We recently featured an article in our daily newsletter by South China Morning Post correspondent Jevans Nyabiage about the rapid decline of Africa’s oil sales to China. In 2007, China bought about a third of its oil from African countries. Today, this share has shrunk to about 18%, and it’s expected to fall further. (Nyabiage points out that Angola’s continued repayment of Chinese loans with oil inflates these numbers – without the Angolan factor, the percentage would probably be even smaller.)
Some of the reasons for this shift have nothing to do with Africa. During the 2000s, China was competing with the United States for oil supplies. Since then, the rapid increase in fracking has turned the U.S. into an oil exporter. This means that China doesn’t only face much less competition for oil in the world market, but that, despite the trade war, it’s also importing oil from the U.S.
The fact that China has more options is a pull factor drawing it away from Africa. But what are the push factors? Nyabiage points to a big one: the secession of South Sudan, and its resultant civil conflict around oil resources, which still drags on despite a peace agreement. Chinese companies were heavily invested in South Sudanese oil fields, and China even became involved in trying to mediate between warring parties.
Did the failure of China’s experiment in South Sudan sour it on African oil as a whole? While it’s difficult to give a definite answer (and we’d love inputs from readers,) I’d be surprised if it weren’t a significant factor in China’s wider energy planning. It’s a truism that China has been less risk averse in Africa than many other partners. What’s said less often is that China also learns from its failures. I wouldn’t be surprised to learn that the lesson Chinese officials took from South Sudan is ‘African oil is inherently risky and to be avoided.’
The more important question for me is which lessons African leaders are taking from this history. I’d suggest one: the costs of hydrocarbons always outstrip their profits in the long run. The long-term trends point to countries banking on energy self-sufficiency via renewables. The episode of the China in Africa podcast we posted today certainly bears this out, despite China’s current investments in oil and coal.
I would suggest that it’s crucial for African leaders to learn from South Sudan, not only about the sustainability of oil as an economic cornerstone, and its potential to spark conflict, but also about these countries’ own future energy choices. What makes more sense, spending economic, logistic and security capital on oil and risking stranded assets in 15 years, or leaving it in the ground in favor of other energy options? South Sudan offers a bleak example of how these choices can derail everything. China paid attention to this example. Is Africa doing the same?
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