Chapter 6: West Africa: In-Depth Country Analysis
6.1- Nigeria
Nigeria is Africa’s largest oil producer and one of the world’s largest hydrocarbon producers. Historically, the country’s oil sector has been the backbone of its economy, accounting for about 90% of export earnings and nearly 50-60% of government revenue (World Bank, 2023; OPEC, 2023). Despite these considerable resources, Nigeria presents a complex case where political instability, governance issues, and systemic corruption have severely hampered the performance of the sector.
In Nigeria, political stability is more aptly described as uneven than non-existent. At the federal level, democratic governance has been maintained since 1999, ensuring a certain institutional continuity. However, subnational instability, particularly in the Niger Delta, has a direct and persistent impact on oil operations. The region has been plagued by decades-long insurgency, pipeline sabotage and communal strife, often fuelled by grievances over environmental degradation, income distribution and a sense of marginalisation. These dynamics have created significant operational risks, particularly for land-based facilities, whose infrastructure is particularly vulnerable.
The governance framework of Nigeria’s oil sector has undergone significant reforms in recent years, including the enactment of the Petroleum Industry Act (PIA) in 2021. The Act was intended to address persistent issues related to regulatory fragmentation, financial uncertainty, and inefficiency of the Nigerian National Petroleum Corporation (NNPC), which has since been restructured into a commercially oriented entity, NNPC Limited. The Act established new regulatory bodies, including the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), to improve transparency and operational efficiency.
Although the Natural Resource Assessment (ERN) represents a major step forward, implementation challenges remain. Institutional capacity constraints, bureaucratic inertia and overlapping mandates continue to limit the effectiveness of regulatory reforms. According to the Natural Resource Governance Institute (NRGI, 2022), Nigeria has average scores on resource governance, but continues to face significant challenges regarding revenue management and transparency.
Corruption remains one of the most critical issues affecting Nigeria’s oil sector. Transparency International’s Corruption Perceptions Index consistently ranks Nigeria as a country with a high risk of corruption (Transparency International, 2024). Corruption occurs at all levels of the value chain, from licensing and contracting to procurement and revenue management. Historically, the lack of transparency in licensing procedures and the discretionary nature of award processes have raised concerns about fairness and accountability.
One of the most significant forms of corruption and crime in Nigeria is oil theft, commonly known as “subkering”. It is the illegal diversion of crude oil from pipelines to sell it on the black market. The Nigerian National Petroleum Company (NNPC) reported losses of up to 200,000 barrels per day at peak activity (NNPC, 2022), representing a significant loss of revenue for the state. This problem is compounded by weak enforcement mechanisms and, in some cases, alleged collusion between criminal networks and security forces.
Operationally, these challenges translate into higher costs and lower efficiency. Operators need to invest heavily in security, surveillance, and dialogue with local communities to mitigate risks. As a result, offshore projects have become more attractive, given their relative protection against land-based security problems. However, these projects involve higher capital expenditure and longer development times, which can offset some of these benefits.
Despite these challenges, Nigeria still has considerable potential. The country has significant untapped reserves, particularly in deep-water basins and border basins. Ongoing reforms under the PIA, combined with efforts to improve transparency and attract investment, could boost the sector in the long term. However, sustained progress will depend on the government’s ability to address underlying governance and corruption issues, while preserving political stability.
6.2- Ghana
Ghana represents a positive example of governance and political stability in the West African oil sector. Since the discovery of commercial oil in the Jubilee field in 2007, Ghana has put in place a relatively strong institutional framework for the management of its petroleum resources. The sector contributes significantly to government and export revenues, although it is less preponderant than in countries such as Nigeria and Angola (World Bank, 2023).
Politically, Ghana is widely regarded as one of the most stable democracies in Africa. The country has experienced peaceful transitions of power and remains firmly committed to the rule of law. This stability has been a key factor in attracting investment in the oil sector, especially in the early stages of its development.
Ghana’s governance framework is characterized by a clear separation of roles among key institutions. The Ministry of Energy is responsible for energy policy, the Petroleum Commission regulates upstream activities, and the Ghana National Petroleum Corporation (GNPC) handles business operations. This institutional clarity has contributed to a more transparent and efficient regulatory environment.
Ghana is also a member of the Extractive Industries Transparency Initiative (EITI) and has mechanisms in place for the publication of oil revenues and contracts. The Petroleum Revenue Management Act (PRMA) sets out the rules for the allocation and use of these revenues, including the establishment of the Ghana Petroleum Fund. These measures have helped to strengthen transparency and accountability.
Despite these strengths, challenges remain. The risks of corruption, although lower than in some neighbouring countries, are not non-existent. Issues related to public procurement, contract management, and local content implementation were identified as areas of concern (NRGI, 2022). Ghana is also facing pressures related to revenue volatility and fiscal management, especially in the context of oil price fluctuations.
Operationally, Ghana’s offshore production reduces exposure to certain security risks associated with onshore environments. However, the country needs to continue to invest in its regulatory capacity and infrastructure to support the growth of the sector. Ensuring the effective implementation of local content policies, without creating inefficiencies or opportunities for corruption, will be a major challenge.
Overall, Ghana’s experience demonstrates that strong governance and political stability can significantly improve the performance of the oil sector. Despite the ongoing challenges, the country offers a useful model for other resource-rich nations looking to improve their governance and transparency.
6.3- Senegal
In recent years, Senegal has established itself as one of the most promising new hydrocarbon producers in West Africa. The discovery of significant offshore oil and gas reserves, including the Sangomar oil field and the Grand Tortue Ahmeyim (GTA) gas project (shared with Mauritania), has positioned Senegal as a major player in the regional energy landscape. Unlike historical producers such as Nigeria and Angola, Senegal is at an early stage of development in its sector, which represents a crucial opportunity for the establishment of strong governance frameworks from the outset.
Politically, Senegal is widely regarded as one of the most stable democracies in West Africa. The country has a long tradition of peaceful political transitions and relatively strong institutional structures. This stability has been instrumental in attracting international oil companies and boosting investor confidence. According to the World Bank (2023), Senegal ranks comparatively well among countries in the region in terms of governance indicators.
The governance framework for Senegal’s oil sector has been developed with a focus on transparency and institutional clarity. The Ministry of Petroleum and Energy oversees policy, while regulatory functions are carried out by specialized agencies. Senegal has also joined the Extractive Industries Transparency Initiative (EITI), reaffirming its commitment to revenue transparency and public accountability.
Despite these strengths, Senegal faces several emerging challenges. With the increase in production, the pressure is increasing to ensure that governance systems can effectively manage large revenue streams. The experience of other resource-rich countries highlights the risk of deteriorating governance in the transition from discovery to production. The Natural Resource Governance Institute (NRGI, 2022) emphasizes that early-stage producers need to prioritize institutional capacity building to avoid the pitfalls of the resource curse.
In Senegal, the risk of corruption is relatively moderate compared to other producing countries in the region, but it remains a concern, particularly in terms of procurement and contract management. As the industry expands, the complexity and scale of transactions will increase, potentially creating new opportunities for rent-seeking.
Operationally, offshore operations in Senegal reduce their exposure to many of the security risks associated with onshore production. However, the country needs to invest in infrastructure, regulatory capacity, and training of the local workforce to support the sector’s long-term growth.
Overall, Senegal has great potential, based on strong political stability and governance. The main challenge will be to maintain these standards as the sector transitions to large-scale production.
6.4- Côte d’Ivoire
After a period of political instability in the early 2000s, Côte d’Ivoire has once again become a major producer of hydrocarbons. Recent deep-sea discoveries, including large deepwater oil and gas deposits, have revitalized the sector and sparked renewed investor interest.
Politically, Côte d’Ivoire has achieved some stability since the resolution of its civil conflict, despite the persistence of underlying tensions. The government has prioritized economic development and institution-building, helping to improve investor confidence. According to the IMF (2023), the country has recorded strong economic growth and increased macroeconomic stability in recent years.
The governance framework for the oil sector is relatively well structured, with clearly defined roles for the Ministry of Petroleum, regulators, and the national oil company, Petroci. Licensing procedures are conducted with increasing transparency, although concerns persist about discretion in contract decisions and negotiations.
The risk of corruption in Côte d’Ivoire is moderate. Transparency International (2024) indicates that, despite progress, challenges remain, particularly in public procurement and state-owned enterprises. The oil sector is not immune to these risks, especially as new discoveries increase the value of contracts and investments.
Revenue management is an area that requires constant attention. As production increases, the government must ensure that revenues are managed transparently and allocated efficiently. Participation in the EITI provides a framework for improving transparency, but its implementation remains essential.
Operationally, Côte d’Ivoire benefits from a majority of offshore production, which reduces its exposure to security risks. However, the exploitation of deep-sea resources requires considerable technical expertise and investment, making the sector sensitive to global market conditions.
In summary, Côte d’Ivoire’s oil legislation is on the verge of recovery and increasingly attractive, with improving governance but persistent risks related to corruption and institutional capacity.
6.5- Benin
Benin has experienced limited hydrocarbon production, mainly focused on small, shallow offshore fields and exploration activities. He has just resumed production on the Sèmè field. The oil sector plays a relatively minor role in their economies.
This country enjoys a stable political environment compared to some neighbouring countries. Its governance framework is modest but functional, and efforts are being made to improve its institutional, legislative and regulatory capacities with the adoption of Law 06 on the Petroleum Code.
The risk of corruption is moderate, with challenges mainly related to public sector governance rather than large-scale extractive activities.
The development of the oil sector in Benin is likely to remain limited unless there are significant new discoveries.
6.6- Niger
Niger is one of the new emerging producing countries in the hinterland. Due to its geographical location, this Sahel country is facing enormous difficulties related to its political instability, its landlocked position which impacts oil operations and especially the evacuation of its crude oil as well as a preponderant security risk that weakens all the Sahel states, especially the oil infrastructure.
Political instability and the absence of democratic governance are challenges for the transparent management of oil rents.
6.7- Other West African countries
Mauritania
Mauritania is an emerging hydrocarbon producer with significant offshore gas potential, notably through its participation in the Grand Tortue Ahmeyim (GTA) project alongside Senegal. Historically, Mauritania’s economy has relied on mining, but recent discoveries have positioned the country as a major player in the gas sector.
Politically, Mauritania has experienced periods of instability, including coups in the 2000s, but has shown increasing stability in recent years. The current political context is relatively stable, although institutional capacity remains limited.
The governance of the oil sector is still developing. The government has made efforts to put in place regulatory frameworks and attract investment, but institutional weaknesses remain a major challenge. According to the World Bank (2023), Mauritania scores relatively low on governance indicators compared to global averages.
The risk of corruption is moderate to high, reflecting broader governance challenges. Transparency International (2024) highlights issues related to accountability and transparency in the public sector. In the oil sector, risks are particularly associated with contract negotiations and revenue management.
The GTA project represents a major opportunity for Mauritania, but also raises governance challenges related to the management of significant gas revenues. Effective coordination with Senegal and international partners will be essential to ensure the success of the project and revenue transparency.
Operationally, offshore gas exploitation reduces some risks, but requires considerable technical and financial resources. Mauritania’s ability to effectively manage these projects will depend on further institutional development and international support.
Sierra Leone
Sierra Leone has experienced intermittent exploration activities in its offshore basins, with several discoveries indicating potential hydrocarbon resources. However, the sector remains underdeveloped and no large-scale commercial production has been implemented to date.
Politically, Sierra Leone has made considerable progress since the end of its civil war in 2002. The country has developed democratic institutions and has experienced relatively peaceful political transitions. However, its governance capacities remain limited, particularly in complex sectors such as oil.
The regulatory framework for the petroleum sector has been developed with the support of international partners, but implementation challenges remain. Institutional capacity constraints and lack of technical expertise have hampered the development of the sector.
The risk of corruption remains a concern. Transparency International (2024) ranks Sierra Leone as one of the countries with moderate to high levels of corruption, particularly in public administration and public procurement. These risks extend to the oil sector, where licensing and contract management require rigorous oversight.
The main challenge for Sierra Leone is the transition from exploration to production, while putting in place strong governance systems. Without strong institutions, the country risks replicating the difficulties faced by other resource-rich economies.
Liberia
Liberia has conducted offshore exploration activities and identified potential hydrocarbon resources, but commercial production has not yet started. The country’s oil sector remains in its infancy, and uncertainty about resource potential remains high.
On the political front, Liberia has made progress in stabilizing its institutions after years of civil conflict. A democratic government has been established, but institutional capacity remains limited.
The governance framework for the oil sector has been developed with a focus on transparency, including through participation in the EITI. However, implementation challenges remain, particularly in the areas of enforcement and institutional coordination.
The risk of corruption is moderate, with difficulties related to accountability and public procurement. These risks are particularly relevant in the context of licensing and exploration activities.
Liberia’s main challenge is to attract investment in a competitive global environment, while ensuring that governance systems are robust enough to manage future resource development.
- Guinea and Guinea-Bissau
Guinea and Guinea-Bissau have limited but promising hydrocarbon potential, mainly in offshore basins. Exploration has been sporadic and no significant production has been established.
Both countries face significant political and governance challenges. Guinea has experienced political instability, including coups, while Guinea-Bissau has struggled with chronic instability and weak institutions.
Governance frameworks for the oil sector are underdeveloped and institutional capacity is limited. The risk of corruption is high, reflecting broader governance weaknesses (Transparency International, 2024).
The development of the oil sector in these countries will depend heavily on improved political stability and governance.
The Gambia
The Gambia has been conducting offshore exploration activities and has identified potential hydrocarbon resources, but the sector remains at a preliminary stage of development.
Politically, the country has undergone a transition to democratic governance in recent years, which has improved stability and investor confidence. However, its institutional capacity remains limited.
Governance frameworks are being developed, with the support of international partners. The risk of corruption is moderate, and efforts are being made to improve transparency and accountability.
The main challenge for The Gambia is to strengthen its institutional capacity to effectively manage the potential development of its resources.
6.8- Regional synthesis
In West Africa, the oil sector has a wide disparity in terms of political stability, quality of governance and corruption risks. Established producing countries, such as Nigeria and Angola (Central Africa), face significant legacy challenges, while emerging countries, such as Senegal and Mauritania, Côte d’Ivoire, Ghana, and even Benin, have the opportunity to put in place stronger governance frameworks from the outset.
A common trend emerges across the region: countries with stronger political stability and governance structures are better positioned to attract investment, manage their resources effectively, and achieve sustainable development goals. Conversely, weak governance and high levels of corruption continue to undermine sector performance and economic spillovers.