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Africa at highest risk of instability as oil and gas production wanes

April 26, 2021

When it comes to the final frontier for big oil discoveries, it’s not the Guyana-Suriname basin where supergiants like ExxonMobil (NYSE:XOM), Hess Corp. (NYSE:HES), and CNOOC (NYSE:CNOOC) have already staked their claims. And it’s not the American shale patch, where production has hit reverse gear with no end in sight. It’s Africa, where even small-cap companies are staking outsized claims of the kind that generously reward investors with a bigger risk appetite.

Unfortunately, the second-largest continent is suddenly finding itself between a rock and a hard place, thanks to Covid-19 and OPEC’s production cuts. Five of OPEC’s 13 member states are from Africa, with the huge cuts taking a massive hit on their oil-dependent economies.

Yet, things could get far worse for Africa’s oil and gas giants.

A new report by risk consultancy firm Verisk Maplecroft via CNBC has revealed that Algeria, Chad, Iraq, and Nigeria are at the highest risk to experience political instability as the world turns its back on oil and gas in favor of renewable energy.

About two decades ago, The Economist [infamously] dubbed Africa as the “Hopeless Continent”, claiming that the new millennium had brought more disaster than hope to Africa with threats of famine in Ethiopia (again), floods in Mozambique, mass murder in Uganda, and the implosion of Sierra Leone.

[Alex Kimani]

More: Energy Transition Could Doom Africa’s Oil Producers

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