> >Stratfor.com's Global Intelligence Update - 23 August 2000 >_________________________________________ > >We knew it before it was news. > >Europe's Coming Crisis >http://www.stratfor.com/europe/commentary/0008230010.htm > >China Declares Temporary Peace with Taiwan >http://www.stratfor.com/asia/commentary/0008222341.htm >_________________________________________ > >Moroccan Desert Oil - Miracle or Mirage? > >Summary > >Moroccan King Mohammed VI announced the discovery of one of the >largest oil fields uncovered in this decade. Estimated to contain >an equivalent of 20 billion barrels, the find could be worth up to >$800 million. Production of the oil deposit could significantly >alter Morocco's agrarian-based economy and foster stronger ties >with developed countries, including Europe and the United States. >It may also worsen relations with neighboring Algeria and spark a >flurry of prospecting in the region. > >Analysis > >A startling discovery in Morocco's desert could dramatically alter >the North African country's economy. During a speech broadcast on >state radio and television on Aug. 20, King Mohammed VI announced >the discovery of an oil deposit estimated to contain 20 billion >barrels in crude near the southeastern town of Talsint. Located >just 125 miles from the Algerian border, the field could yield >revenues of up to $800 billion annually. > >If the government's claims are true, the find could drastically >impact Morocco's agrarian-based economy by providing a more stable >source of revenue. At the same time, oil sector development >requires investment, usually from multinational oil companies. This >could encourage stronger ties between Morocco and industrialized >countries, further boosting the kingdom's economy and sparking an >upsurge in oil prospecting throughout the western tip of North >Africa. But the deposit's location could also exacerbate tensions >with neighboring Algeria by encouraging exploration along the >border region. > >The oil find would provide a reliable source of revenue that would >lessen Rabat's dependence upon agriculture. Agricultural production >employs more than 50 percent of the population, but accounts for >only 20 percent of Morocco's Gross Domestic Product. The switch >would be a boon for the economy; which regularly suffers production >losses from drought. In 1997, Morocco's GDP fell from 4.0 percent >to -2.3 percent after suffering a protracted drought. Oil >production would provide a constant and predictable source of >revenue, even though prices are subject to the whims of the global >oil market. >________________________________________________________________ >Would you like to see full text? >http://www.stratfor.com/SERVICES/giu2000/082300.ASP >___________________________________________________________________ > >Oil sector development also attracts foreign investment, another >boost for the Moroccan economy. Few oil companies are involved in >Morocco's oil sector, and the country has only two refineries. In >order to develop the field, Rabat must garner additional investment >for drilling, extraction and transport. > >Attracting investment should be easy with high oil prices sending >producers all over the world in search of new fields. The kingdom's >good relations with Washington and Europe also make it a prudent >investment choice. > >The major obstacles to investment and development will be the >quantity, quality and location of the reserves. The government's >claim has yet to be verified, and there are several reasons to >doubt its veracity. For one, sedimentary basins in the country have >been explored before, and no significant oil reserves were found. >Second, the estimation of 20 billion barrels includes related >hydrocarbons as well as potential crude reserves. > >The proximity of the oil reserve to the Algerian border may also >hamper development. The two neighbors have often clashed over >regional issues. Morocco claims the Western Saharan territory, and >Algeria allows Western Saharan separatists to operate in its >country. >_____________________________________________________________ > >For more on Morocco, see: >http://www.stratfor.com/MEAF/countries/Morocco/default.htm >_______________________________________________________________ > >If the reserves prove to be of high quality or easily recoverable, >then the expansion of prospecting in the region could increase >areas of contention between the two rivals. Although the Talsint >field is 125 miles from the Algerian-Moroccan border, a further >search for oil may bring the two into competition. Underground oil >reserves can easily lie on both sides of a border. > >Another possible drawback is the obscure Skidmore Energy Inc. >Skidmore is the parent company of the Moroccan-based Lonestar, >which made the Talsint discovery. Earlier this year, Lonestar >agreed to invest $50 million in exploration and drilling in >Morocco, reported Reuters on Aug. 22. > >The Texas-based company may not have the promised money and could >have rushed the announcement in order to attract investment >quickly. According to the Texas State Comptroller's Office, >Skidmore is in danger of forfeiting its corporation privileges >because it hasn't filed its 2000 corporate franchise tax. > >King Mohammed's announcement on Aug. 20 was a public relations >triumph for the newly crowned monarch. Since the death of King >Hassan last year, the new king has tried to diversify the economy. >Mohammed encouraged foreign investment and instituted fiscal >reforms aimed at bolstering the country's erratic economy. If the >claims are exaggerated, the triumph could backfire and undermine >the king's hopes for the future of Morocco's economy. >_______________________________________________________________ > >For more on the Middle East & Africa, see: >http://www.stratfor.com/MEAF/default.htm >_______________________________________________________________ > > >(c) 2000 Stratfor, Inc. >_______________________________________________ >SUBSCRIBE to the free, daily Global Intelligence Update. 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