Advantages And Disadvantages Of Oil And Oil Industry

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The greater part of many African economies nowadays are represented by oil and gas industries, although they do not seem to be of high contributions to the societal development in these countries. Instabilities have resulted for some decades, from the exploration of natural resources, especially oil and gas, as stated by Ayuk: “The oil price shocks of the 1980s in Nigeria, Angola’s decade of hyperinflation, the civil wars in both Congos, and the devastation of Libya’s economy following the collapse of the Gaddafi regime, have all shown the calamitous results of excessive dependence on natural resources” (Africa Oil & Power, n.d.). He argues that the value placed on natural resources, especially petroleum resources, is to a big extent the root of most, if not all of these tensions.

It is quite obvious that oil and gas engineering and exploration project are very high cost projects. According to Pedersen (2014), “In a country like Tanzania the costs of establishing the single most expensive investment alone, a two-train liquefied natural gas (LNG) plant including infrastructure, is estimated to amount to approximately US$ 20 billion in 2012 prices”. A country’s whole institutional and political situation and its political economy can be very profoundly affected by large revenue prospects. Simulations like wise give indications that government revenues may annually go as high as US$ 3 billion (Baunsgaard, 2014; Ledesma, 2013). Political

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