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Russia Eyes the African oil Market as a Crucial Investment Strategy

Jan 13, 2020 | Finance

Oil remains one of the hottest commodities on the market. While most banks are looking at precious metals and fiat reserves, Russia has a completely different vision.

The Russia-Africa Summit of 2019

A lot of people didn’t know what to make of this peculiar event. A lot of projects were discussed to strengthen ties between Russia and the African continent. Most of these ventures still raise a lot of questions regarding regulation and approval. 

Various topics are on the table in this collaborative effort. Ranging from nuclear technology to ore mining and wheat exports, there are numerous options to explore now and in the future. 

Perhaps the biggest topic is oil. More specifically, oil prices have stabilized in recent months, creating an exciting investment opportunity. Russian firms had the capital to invest, but are not fully committed as of yet.  However, investment opportunities in Europe are slim to non-existent. 

Other tensions contribute to this uneasy situation as well. Both Gazprom and LUKOIL are not welcomed with open arms in Europe. As such, they have to diversify their assets and presence. Europe is less of an appealing region, whereas Africa presents untapped potential. 

Exploring African Oil

Over the years Russian investments have made their way to various African nations. From Egypt to Mozambique and Ghana, the presence appears to be growing. Rumors persist of how the Democratic Republic of Congo is another key area for Russian investments. 

Assuming this rumor is true, there will be some complexities to take into account. Infrastructure in the DCR is not up to par. It is expected an oil products pipeline will be constructed in the next few years. That deal still needs to be finalized, which may take another few months. 

It is believed that a Russian firm will receive the contract for building the pipeline. That is not entirely surprising, given some recent developments. LUKOIL has recently  purchased 25% in the Marine XII license block. That block spans five oil fields with hefty reserves. 

Cameroon is another region where LUKOIL has begun establishing a foothold. The question remains whether Russian firms will kick-start their efforts in these regions throughout 2020.  A lot of interesting developments loom on the horizon.

Images courtesy of their respective sources.

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<a href="https://fintoism.com/author/oglock/" target="_self">JP Buntinx</a>

JP Buntinx

JP Buntinx is passionate about cryptocurrencies, fintech, blockchain, and finance. He currently resides in Belgium.

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