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Emerging world powers vie for influence

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Emerging world powers vie for influence

By Matthew Green

Published: June 24 2008 03:00 | Last updated: June 24 2008 03:00

In the new scramble for Africa, the big powers do not get to make the rules. With its energy reserves coveted by the US and Europe, Russia and India, Korea and China, Nigeria expects the rest of the world to treat it with a little more respect. “We have woken up from sleep, we are big boys, we know what we want,” says Ojo Maduekwe, Nigeria’s foreign minister, in an interview with the FT. “Standards that are not acceptable in your own countries, in Britain, or Holland or America, will not be acceptable here.”

As the leaders of industrial civilisation begin to wonder where they will find the oil and gas to power growth in future decades, Nigeria – which has plenty of both – believes it can demand more of its partners.

While countries such as Russia and Venezuela have exploited the shift in money and power, brought by rising energy prices, to take a more aggressive approach to foreign companies, all Nigeria wants is what Mr Maduekwe calls a more “adult” relationship.

Specifically, it wants western majors to make the kind of investments that will provide more jobs in Nigeria, a long-standing desire of successive governments. He also says there would be no more of the kind of infrastructure-for-oil deals pursued by Asian companies which have promised multi-billion dollar investments in return for energy exploration rights.

With Umaru Yar’Adua, the president, still seeking to stamp his authority on Nigeria’s fractious political scene after a year in office, some analysts question whether the government has the cohesion needed to exert more leverage in its foreign relations.

But the way Nigeria’s relationships evolve could have implications not just for established companies such as Royal Dutch Shell, ExxonMobil and Chevron, but for the global competition for energy security.

The US, in particular, is banking on Nigeria’s sweet, light crude to reduce its dependence on the Middle East. Nigeria’s 36.2bn barrels of proven oil reserves dwarf those of Angola, its nearest sub-Saharan rival, with only 9bn. And the country’s export terminals lie straight across the Atlantic, free of the kind of choke points such as the Strait of Hormuz that make military planners fret.

In a growing measure of West Africa’s strategic importance, the US Navy launched an open-ended training mission for the region’s security forces late last year by starting a continuous rotation of ships. The exercise is a model for the kind of co-operation the Pentagon’s new Africa command, Africom, seeks to forge with African governments. Mr Yar’Adua has called for US assistance to set up a Gulf of Guinea force to help West Africa protect its energy installations.

Such assets belong largely to US and European majors, which Mr Maduekwe says should plough more money into industries such as power or petrochemicals to boost Nigeria’s economy, rather than just shipping resources abroad.

“We want to remind those who are interested in oil and gas in 2008 that they were those who were interested in our cocoa and groundnuts, in 1958, and we don’t see much difference,” he says. “We think that our friends should now look at Nigeria, not in terms of how much more oil they can take out, or gas, but how much they can add to the value-chain.”

He says the government is also keen to distance itself from the kinds of deals cut with Asian companies by Mr Yar’Adua’s predecessor, Olusegun Obasanjo, who sought to swap exploration rights for pledges of investment in big infrastructure projects. “There will be no behind-the-scenes kind of deals,” says Mr Maduekwe, who served as transport minister under Mr Obasanjo, and supported the previous president’s unsuccessful bid for a third term. “Just because we badly want the energy sector to develop, we’re not going to change the goalposts about the process of getting involved with the oil blocks.”

China, India and Korea each won preferential access to exploration acreage during the last few years of Mr Obasanjo’s tenure, partly by promising big investments in projects such as gas pipelines, railways and refineries. But with no effective mechanisms to ensure the pledges were met, none of the projects has been delivered.

China has revived its offer of a $2.5bn loan made to the previous administration to finance a railway, but Nigeria has sought better terms than the initial proposal. Officials emphasise the loan is not linked to any new oil blocks. Mr Yar’Adua told the FT in an interview in mid-May that he did not believe relations with China had grown closer during the year he has been in power.

The future may spring other surprises for western governments. Moves by Gazprom to establish itself in Nigeria have raised fears that the Russian gas monopoly will gain an even tighter grip over supplies to Europe, although much of the country’s gas lies in blocks already controlled by western companies.

Perhaps aware of such concerns, Mr Maduekwe is keen to reassure the Americans and the Europeans that, provided they avoid “predatory” actions and build a partnership, they are likely to have the edge over the new entrants.

“The traditions of the west, over the years – rule-based culture, strong judicial systems – are even more likely to produce those kind of players,” he says. “Those whom we are used to are more likely to fit into these criteria.”

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