Royal Dutch Shell Plc  .com Rotating Header Image

AP Worldstream: Oil boom, shifting global politics give Africa its best chance in decades

EDWARD HARRIS
Published: Jun 29, 2007

Europe’s great powers once scrambled for dominance across vast, underdeveloped African lands rich in raw resources, including the scarlet palm oil used to grease the first cogs of the industrial revolution.

A century later, a new group of nations are competing for a different valuable, viscous material, with Sub-Saharan Africa closing in on the Persian Gulf as the prime overseas supplier of oil to the last remaining superpower.

As China and India increasingly prospect for resources here, terrorism concerns rise and the U.S. military seeks a permanent military presence in Africa, the continent has its greatest international influence in decades. Whether Africa can use its newfound might to end its longtime blight is a separate issue.

“There’s a new dynamic in play” for African nations, says Antony Goldman, an independent risk-analysis consultant based in London. “And the challenge for those countries is how to manage that.”

An AP analysis of U.S. oil import figures shows the stakes.

In 1993, the earliest year for which there are full figures, the main African oil producing countries _ Nigeria, Angola, Cameroon, Chad, Equatorial Guinea and Gabon _ shipped about 494,000 barrels per day of oil to the United States, data from the official Energy Information Administration show. That’s about 7 percent of total U.S. imports. In the same year, the Persian Gulf nations averaged 1.6 million barrels per day, or about one quarter of all U.S. imports.

By 2006, sub-Saharan African oil constituted about 18 percent of all U.S. imports, or about 1.8 million barrels per day; the Persian Gulf made up 2.2 million barrels per day, or 21 percent of total daily imports.

But the oil producers are among the sickest countries in Africa. While poorer nations such as Senegal, Mali, Liberia, Burundi, Ghana and others have made democratic advancements, the oil countries are still mostly run by weak or illegitimate leaders.

Angola is emerging from one of the continent’s longest-running civil wars. Chad, which has only been exporting oil for a few years, is in the depths of one. Chad’s crude reaches African export terminals in oil-rich Cameroon, whose president has been in power for a quarter of a century.

Next door is Equatorial Guinea, where per capita gross domestic product boosted by oil revenues is among the highest in the world, while its ranking on the United Nations human-development index is near the bottom.

And then there is Nigeria, where the challenges facing Africa, and particularly its petroleum producers, are on desperate display. Nigeria is Africa’s biggest producer of oil and among the top three outside suppliers of crude to America.

Among the first Europeans to arrive here centuries ago were slave merchants and traders seeking palm oil, which women still produce in Nigeria’s crude-rich Niger Delta by crushing bright crimson palm kernels on potholed roads outside massive oil installations that belch smoke and flames.

Crude oil was first exported from Nigeria in 1958, two years before independence from Britain. Despite the hundreds of billions of dollars of oil revenues _ there was another massive oil boom in the 1970s _ the country’s 140 million people remain desperately poor. Some 70 percent of the population live on less than US$2 per day, U.N. figures show.

Much of the oil money has been stolen by corrupt leaders or misspent on wasteful government boondoggles. In Nigeria alone, the World Bank estimates about US$300 billion of government oil funds can’t be accounted for. By contrast, oil-rich Norway has about that same amount in a government-controlled fund where the petroleum surpluses are kept.

Norway sits atop the U.N.’s 2006 human development index, which groups social indicators like literacy and infant mortality. Nigeria is among the worst performers, at 159 out of 177 countries surveyed.

The late Nigerian dictator Sani Abacha is estimated to have salted billions of dollars away in overseas bank accounts, with about US$730 million in Swiss accounts having been returned. In Nigeria, basic infrastructure rotted under Abacha’s watch. Today, none of Nigeria’s main oil refineries are operable, leaving one of the world’s top oil producers completely reliant on fuel imports. In the oil region, vines climb up abandoned onramps to superhighways planned, but never completed.

Meanwhile, military leaders or weak, corrupt administrations racked up tens of billions of dollars in loans, including many by Western countries or their funding bodies in hopes of setting up friendly bulwarks against communism in Africa.

But that dynamic began to shift in the late 1980s, as the Cold War ground to a halt. The easy loan money stopped flowing, and markers were called in. Overseas governments began insisting good governance be linked to aid.

While few Africans lived in multiparty democracies in the 1970s, most do today. But in many of those countries, that hasn’t translated into better daily existences for the people.

Corruption still keeps governments from acting accountably, as has happened in Nigeria’s southern oil delta, where electricity is fitful, pipe-borne potable water virtually nonexistent.

The little government spending there has been has been ineffectual. The few new streetlights here in the heart of the oil city of Port Harcourt are solar powered _ an apparent admission by town planners that no electricity will soon reach the lamps.

Most people live in teeming slums, including John Isah-Aaron, a 32-year old fisherman who’s constructing his new home next to open latrines on a riverbank in the vast wetland region where militant attacks have cut oil output by nearly one-third.

“Look, here is where we bathe, and also where we toilet,” he says, gesturing at the befouled riverbanks. “We’re very poor.”

The movement toward democracy encouraged by the West since the end of the Cold War hasn’t made much improvement in his life, he says. Nigeria’s civilian leaders have proved as corrupt as the military junta they replaced.

“They’re saying democracy is government for the people, by the people. But we’re not seeing any dividends,” he said in his village, which is just outside a compound run by the Italian oil-company Agip.

Nigeria’s oil industry, like those of many other African countries, is primarily run by Western energy concerns. The companies who operate crude pumping operations and share the proceeds with Nigeria’s federal government include Anglo-Dutch Royal Dutch Shell, France’s Total SA, Eni SpA from Italy, and US-based Chevron Corp.

But increasingly, China and India have been moving in, too. Chinese and Indian companies won big in a recent round of bids for exploration licenses, for example, and have become big consumers.

Much of Africa’s estimated 5.5 percent economic growth last year was attributed to China’s near-insatiable demand for the continent’s oil, gas, timber, copper and other natural resources. Economic growth for sub-Saharan Africa is expected to reach near 7 percent in 2007, according to the IMF.

Two-way trade soared 40 percent to US$55.5 billion last year, and Beijing says it believes that figure will rise to US$100 billion by 2020.

At the same time, the United States is also ramping up its influence in Africa. After the terrorist attacks on Sept. 11, 2001, diminishing reliance on oil from the Middle East has become a stated goal of the U.S. government.

Washington recently announced it intended locate a permanent military command for Africa on the continent.

“There clearly is an energy component in this,” said Navy Rear Admiral Bob Moeller, who’s helping arrange the new command.

“Overall, Africa is growing in global strategic importance and setting up this command allows us to help them help themselves in enhancing security in their countries, and across the continent writ large,” he told the AP in a telephone interview.

Analysts say the post-Sept. 11 focus on terrorism, combined with high oil prices around the globe, gives Africa a new shot at ending decades of disease, wars, corruption and, above all, the poverty that drives it all.

Africa can use its oil-fueled influence to play more powerful nations off each other. It can lobby for more-favorable trade deals, increased direct assistance and better loan rates. Africa is also lobbying for a permanent seat on an expanded U.N. Security Council.

The West may not always see Africa’s power as productive _ Sudan has been able to stave off pressure over the war in Darfur because of support from China, an oil customer.

Already, Africa is paying down or having its debt written off from Western lenders, with many countries turning to China instead for funding that comes without any demands for governmental transparency.

While graft, poorer educated populaces and inter-community strife still typify many African nations like Nigeria, those countries are looking better each day for the West compared with other oil-rich nations, like Iran and Venezuela. Africa can no longer be ignored, analysts say.

“Before, on a day-to-day basis, places like Nigeria seemed like a bad bet,” said Goldman, the London-based analyst. “Now people would prefer the day-to-day problems of Nigeria compared with those of the Middle East.”

Peter Pham, a professor of international relations at James Madison University in Harrisonburg, Virginia, said, “Africa can no longer be safely ignored … that era of benign or not-so-benign neglect is over.”

Oil will get the attention of policy makers, but Africa’s security has become a national security issue for the U.S., said Pham.

“If 9/11 taught us anything, it’s that weak nations can cause threats,” he said. “There’s an interest in building up the capacity of African states to handle their own problems, provide services for its people.”

It all adds up to a rare moment of potential influence for Africa, he says, but only if African leaders can at last end their own self-enrichment at the expense of their people.

“It’s a question of whether African leaders rise to the occasion,” said Pham, “or if it just becomes another moment to support themselves.”

Associated Press researcher Monika Mathur in New York contributed to this report.

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

1 Comment on “AP Worldstream: Oil boom, shifting global politics give Africa its best chance in decades”

  1. #1 Frank Bruno
    on Jun 29th, 2007 at 11:02

    Get approved for your home loan. Watch Credit Tip Videos!
    http://www.CrediTips.com/blog/index.php

Leave a Comment

%d bloggers like this: