Yaounde, Cameroon Africa. (Cameroon News) – The countries that dot the Gulf of Guinea are turning out into a rich source of oil, cocoa and minerals and may well be the source of jealousy to the rest of the world.

A stretch of West Africa’s coast which comprises of more than a dozen countries, the Gulf of Guinea is slowly emerging into a highly sought after reserve of oil, cocoa and metals to the world markets.

But just as there are opportunities, there as also threats to these opportunities that make them lose their glory.

These threats come in the form of piracy, drug trafficking and political turmoil owing to elections that are to take place in most of the countries.

Many of the countries are still plagued by evils like civil wars and military coups which is making these regions apprehensive territories for people who wish to invest in their businesses and want to exploit their vast reserves of resources.

The Gulf of Guinea starts from Guinea on Africa’s northwestern tip to Gabon in the south and is dotted by countries like Nigeria, Ghana, Ivory Coast, Democratic Republic of Congo, and Cameroon spanning its entire length.

The article aims at analyzing some of the risk factors that are inhibiting the growth of these countries in spite of the vast store of resources that they contain.

Political Unrest in the lines of North Africa

Havign drawn inspiration from the results that anti government groups are garnering from protests in North Africa a lot of the countries here like Cameroon and Ivory Coast are also gearing up for such protests.

It is yet for the world to wait and see if such waves of protests will be also mirrored in Sub-Saharan Africa, especially in the countries along the Gulf of Guinea where social and financial conditions are more or less like those in the north, and where most countries are also being ruled by some of the leaders who have served the longest tenures in office as per global statistics.

So far, protests have been taken out only by opposition groups in Cameroon and Gabon and even those have not had the impact of their North African counterparts what with the protests having been stalled at the root or taken over by the force of the state rum police and army.

Things to look out for:

It is important that the world keeps track of the development of stronger protests or possibilities of a security crackdown both of which have been considered as strong possibilities by political experts across the world.

Upcoming energy Stores?

The countries that dot the Gulf of Guinea are home to more than 3 million barrels of oil per day –which makes up close to 4 percent of the global total — mostly for European and American markets, with the major chunk of oil being contributed by OPEC-member Nigeria (2.2 million bpd).

Sone countries that are likely to join the list and comprise of smaller producers include Equatorial Guinea (300,000 bpd), Congo Republic (340,000 bpd), Gabon (230,000 bpd), Cameroon (66,000 bpd) and Ivory Coast (40,000 bpd).

While many of the region’s oil hubs are just about managing to continue giving the same levels of output, oil companies assume that the deep seas along the coast west of Nigeria could well turn out to be a totally new avenue.

Ghana is the latest addition to the list of West African oil producers coming in this December and is anticipated to enhance its output to 150,000 bpd in the coming year.

To add on to the list are, Sierra Leone and Liberia who expect to start off offshore drilling which is anticipated to create more oil riches for them as well.

Experts believe that the Gulf of Guinea will be responsible for the supply of close to a quarter of U.S. oil by 2015 and has dispatched military trainers to the region to aid local navies manage shipping.

Things to look out for:

Setting fuel to a highly controversial step that has raised quite some criticism, Gabon has called in direct bids for investments in the oil fields that remain in the country as against the usual practice of auction.

The government of the country has further announced that a new set of rules would be laid out on which the negotiations would be based.

The results of exploration efforts by mining majors like Tullow (TLW.L) and Anadarko (APC.N) off Ghana, Sierra Leone, and Liberia could be what would be determinant of indicating the energy potential of the region.

Anadarko said in November it had discovered yet another oil find in Sierra Leone at its Mercury-1 well. Tullow and Lukoil which improves the prospects in Ghana.

However the activities in these areas are risky especially for shipping and oil transportation since there have been numerous cases of abductions and attacks from pirates in this region.

The safety of operations of contracts are also a source of concern after Ghana’s government said last year Exxon Mobil’s reported deal to buy Kosmos’ stake in the Jubilee field had not followed the legal mandates . Kosmos announced in August the deal was no longer there.

Worlds Top Cocoa producers

Two-thirds of the world’s cocoa is produced from Gulf of Guinea nations, a major chunk of it being contributed by the world’s top producer of the crop, Ivory Coast, and the remaining from Ghana, Nigeria, Cameroon and others.

Cocoa output from the four producers during the 2009-10 season reached an all time low in the past three years going below 2.4 million tonnes, but may just get back to over 2.5 million tonnes within the course of the next two years if Ghana is able to keep up to its ambitious targets.

A major risk, however, is the political turmoil in top producer Ivory Coast that is causing lots of delays to shipments from the ports of Abidjan and San Pedro and there are also rumors of an increase in the number of smugglers

What to watch out for:

Ivory Coast’s presidential candidate Alassane Ouattara has enforced a ban on Ivorian cocoa exports to March 15 as a measure to let incumbent Laurent Gbagbo suffer from lack of funds. Western and African leaders have said Ouattara was the winner of the Nov. elections, but Gbagbo is still not agreeing to move out from his post.

As of now it looks as though many big time exporters are acceding to the ban which has been brought into force by putting a stop to new export registrations — a factor that has infinitely slowed down official shipments from Abidjan and San Pedro.

Experts opine, however, that a major portion of the cocoa will most probably make its way onto the market through illegal means, including into neighbour Ghana. The major portion of the 2010-11 season’s crop has already been registered for export. [COC/IC]

The world’s second biggest cocoa producer Ghana is anticipating its official output to rebound this season to 800,000 tonnes, after below 650,000 tonnes last season. [ID:nLDE6BL19X] .The country has already announced that it is committed to its target of 1 million tonnes of annual output within the course of the next two years. If successful, the programme could alter Ghana’s position in the world map of cocoa production to go above Ivory Coast as the world’s top cocoa producer.

The present political climate in Ivory Coast which is extremely tense has brought into question the long term probability of supply from the world’s top producer. The government however has announced that it would e extremely interested in employing measures to revamp the sector that has been ailing for many years because of lack of interest since a 2002-03 civil war, but years of crises have eliminated reform measures, causing output declines.

The Mineral wealth

The Gulf of Guinea is already proud of the world’s numero uno bauxite exporter Guinea and biggest gold producer Ghana both of which have been regularly luring in billions of dollars of investments from resource firms who have been greedily putting their hands into the rich yet unexploited resources of various minerals and metals.

The region will in course of time yield close to 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 (BLT.L) (BHP.AX), Rio Tinto (RIO.L)(RIO.AX), Vale (VALE.N)VALE.SA and Chinalco total to around $10 billion.

Mining companies are well versed on the threats that their businesses are likely to be subject to in West Africa, contract security being one of the major concerns.

What to look out for:

Iron-rich Guinea’s controversial elections in November that ended on a positive note putting a full stop to two years of military rule in now giving positive signals to investors a lot of who are considering renewing their investments and interests in the area.

New President Alpha Conde has nominated a former adviser to the prime minister as mines minister and proposes to revamp the mining code to give the state a 33 percent stake in projects, up from the 15 percent currently in vogue.

Other prominent concerns in the region include stringent power generation capacity, an issue which has been a causative factor in significantly bringing down mining investment in other countries such as South Africa and Chile.

Most notably, Cameroon is on the verge of ramping up power generation by three times by 2020 after regular power outages have prompted Rio Tinto’s joint-venture Alucam smelter to slash down operations in 2009.

Cameroon issued a treasury bond in December that was indicates as oversubscribed. Proceeds from the bond are intended to be deployed towards hydropower projects.

Piracy and abductions

Piracy in the Gulf of Guinea though not in the least comparable to what is happening off Somalia, but analysts say a hike in the scope and number of attacks in a region not proficient to handle the threat could adversely affect shipping and investment.

Recent attacks by armed pirates on ships off Cameroon’s major port of Douala have proven again that pirates are taking their operations beyond the Cameroon-Nigeria maritime frontier, where Niger Delta rebels function.
Eleven local officials were abducted and later freed in February, after close to five guards lost their lives at a Perenco site off the coast of oil-rich Bakkasi region.

Cameroon says that piracy is primarily responsible for a 13 percent drop in oil output in 2009 to 73,000 bpd. Production has since then dropped to 66,000 bpd and is expected to slide down further to 55,000 bpd in 2011.

What to look out for.

Shipping, oil production, and investment trends will dip due to the economic impact of piracy. Cameroon is anticipated to keep an offshore lease sale in 2011 that might be an accurate measure of the perceived risks of piracy to the sector.