FACTBOX-Key political risks in the Gulf of Guinea


A stretch of West Africa’s coast spanning more than a dozen countries, the Gulf of Guinea is a growing source of oil, cocoa and metals to world markets.

But rising rates of piracy, drug smuggling, and political uncertainty in an area ravaged by civil wars and coups have made it a challenging destination for investors seeking to benefit from the massive resources.

The Gulf of Guinea runs from Guinea on Africa’s northwestern tip to Angola in the south and includes Nigeria, Ghana, Ivory Coast, Democratic Republic of Congo, and Cameroon, Reuters reports.


Gulf of Guinea nations produce more than 3 million barrels of oil per day — about 4 percent of the global total — mostly for European and American markets, with the bulk coming from OPEC-member Nigeria (2.2 million bpd).

Smaller producers include Equatorial Guinea (200,000 bpd), Congo Republic (340,000 bpd), Gabon (230,000 bpd), Cameroon (55,000 bpd) and Ivory Coast (40,000 bpd).

Ghana joined the ranks of West African oil producers in December 2010 and is expected to ramp up output to 120,000 bpd by early next years and reach 250,000 bpd after three years . Further out, Sierra Leone and Liberia hope offshore drilling will spell oil riches for them as well.

Washington estimates the Gulf of Guinea will supply about a quarter of U.S. oil by 2015 and has sent military trainers to the region to help local navies secure shipping as piracy is increasingly becoming a concern.

What to watch:
— Oil Sands: ENI’s $3 billion deal with the Republic of Congo to explore the estimated 2.5 billion barrels of recoverable oil sands in Congo runs out this year. There has been little information from the parties on the progress of the project. Eni had said it planned to invest about $3 bln in the 2008-11 period.
— Oil leases: Gabon decided to invite direct bids for investments in remaining oil blocks rather than auction them and is preparing new legislation for the sector . French oil major Total revived its exploration efforts in the country by purchasing stakes in three onshore licences
— Exploration efforts: The results of exploration efforts by Tullow and Anadarko off Ghana, Sierra Leone, and Liberia, Bowleven and Victoria Oil and Gas in Cameroon help define the energy potential of the region.
— Tullow said in September it struck more oil off Ghana, confirming an extension to its Enyenra field , the latest in a string of discoveries in the area. The company is expected to issue results soon for drilling off Liberia.

Bowleven said early in June that its Sapele-1 well off the coast of Cameroon flowed oil at rates which it believes indicate a commercial development is possible, while Victoria Oil & Gas (VOG) said the first gas sale from its flagship project in Cameroon was on schedule for the fourth quarter.
— Security: The security of operations and shipping is a key risk, with piracy on the rise in the area.


About three-quarters of the world’s cocoa comes from Gulf of Guinea nations, most of that from No.1 global producer Ivory Coast, and the rest from Ghana, Nigeria, Cameroon and others.

Cocoa output from the four producers hit new records this season to over 3.2 million tonnes due to ideal weather and improved husbandry techniques.

What to watch:
— 2011/2012 harvest: After record harvests from the top producers, the market is watching whether output for the coming season would match the 2010/2011 records. Farmers and cocoa industry officials think that, if the weather stays good, another banner crop is possible.
— Longer-term trend. Ivory Coast’s political crisis has called into question the longer-term security of supply from the world’s top producer. The government has said it is keen to revamp the sector with minimum price guarantees for farmers, a way to encourage reinvestment in ailing plantations.
— Ghana’s Cocobod authorities plan to raise $2 billion for the next cocoa season to buy at least 850,000-900,000 tonnes. Analysts predict cocoa purchases will exceed that figure.


Gulf of Guinea nations — already home to top bauxite exporter Guinea and major gold producer Ghana — have attracted billions of dollars of investments from resource firms eager to dig up its vast unexploited resources of iron ore.

The region could eventually produce nearly 10 percent of the world’s iron ore, up from under 1 percent last year, according to the U.S. Geological Survey.

Investments announced last year from BHP Billiton , Rio Tinto , Vale and Chinalco amount to around $10 billion.

What to watch:
— China’s move: China is making moves on some of Africa’s biggest iron ore resources so as to break Rio, Vale and BHP’s grip on iron ore supply and prices. China’s Hanlong has made a $1.5 billion bit for Australia’s Sundance Resources which owns the Mbalam project in Cameroon. China is still keen on the massive Belinga project in Gabon, while Chinalco is in joint venture talks with Rio over the Simandou project in Guinea.

Guinea is also in advanced talks with state-owned China Power Investment to develop a bauxite mine and build an alumina refinery, deep water port and a power plant.
— Mining companies are well aware of the risks common to West Africa, contract security being one of the chief worries. Guinea is planning a mining contract review, and Congo’s state firm Gecamines is planning an audit of joint ventures to raise money for expansion.
— Other risks in the region include tight power generation capacity especially in countries such as Liberia and Sierra Leone — something which has interfered with mining investment in other countries such as South Africa and Chile.

Most notably, Cameroon is hoping to triple power generation by 2020 after shortages forced Rio Tinto’s joint-venture Alucam smelter to cut back operations in 2009.

Cameroon issued a treasury bond in December that it said was oversubscribed and plans to issue another by year-end. Proceeds from the bonds are meant to go towards hydropower and other infrastructure projects.
— Elections. Liberia is in the midst of an election that, if smooth, could pave the way for billions of dollars in investment in its iron ore sector. Democratic Republic of Congo is approaching an election Nov. 28. In both cases, there is a risk of street unrest and uncertainty over investment policy if there is a change in leadership.


Piracy in the Gulf of Guinea is not on the scale of that off Somalia, but analysts say an increase in scope and number of attacks in a region ill-equipped to counter the threat could affect shipping and investment. Benin in particular is seeing an increase in activity off its coastline.

The U.N. Security Council has said it is concerned over the increase in piracy, maritime armed robbery and reports of hostage-taking in the Gulf of Guinea and its damaging impact on security, trade and economic activities in the sub-region.

West African drug trafficking is also having an impact on the region’s economies. The United Nations estimates that $1 billion worth of cocaine, destined for Europe from Latin America, passed through West Africa in 2008.