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The Horn of Africa States The Potential of Oil and Gas in Regional Integration

(Part II)

By Dr. Suleiman Walhad
January 19th, 2023

In his book “The Prize” Daniel Yergin, noted in the prologue that it does not appear that the hydrocarbon man would give up his cars, or his suburban homes and whatever he considers not as conveniences but as essentials for his way of life. This was true when the hydrocarbon industry truly became an important element in the way people live since the early twentieth century and it remains true today. Despite the continuing discussions on climate change and the search for alternative sources of energy, a suitable, manageable, reasonably prized, less hazardous and profitable replacement has yet to be found or at least the processes for renewable energy have to be made acceptable and as convenient as hydrocarbons.

The current ongoing European war in Ukraine has made it also clear that nations would fight over oil and gas and that the hydrocarbons even at their worst, such as coal would not go away easily. In Germany, some groups are pushing to the return to the coal industry as in other parts of Europe after the cheap and convenient Russian gas was found inconvenient and troublesome for European and Western security in general.

Major countries of the world still search for hydrocarbons in regions that have not yet produced these products and they spend large outlays of funds in looking at their recoverability of hydrocarbons and specially for oil and gas. The Horn of Africa States region is not in the news not only because of the hunger and apparent despair but for two main reasons – its geostrategic position and its potential as a source of oil and gas and more specifically the latter, and in particular, when its availability and delivery depends on the source.

The potential for a hydrocarbon industry and more specifically for oil and gas is extensive in the horn of Africa States. Many of the geological formations of the land are said to be similar to those of West Asia, source of much oil and gas over the past nearly hundred years. With such potential and yet unexploited, there must some great inconvenience the hydrocarbon industry is unable to handle in the Horn of Africa States. The industry is not a clean industry, but they still overcome many substantial obstacles in many parts of the world. They have gone even to the cold polar zones and to the deep oceans and to many other countries. Yet the Horn of Africa States, despite holding extremely large potential reserves, stays out of the orbit of major oil and gas companies. Only adventurer hydrocarbon companies show up in the region. Are they the litmus test?

It cannot be only because of the political instabilities that the region is known for or the competition among the superpowers in the region because of its geostrategic location. I believe, we may have been looking at the wrong issues, when it comes to exploitation of the hydrocarbon potential of the Horn of Africa States. In the early part of the twentieth century, oil and oil discoveries, were mostly driven by men who dedicated to the product and the industry. There was John D. Rockefeller, and there was Alfred Noble and there were others that followed. One would look at Marcus Samuel who created Shell and William Knox D’Arcy, who created Anglo-Persian Oil, later the Iranian Oil company and others. One of the most influential of those men was Frank Holmes that Aden shopkeeper from New Zealand, who made it his career to develop the hydrocarbon industry of West Asia.

The hydrocarbon industry and specially the oil and gas became the national industries of those countries that produce the product. They removed those enterprising and endearing gentlemen who made it their business to sniff for oil and gas wherever and hence, in addition to the surplus of the products in the world, the interest of such men, in the modern age are not aroused. One has, these days, to deal with corrupt officials, interested only in the small dollar than real wealth that is out there in the depths of the lands and seas of the Horn of Africa States.

Perhaps another issue related to the industry in the region is the politicization of the region, where most people of the region breathe politics and essentially tribal and ethnic just as they breathe air. The individual state infrastructure of the region was not helpful either and perhaps, the hydrocarbon industry, could assist in the formation of a regional block where they can then deal with one super institution instead of helpless poor states, who are not capable of neither helping themselves nor others.

Perhaps instead of dealing with a number of national oil companies in constituent member states of the Horn of Africa States, it would be more opportune to deal with one regional oil institution empowered to make deals with others including major oil companies, other governments or regions, and all those interested in exploiting the resource that is said to be there but not yet seen. The climate change would no doubt be a factor to deal with, but the oil and gas industry is still around for quite some time into the future and present an opportunity for profit making.

 

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