A stretch of West Africa's coast spanning more than a dozen countries, the Gulf of Guinea is a growing source of oil, cocoa and metals to world markets.
But rising rates of piracy, drug smuggling, and political uncertainty in an area ravaged by civil wars and coups have made it a challenging destination for investors seeking to benefit from the massive resources.
The Gulf of Guinea runs from Guinea on Africa's northwestern tip to Gabon in the south and includes Nigeria, Ghana, Ivory Coast, Democratic Republic of Congo, and Cameroon, Reuters reports.
NEW ENERGY FRONTIER?
Gulf of Guinea nations produce more than 3 million barrels of oil per day -- about 4 percent of the global total -- mostly for European and American markets, with the bulk coming from OPEC-member Nigeria (2.2 million bpd).
Smaller producers include Equatorial Guinea (300,000 bpd), Congo Republic (340,000 bpd), Gabon (230,000 bpd), Cameroon (55,000 bpd) and Ivory Coast (40,000 bpd).
Ghana joined the ranks of West African oil producers in December 2010 and is expected to ramp up output to 120,000 bpd by year-end and reach 250,000 bpd after three years . Further out, Sierra Leone and Liberia hope offshore drilling will spell oil riches for them as well.
Washington estimates the Gulf of Guinea will supply about a quarter of U.S. oil by 2015 and has sent military trainers to the region to help local navies secure shipping as piracy is increasingly becoming a concern.
What to watch:
-- Oil Sands: ENI's $3 billion deal with the Republic of Congo to explore the estimated 2.5 billion barrels of recoverable oil sands in Congo runs out this year. There has been little information from the parties on the progress of the project. Eni had said it planned to invest about $3 bln in the 2008 - 11 period.
-- Oil leases: Gabon decided to invite direct bids for investments in remaining oil blocks rather than auction them and is preparing new legislation for the sector . French oil major Total revived its exploration efforts in the country by purchasing stakes in three onshore licences
-- Exploration efforts: The results of exploration efforts by Tullow and Anadarko off Ghana, Sierra Leone, and Liberia, Bowleven and Victoria Oil and Gas in Cameroon help define the energy potential of the region.
Tullow announced in September a well its drilled marked a likely extension of its Enyenra oil field, bringing it closer to commercialization of its second Ghana field. . The country's next drilling result in Liberia is expected in mid-October.
Bowleven said early in June that its Sapele-1 well off the coast of Cameroon flowed oil at rates which it believes indicate a commercial development is possible, while Victoria Oil & Gas (VOG) said the first gas sale from its flagship project in Cameroon was on schedule for the fourth quarter.
-- Security: The security of operations and shipping is a key risk, with piracy on the rise in the area.
COCOA HUB
Two-thirds of the world's cocoa comes from Gulf of Guinea nations, most of that from No.1 global producer Ivory Coast, and the rest from Ghana, Nigeria, Cameroon and others.
Cocoa output from the four producers likely hit new records last season (2010-11) near 3 million tonnes due to bumper crops increases in Ghana, Ivory Coast and Cameroon.
What to watch:
-- 2011/2012 harvest: After record harvests from the top producers, the market is watching whether output for the coming season would match the 2010/2011 records.
Ivorian farmers have said weather has been supportive of another abundant crop, though it is unlikely to match this year's volumes near 1.5 million tonnes. The finance ministry has predicted 2011-12 to yield between 1.3 and 1.5 million tonnes.
-- Longer-term trend. Ivory Coast's political crisis has called into question the longer-term security of supply from the world's top producer. The government has said it is keen to revamp the sector that is suffering from years of neglect since the 2002-03 civil war, but years of turmoil have blocked reform efforts, leading to output declines.
A reform plan may be coming soon, however, including a provision to fix farmgate prices -- a move that could provide incentive to growers to reinvest in their plantations.
-- Ghana's Cocobod authorities raised $2 billion for the next cocoa season, which would be used to boost crop output. Cocobod has said it is banking on production of around 850,000-900,000 tonnes, compared to more than a million last season.
IRON ORE AND OTHER MINERALS
Gulf of Guinea nations -- already home to top bauxite exporter Guinea and major gold producer Ghana -- have attracted billions of dollars of investments from resource firms eager to dig up its vast unexploited resources of iron ore.
The region could eventually produce nearly 10 percent of the world's iron ore, up from under 1 percent last year, according to the U.S. Geological Survey.
Investments announced last year from BHP Billiton , Rio Tinto , Vale and Chinalco amount to around $10 billion.
What to watch:
-- China's move: China is making moves on some of Africa's biggest iron ore resources so as to break Rio, Vale and BHP's grip on iron ore supply and prices. China's Hanlong has made a $1.5 billion bit for Australia's Sundance Resources which owns the Mbalam project in Cameroon. China is still keen on the massive Belinga project in Gabon, while Chinalco is in joint venture talks with Rio over the Simandou project in Guinea.
Guinea is also in advanced talks with state-owned China Power Investment to develop a bauxite mine and build an alumina refinery, deep water port and a power plant.
-- Mining companies are well aware of the risks common to West Africa, contract security being one of the chief worries.
-- Iron-rich Guinea's successful elections in November ended two years of military rule and could be a green light for investors to re-engage. However, the country in September passed a mining code to boost state ownership in the sector and toughen the rules for obtaining concessions -- changes that industry players said could discourage future investment.
-- Other risks in the region include tight power generation capacity especially in countries such as Liberia and Sierra Leone -- something which has interfered with mining investment in other countries such as South Africa and Chile.
Most notably, Cameroon is hoping to triple power generation by 2020 after shortages forced Rio Tinto's joint-venture Alucam smelter to cut back operations in 2009.
Cameroon issued a treasury bond in December that it said was oversubscribed and plans to issue another by year-end. Proceeds from the bonds are meant to go towards hydropower and other infrastructure projects.
PIRATES AND DRUG RUNNERS
Piracy in the Gulf of Guinea is not on the scale of that off Somalia, but analysts say an increase in scope and number of attacks in a region ill-equipped to counter the threat could affect shipping and investment. Benin in particular is seeing an increase in activity off its coastline.
The U.N. Security Council has said it is concerned over the increase in piracy, maritime armed robbery and reports of hostage-taking in the Gulf of Guinea and its damaging impact on security, trade and economic activities in the sub-region.
Attacks by gunmen on ships off Cameroon's major port of Douala have also showed pirates are extending their range beyond the restive Cameroon-Nigeria maritime frontier. Analysts have said it appears the pirates are moving into new areas to avoid a Nigerian security crackdown
Cameroon blamed piracy for part of a 13 percent drop in oil output in 2009 to 73,000 bpd. Production has since fallen to 55,000 bpd
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