Instability, extremism threaten coastal West African oil belt

Insecurity and extremism in the coup-plagued Sahel risk destabilizing West African coastal states, which will soon be responsible for almost 500,000 b/d of oil and refined product flows, according to S&P Global Commodity Insights data.

Benin, Cote d'Ivoire, Ghana and Togo are peaceful and relatively prosperous but have seen a recent uptick in violence on their northern borders from Islamist insurgents active in junta-led Burkina Faso, Mali and Niger.

In Ghana's northern town of Bawku, the insecurity has amplified a deadly local community dispute, while Benin's W-Arly-Pendjari national park complex has become a smuggling route for the al-Qaida affiliated JNIM.

According to the Armed Conflict Location and Event Data Project (ACLED), the four coastal nations have seen 384 incidents -- including battles, explosions and violence against civilians -- in the past 12 months, with 397 fatalities.

The wider region has seen 7,526 such events and 23,382 fatalities over the period, driven by Burkina Faso, Mali and Nigeria.

"There is a genuine security threat," said Adam Bonaa, a Ghanaian security analyst, adding that poor governance and corruption in coastal states were hindering anti-extremism efforts.

"Once the people are left with nothing and the extremist group comes and provides them social amenities, water, food, the chances are they will pick up arms and fight."

Now, African and Western officials increasingly fear militant groups could seek to expand their reach south into coastal countries rich in gold, cocoa and increasingly oil, particularly after military juntas in the Sahel kicked out western forces.

Niger was a strong Western security ally and bulwark against the spread of extremism under former president Mohamed Bazoum, who was ousted by his presidential guard last July.

In recent months, the US has pledged $145 million to help the coastal states battle extremism, while the EU's foreign policy chief -- announcing EU funding for Ghana -- said the spillover was "a danger that is happening now".

"I am not so worried about extremism in Ghana," said Robert Jackson, US ambassador to Ghana from 2016 to 2018, citing efforts by Ghana's post-independence government to strengthen community ties. "I am much more worried about it in Cote d'Ivoire, Togo and Benin."

Crude supply

After decades in oil powerhouse Nigeria's shadow, the coastal states have emerged as a new oil and gas frontier in recent years and an import hub for refined products, meaning destabilization would have implications for regional oil markets.

Ghana produces 130,000 b/d of crude, having seen first oil in 2010, just three years after commercial discoveries. While production has dipped from a peak of roughly 200,000 b/ due to underinvestment, the country hopes to boost output and eventually join OPEC, energy minister Matthew Opoku Prempeh told S&P Global Commodity Insights in an interview in Accra.

Cote d'Ivoire is another success story. The country is producing slightly below 50,000 b/d, following the start-up of Eni's Baleine oil project in August, but that is forecast to rise to 225,000 b/d by 2036, according to S&P Global data. Eni announced another major oil and gas discovery off Calao, Cote d'Ivoire, in March.

Both countries produce light, sweet oil. While Ivorian oil is exported to Europe and Asia, Ghana's Jubilee crude finds an array of buyers in Asia, the Americas, Europe and Africa. Jubilee was last assessed by Platts, a unit of S&P Global, at a 95 cents/b premium to Dated Brent.

Meanwhile, Benin is poised to become a major regional crude exporter in April or May following the completion of the Niger-Benin crude pipeline, which stretches from Niger's Agadem Rift Basin to Benin's Seme port.

Built by China's CNPC, the pipeline will transport 90,000 b/d of crude initially, boosting Niger's output to 110,000 b/d.

Finally, while Togo has not seen exploration activity, it boasts the region's deepest and most sophisticated port at Lome and has emerged as a major refined products import hub, from which gasoline is re-exported within West Africa.

Togo saw 246,000 b/d of refined product imports in February, according to S&P Global Commodities at Sea.

Nigeria produced 1.47 million b/d of crude in February, according to the monthly Platts OPEC Survey from S&P Global Commodity Insights, while nearby Senegal will bring the large GTA gas project and Sangomar oil development onstream this year.

Spill-over

Despite African and Western officials raising the alarm about the spill-over of instability to the coastal states, Emmanuel Kwesi Aning, research director at the Kofi Annan International Peacekeeping Training Centre in Accra, remains skeptical about extremist groups spreading south.

"I am extremely doubtful about this narrative that the extremists are coming to the coast," he said. "Because our North American, European friends are so frightened, when coastal countries say [extremists] are coming, they ask how much money do you need, feeding into a groundswell of corruption."

Meanwhile, Mucahid Durmaz, senior West Africa analyst at Verisk Maplecroft, said the threat remained low.

"Despite the proliferation of attacks on the northern borders of coastal states, a more substantial insurgent expansion into these key commodity-producing nations is unlikely," Durmaz said.

"Their relatively resilient state structures will likely succeed in pushing back the threat with help of diplomatic and military support from regional and Western states."

Yet analysts agree that the region remains in a state of flux, plagued by coups, insecurity and instability, threatening much-needed investment.

And Durmaz said cross-border attacks will likely continue in the coastal states, because "militant groups will seek to capitalize on communal grievances in the northern parts ... and to create new supply lines and new sources of income from banditry."