percent.
  • The majority of reserves are located in the South in the Muglad and Melut basins. Due to civil conflict, oil exploration has mostly been limited to the central and south-central regions of the country.
  • The United States prohibits U.S. nationals are prohibited from engaging in any transactions or activities related to the petroleum or petrochemical industries in the entire territory of Sudan (including Southern Sudan) as a result of the conflict in Darfur.
  • Top petroleum export destinations: over 97% of exports go to Asia: China (65%) ; Indonsia (15%) ; Japan (12%) ; India (5%); Ethiopia imports most of its fuel from Sudan but official data on trade volumes is not available
Recent Petroleum Export Trend: Rapidly Increasing (production increasing faster than increasing consumption)

Religion: Muslim 98%, Christian 1%, Jewish and other 1%
Population: 10 million; growth rate 1%
GDP per Capita: $9,500 (2010 est.)
Public Debt: 49.5% of GDP (2010 est.)
Population below Poverty line 3.8% (2005 est.)
  • The country's first president, BOURGUIBA, established a strict one-party state. He dominated the country for 31 years, repressing Islamic fundamentalism and establishing rights for women unmatched by any other Arab nation. In November 1987, BOURGUIBA was removed from office and replaced by BEN ALI in a bloodless coup.
  • Street protests that began in Tunis in December 2010 over high unemployment, corruption, widespread poverty, and high food prices escalated in January 2011, culminating in rioting that led to hundreds of deaths. On 14 January 2011, the same day ALI dismissed the government, he fled the country, and by late January 2011, Prime Minister GHANNOUCHI announced the formation of a "national unity government" with the head of the Chamber of Deputies, M'BAZAA, as the interim president.
  • Tunisia has a diverse economy, with important agricultural, mining, tourism, and manufacturing sectors. Governmental control of economic affairs while still heavy has gradually lessened over the past decade with increasing privatization, simplification of the tax structure, and a prudent approach to debt.
no Country Analysis Brief

Recent Petroleum Export Trend: Increasing (increasing production and declining consumption) after hitting zero net exports in about 2001 Tunia has increased production and decreased consumption sufficiently to be a slightly net positive exporter once again.

West Sahara
Religion: Muslim
Population: 0.5 million; growth rate 3.2%
GDP per Capita: $2,500 (2007 est.)
Public Debt: no data
Population below Poverty line no data
  • Morocco annexed the northern two-thirds of Western Sahara (formerly Spanish Sahara) in 1976 and claimed the rest of the territory in 1979, following Mauritania's withdrawal. A guerrilla war with the Polisario Front contesting Morocco's sovereignty ended in a 1991 UN-brokered cease-fire
  • Western Sahara has a small market-based economy whose main industries are fishing, phosphate mining, and pastoral nomadism. The territory's arid desert climate makes sedentary agriculture difficult, and Western Sahara imports much of its food.
no Country Analysis Brief

Recent Petroleum Import Trend: Increasing (no production and consumption increasing)

Summary and Conclusions
As with the Middle East Survey, by just looking at these plotsm you can see that the overall trend in production rates is flat or down while consumption rates are up—even for the countries with no production.

Similar to the Middle East survey, there are a few North African countries have increasing exports, but their rapid population growth will tend to mitigate any increase in exports as domestic consumption increases.  An exception to this is Sudan, but the relative amount of oil produced by Sudan is quite small.

Of these fourteenNorth African countries, nine are importers: Djibouti, Egypt (starting 2009), Eritea, Ethiopia, Mali, Mauritania, Morocco, Niger and West Sahara.  Several of these are among the poorest countries in the world.  The percentage of the population below the poverty line ranges for 36 to 63% for all of these importing countries, except Egypt (20%) and Morocco (15%).  Morocco has other income sources, while Egypt just recently hit net zero exports.  I expect the percentage of the population falling below the poverty line Egypt will soon joining the percentages of other importers.

One point made very clear by this survey is that that population growth does not require oil consumption, at least not directly.  Just look at Ethiopia  and Niger with +3% population growth rates, but still very low oil consumption rates.  These are insanely high population growth rates, but on a per capita basis, oil consumption is about as low as you will see anywhere in the world: less than 0.2 b/p•yr. Perhaps the population growth is fueled indirectly by petroelum through foreign aid and food imports. More on the population growth from these, and the other importing countries later on.

Tunisia was a petroelum importer for several years in the early 2000s, but recently has become an exporter again, although the amount of exports is very small.  Tunsia does have other sources of income, which helps to explain why the percentage of the population below the poverty line (3.8%) is the lowest in North Africa, and why the country has a relatively high GDP per capita.  It would seem that the civil unrest that started in Tunisia and spread across the Middle East has less to due with oil and poverty, and more to due with religious repression, and a forced move towards western style secularism, that is not supported by the majority Muslim population.  You don’t hear this in the mainstream media, but, Tunisia is not rushing to democracy, rather it is about to become a fundamentalist Islamic republic similar to Iran (Secular Tunisia may face a new, younger Islamist challenge; End to hijab ban mooted in Tunisia – the end of secularism?; Islamist movement at forefront of Tunisia's protests). 

Of the five petroelum exporters, only three: Algeria, Libya and Sudan have exports that are large enough in magnitude to be of much global significance. Algeria splits its exports between Europe (34%), North America (28%) and probably the remainder to Asia, while Libya send almost all its exports to Europe, and Sudan send almost all of its oil to Asia. 

Surveying the Middle East and North Africa Exporters as a Group
The bar graph below shows the 15 countries with net position petroleum exports in order of the quantity exported.  The green arrows show the recent export trend for each country.
Petroleum exports from the Middle East and North Africa in total equaled 8 bbs/yr in 2009, corresponding to about 48% of total global exports. 

Saudi Arabia is the dominant exporter for the region, accounting for one-third (2.7 bbs/yr) of the 8 bbs/yr exported in 2009.  North African exports accounts for another 19% (1.5 bbs/yr) and the other countries of the Middle East make up the remaining 42% of exports.

The curtailment of exports from the Middle East and North Africa would impact Asia the most, then Europe and then the USA, as this table shows:

Exports from ME & NA
3.8 bbs/yr
1.2 bbs/yr
0.8 bbs/yr

Looking at this, one might be tempted to say that the civil unrest in the Middle East and North Africa and potential loss of petroelum exports is mainly Asia’s problem, and, there is some truth to that.  But, so long as petroelum remains a fungible quantity, Asia’s lost imports would rapidly translate into higher prices for all importers (and greater profits for the exporters).

The figure below shows the sum of petroelum production, consumption and exports for the 15 exporting countries of Middle East and North Africa, their populations, and projected future populations, as predicted by the US census bureau. 

The trends for production rates peaking (blue) and consumption rate increasing (red) has a clear consequence: flat to falling export rate (green). 

The total population for the 15 exporting MENA countries in 2010 was estimated to be 297 million—that's a little less than the USA’s population.  But at a composite 2%/yr growth rate, by 2030, that population is expected to grow to 400 million.  I would expect the domestic consumption rate to at least match the population growth and increase by 2%/yr.  However, the recent 5 year trend is for petroleum consumption rates to be more than double this rate: 4.1%/yr.  Therefore, even if production stays flat, I expect export rates to decline.

What about the oil importing neighbors of the 15 exporting countries?

The dashed red line in the figure adds in the consumption rates from the 13 oil importing MENA countries.  As expected from the country by country survey, their total consumption rate is small (20%) compared to the sum of consumption rates of the 15 exporting countries.

The dashed black line adds in the population of the 13 importing countries, which in 2010, equaled about 154 million. That puts the total population of the MENA countries at over half-a billion (554 million).  By 2030, the population of the 13 importing countries is projected to grow by another 200 million people, putting the total population for the MENA at 800 million.  A population of one-billion is projected to be reached by 2045. 

If the population increases anything close to these numbers, I expect that the entire region's economy to be disrupted by the additional stresses to the environment, the food supply, the water supply that this will cause, and all this in the face of declining revenues from petroelum exports. 

Except for Ethiopia and Israel, all of the MENA countries are majority Muslim in religious belief system.  I expect that if the general population in these countries get their way, then eventually all of these countries will shift to a fundamentalist Islamic republic style of government that is less friendly towards the West and less inclined to export as much of  their declining petroelum resourse as they have in the past.  However, they will still probaly have to export petroelum, essentially in exchange for food to feed the exploding population in the region.  And when the oil exports end?  Well....I think that you can see the likely result as well as I can: increasing poverty, starvation, civil unrest and war.

1 comment:

  1. Thanks for a very thorough and comprehensive review. Since the region accounts for about half of the world's net inter-regional exports of oil and significant natural gas exports too, one might conclude that a sustained period of instability will contribute to an intensification of the oil export slowdown already observed in your data. If revolution spreads to other exporters in Algeria and the Gulf then the already impending global liquids imbalance between demand and supply will become a very serious issue for the global economy in the period 2012-2015.


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