Akabogu added: “Local content in the oil industry is supposed to be a long term thing; it is supposed to be implemented in a gradual manner because the enabling environment is not there. The ideal thing would have been to retain the IOCs by addressing the issues that necessitated their divestment.” He said the IOCs were merely shifting their risks to the local operators who would now deal with issues of oil bunkering and theft.
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Can indigenous operators cope after foreigners' exit? - The Nation - 1 views
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To renowned environmental expert and coordinator of Oil Watch International, Mr. Nnimmo Bassey, the development is hardly surprising. According to him, divestment is a business strategy by the IOCs to cut losses and maximize profits. “You will notice that they are divesting mostly from onshore and swamp fields that intersect with communities that they have massively polluted and abused. Their aged facilities in those locations will certainly bring on more resource ownership and social conflicts. So, if local companies are happy to step in and take the flak that means ‘good’ business for the IOCs,” he observed
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Bassey also said that on the other hand, the IOCs mostly divested to the extent of their equity holdings in such fields and production also activities. “They still own the pipelines and related facilities. What that means is that they are renovating their image, collecting rents from their facilities and generally smiling to the bank while the local companies will eventually take the beating for the pollutions, conflicts and other social disruptions. We see the divestment as a business strategy that benefits the IOCs and leaves the oil field communities and the environment at risk,” he told The Nation.
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Bassey noted, for instance, that although the PIB is a good first step, the document as packaged, is not as strong as it ought to be. According to him, the PIB does not have stringent pro-people and pro-environment provisions, as the country, despite the PIB, will still be having illegal routine gas flaring. He blamed the delay in passing the bill on what he described as ‘toxic politics’ and pressure from the IOCs who have openly said they would not accept laws that curb their excessive profits as well as wrong perception by some legislators that provision of funds for communities mean more money to the oil-bearing states.
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Nnimmo argued that although, the PIB makes the offer of money to oil-bearing communities on one hand, it takes it away on the other. “The PIB criminalises communities when it says that if oil facilities are tampered with then the communities, local government areas, and states would pay. Communities are not the policemen of oil facilities. The PIB speaks the old language of subsisting laws that free IOCs of responsibility where facilities are interfered with by third parties. That has made the claim of sabotage the favourite refrain of the oil companies even before incidents are investigated. The PIB fell into the same anti-people trap,” he explained.
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Bassey insisted that what Nigeria needs to do right now is to “massively increase oil revenues by halting oil theft. We are not talking about poor villagers scooping crude oil in buckets and jerry cans. Those also need to be stopped. We are talking about the industrial-scale oil theft going on in the oil sector. The official figure bandied by the Ministry of Finance as well as the National Assembly is that 400,000 barrels of crude oil are stolen everyday,” he said As for local operators, Bassey and other experts and stakeholders said the ability of local operators to hold their own would depend, to a very large extent, on better collaboration, better host community management, proper valuation and raising smart financing. They also require huge investment in knowledge, research and development (R&D).
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Mutiu Sunmonu, Managing Director of SPDC, said the divestment of his company’s assets was a deliberate measure to encourage indigenous participation in the upstream oil and gas industry. His words: “We want to create a new set of indigenous players in Nigeria’s oil and gas industry within the next 10 to 20 years from now, while the IOCs concentrate on more difficult issues and also allow us focus on material oil and gas fields.” The divestments are seen by some industry watchers as representing the single largest opportunity for Nigerian operators with the requisite expertise and capital to emerge as major upstream players.
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Union Man: Where are the jobs? | Pipe(line)Dreams - 0 views
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When Ghanaians found out there was oil off their coast, a sense of excitement spread across the country. Optimistic and at times unrealistic statements from various company officials and ministries added to expectations.
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Francis M.K. Sallah is the Regional Industrial Relations Officer for the General Transport, Petroleum and Chemical Workers’ Union. Lately he has been hearing a lot about jobs, or the lack of, in the oil industry.
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The Ghanaian government says that 90% of the oil jobs should go to Ghanaians by 2020, but some people in the industry wonder why the government isn’t being more aggressive. Sallah says that right now Ghanaians could occupy more than half the posts. Welders, pipefitters, painters, maintenance people – there are plenty of skilled laborers in Ghana, so what’s keeping them from getting jobs?
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Yeah, I know a lot of jobs in the oil industry require technical skills and education. I grew up around the oil industry. My father was a petroleum engineer. But he started work as a roustabout.
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Something is preventing Ghanaians from getting work and it’s hard for me to understand. After all, the oil men who are hanging out at the hotel bar in Takoradi are mainly working class guys from Texas and Louisiana who are in Ghana via the Gulf of Mexico or E.G. (that’s Equatorial Guinea). What degrees do they have?
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The illegal refineries are only one part of the illicit industry in Africa's biggest oil producer, and concerns have grown over its alleged international dimension. Authorities, oil firms and industry analysts say the chain of culprits and the stolen crude itself can sometimes reach far beyond Nigerian shores. "I've always said in my speeches that I believe that there are a lot of international syndicates involved," Mutiu Sunmonu, managing director of Shell's Nigerian division SPDC, told reporters recently.
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Decades of oil pollution have at the same time poisoned creeks in a region where fishing had been a major source of livelihood, often with few repercussions for those at fault. Shell, Nigeria's biggest oil producer, says most spills happen due to sabotage, but activists accuse the company of not doing enough to prevent and clean them.
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Without diminishing the severity of the Gulf spill, several observers have pointed out the asymmetrical political reactions to oil disasters in the US and in other parts of the world.[6] Nnimo Bassey, Nigerian head of Friends of the Earth International, explains the sense of frustration: ‘We see frantic efforts being made to stop the spill in the US, but in Nigeria, oil companies largely ignore their spills, cover them up and destroy people's livelihood and environments…This has gone on for 50 years in Nigeria. People depend completely on the environment for their drinking water and farming and fishing. They are amazed that the president of the US can be making speeches daily, because in Nigeria people there would not hear a whimper.’[7]
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Presumably, companies are not only put off by the prospect of increased red tape in the US, but also attracted – as they have been for decades – by the limited capacity of African States to regulate extractive activities. To attract foreign investment, most countries in sub-Saharan Africa also enter into generous production-sharing agreements that allow foreign oil companies to turn a relatively small upfront investment in exploration into billions in downstream profits.[11]
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Even after the Deepwater Horizon explosion, the company has moved full-steam ahead with plans to sell off US$30 billion in onshore and shallow-water production assets in order to aggressively pursue deepwater drilling in West Africa, Angola, Egypt and, yes, Louisiana.[17]
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Critics also point to Ghana’s long history of extractive activities and primary commodity exports: Ghana produces gold, bauxite, manganese, diamonds, timber and cocoa, none of which have generated appreciable benefits for the majority of Ghanaians.
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Ghana has chosen to accept so-called ‘stabilisation clauses’ in its contracts with companies that lock in current laws and regulations. If the country should decide to strengthen its regulatory framework, companies with existing contracts could claim that the new laws do not apply to them, or require the government to provide financial compensation for the cost of compliance.[13] As foreign companies reap handsome rewards, and Ghana gains uncertain benefits (much of the content of these contracts remains secret), coastal communities are sure to pay the highest cost. At a recent Extractive Industries Transparency Initiative (EITI) workshop held in the coastal town of Takoradi, representatives of six districts located closest to the oil find responded angrily to refusals to commit part of the petroleum royalties to an environmental mitigation or compensation fund, as is legally required in the mining sector.[24] No such provision has thus far been established for the oil and gas industry.
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corporate interests are often recast as national security concerns. It was President Jimmy Carter who cemented the connection in his 1980 State of the Union address by stating that any foreign attempt to gain control of Middle Eastern oil would be regarded as ‘an assault on the vital interests of the United States of America.’ The policy, now known as the Carter Doctrine, set a dangerous precedent of using military might to secure ‘strategically important’ resources throughout the world.
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In another case, the European Commission on Oil in Sudan (ECOS) has accused oil companies of complicity in crimes against humanity in a Southern oil field known as Block 5A. ECOS charges companies with pressuring armed groups to ‘clear the ground’, leading to a wave of repression in which 12,000 people were killed and another 20,000 displaced.
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Farming accounts for as much as 32 per cent of total emissions, a significant portion of which are created by industrial agriculture through the use of petroleum-based fertilisers, pesticides and forest clearing.[38] The issue of ‘food miles’ – the distance our food travels from farm to table[39] – has been well documented, while new data shows that the production phase accounts for as much as 83 per cent of the average US household’s carbon footprint for food.[40] Changing the way we produce food, therefore, constitutes a necessary step towards reducing oil dependence, its enormous carbon footprint and its human toll.
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Food sovereignty, the political project put forward by the international peasant movement Via Campesina, offers a promising road map.
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Industrial agriculture may be more ‘efficient’ in terms of labour (output per worker), but its productivity is achieved through massive applications of fossil fuel-based inputs such as tractor fuel and agrochemicals. Small organic farms, however, are generally more efficient in terms of land (output per acre), since they grow a variety of plants and animals, taking full advantage of each ecological niche.
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Monthly Review September 2006 Michael Watts ¦ Empire of Oil: Capitalist Dispo... - 0 views
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Although Africa is not as well endowed in hydrocarbons (both oil and gas) as the Gulf states, the continent “is all set to balance power,” and as a consequence it is “the subject of fierce competition by energy companies.” IHS Energy—one of the oil industry’s major consulting companies—expects African oil production, especially along the Atlantic littoral, to attract “huge exploration investment” contributing over 30 percent of world liquid hydrocarbon production by 2010. Over the last five years when new oilfield discoveries were scarce, one in every four barrels of new petroleum discovered outside of Northern America was found in Africa. A new scramble is in the making. The battleground consists of the rich African oilfields
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Africa is, according to the intelligence community, the “new frontier” in the fight against revolutionary Islam. Energy security, it turns out, is a terrifying hybrid of the old and the new: primitive accumulation and American militarism coupled to the war on terror.
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To see the African crisis, however, as a moral or ethical failure on the part of the “international community” (not least in its failure to meet the pledges promised by the Millennium Development Goals of reducing poverty by half by 2015) is only a partial truth. The real crisis of Africa is that after twenty-five years of brutal neoliberal reform, and savage World Bank structural adjustment and IMF stabilization, African development has failed catastrophically.
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The pillaging and privatization of the state—whatever its African “pathologies”—and the African commons is the most extraordinary spectacle of accumulation by dispossession, all made in the name of foreign assistance. The involution of the African city, notes Davis, has as its corollary not an insurgent lumpenproletariat but rather a vast political universe of Islamism and Pentecostalism. It is this occult world of invisible powers—whether populist Islam in Kano or witchcraft in Soweto—that represents the most compelling ideological legacy of neoliberal utopianism in Africa.
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The African accumulation crisis, and the dynamics of capital and trade flows, are in practice complex and uneven. In addition to oil (and the very few cases of manufacturing growth in places like Mauritius which are little more than national export-processing platforms), the other source of economic dynamism is the (uneven) emergence of global value chains. This can be seen especially in relation to high-value agricultures (fresh fruits and vegetables) in South Africa, flowers in Kenya, green beans in Senegal. Such forms of contract production, typically buyer-driven commodity chains in which retailers exert enormous power, have created islands of agrarian capitalism that contribute to and deepen patterns of existing inequality across Africa and further the interests of business elites, which are often not African. The deepening of commodification in the countryside in tandem with demographic pressures (caused as much by civil war and displacement as high fertility regimes) has made land struggles a vivid part of the new landscape of African development.
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It is no surprise that against this backdrop the development establishment flails around wildly. On the one side stands former World Bank economist William Easterly for whom all aid (“planning”) has been a total (and unaccountable) failure.
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On the other stands the one-man industry otherwise known as Jeffrey Sachs who seeks to expand foreign aid—$30 billion a year for Africa—and to initiate a Global Compact by which “the rich will help save the poor,” who are as much hampered by poor physical geography as governance failure.
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In reality what is on offer is an even bleaker world of military neoliberalism. At one pole are enclaves of often militarily fortified accumulation (of which the oil complex is the paradigmatic case) and the violent, sometimes chaotic, markets so graphically depicted in the documentary film Darwin’s Nightmare. At the other pole are the black holes of recession, withdrawal, and uneven commodification. These complex trajectories of accumulation are dominated at this moment by the centrality of extraction and a return to primary commodity production.
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All African governments have organized their oil sectors through state oil companies that have some forms of collaborative venture with the major transnational oil companies (customarily operated through oil leases and joint memoranda of understanding).
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In general the international oil companies operating in Africa have production share arrangements with state oil companies (Nigeria is the exception which operates largely through joint ventures).
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The nightmarish legacy of oil politics must be traced back to the heady boom days of the 1970s. The boom detonated a huge influx of petro-dollars and launched an ambitious (and largely autocratic) state-led modernization program. Central to the operations of the new oil economy was the emergence of an “oil complex” that overlaps with, but is not identical to, the “petro-state.” The latter is comprised of several key institutional elements: (1) a statutory monopoly over mineral exploitation, (2) a nationalized (state) oil company that operates through joint ventures with oil majors who are granted territorial concessions (blocs), (3) the security apparatuses of the state (often working in a complementary fashion with the private security forces of the companies) who ensure that costly investments are secured, (4) the oil producing communities themselves within whose customary jurisdiction the wells are located, and (5) a political mechanism by which oil revenues are distributed.
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The oil revenue distribution question—whether in a federal system like Nigeria or in an autocratic monarchy like Saudi Arabia—is an indispensable part of understanding the combustible politics of imperial oil.
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there has been a process of radical fiscal centralism in which the oil-producing states (composed of ethnic minorities) have lost and the non-oil producing ethnic majorities have gained—by fair means or foul.
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the oil complex. First, the geo-strategic interest in oil means that military and other forces are part of the local oil complex. Second, local and global civil society enters into the oil complex either through transnational advocacy groups concerned with human rights and the transparency of the entire oil sector, or through local social movements and NGOs fighting over the consequences of the oil industry and the accountability of the petro-state. Third, the transnational oil business—the majors, the independents, and the vast service industry—are actively involved in the process of local development through community development, corporate social responsibility and stakeholder inclusion. Fourth, the inevitable struggle over oil wealth—who controls and owns it, who has rights over it, and how the wealth is to be deployed and used—inserts a panoply of local political forces (ethnic militias, paramilitaries, separatist movements, and so on) into the operations of the oil complex (the conditions in Colombia are an exemplary case). In some circumstances oil operations are the object of civil wars. Fifth, multilateral development agencies (the IMF and the IBRD) and financial corporations like the export credit agencies appear as key “brokers” in the construction and expansion of the energy sectors in oil-producing states (and latterly the multilaterals are pressured to become the enforcers of transparency among governments and oil companies). And not least, there is the relationship between oil and the shady world of drugs, illicit wealth (oil theft for example), mercenaries, and the black economy.
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oil complex is a sort of corporate enclave economy but also a center of political and economic calculation that can only be understood through the operation of a set of local, national, and transnational forces that can be dubbed as “imperial oil.” The struggle for resource control that has taken center stage o
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The current crisis points to the fact that the oil-producing region in Nigeria now stands at the center of Nigerian politics—for four reasons. First, the efforts led by a number of Niger Delta states for “resource control” expanded access to and control over oil and oil revenues. Second, there was the struggle for self-determination of minority peoples in the region and the clamor for a sovereign national conference to rewrite the constitutional basis of the federation itself. Third, there is a crisis of rule in the region as a number of state and local governments are rendered helpless by militant youth movements, growing insecurity, and ugly intra-community, inter-ethnic, and state violence which—as the recent events point out—can threaten the flow of oil and the much vaunted energy security of the United States. And not least, there is the emergence of a so-called South-South Alliance making for a powerful coalition of small and hitherto politically marginalized oil producing states (Akwa Ibom, Bayelsa, Cross River, Delta, Ondo, and Rivers) capable of challenging the ruling ethnic majorities (the Hausa, the Yoruba, and the Ibo) in the run-up to the 2007 elections.
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Not surprisingly the deadly operations of corporate oil, autocratic petro-states, and the violent potentialities of the oil complex have forced the question of transparency and accountability of oil operations onto the international agenda. Tony Blair’s Extractive Industries Transparency Initiative, the IMF’s oil diagnostics program, and the Soros Foundation’s Revenue Watch are all (voluntary) efforts to provide a veneer of respectability to a rank and turbulent industry. But the real action lies elsewhere. The danger is that the ongoing U.S. militarization of the region could amplify the presence of mercenaries and paramilitaries, creating conditions not unlike those in Colombia.
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REFILE-REUTERS SUMMIT-Newly oil-rich Ghana struggles to please | Reuters - 0 views
www.reuters.com/...it-ghana-idUSL5N0CP35Z20130409
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"Because of oil production, rising expectations in Ghana will have to be met. But at the same time, past policy choices constrain the room for manoeuvre and Ghana is toeing a very delicate line," said Razia Khan, Africa analyst at Standard Chartered Bank in London.
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Across the capital Accra, evidence of new resource wealth abounds - brightly-lit multi-storey buildings, cranes looming over construction sites, well-paved roads and billboards advertising banks, cars and mobile phones.But many Ghanaians remain excluded. An influx of rural workers hoping for jobs in Accra, has spawned a sprawl of outlying shanty towns and spilled vendors across the streets.Standing in a trash-strewn courtyard, 49-year-old school teacher Monica Quansah wonders where the oil money is going."Our children are still attending school under trees," she said. "Those of us in the city don't have reliable power and water, let alone those in the regions."
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Ghana's oil worries | Pipe(line)Dreams - 0 views
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Another article, How Overpriced is Ghana’s Jubilee Field Expansion Project?, questions the projected cost of the Jubilee expansion. The higher the costs, the lower the revenues for Ghana. “It is important to note,” the article states, “that the more money that is spent on the project the longer it takes for the field to be profitable, the lower the taxes Ghana can collect, and the longer it takes for even those meagre taxes to show up.” Besides providing an important public service, the IMANI articles have also prompted a response from the Ghana National Petroleum Corporation. You can read the lengthy GNPC press release on Ghana Oil Watch: Recent Media Discussions on GNPC and Jubilee Oil. The press release refutes IMANI’s allegations and IMANI has since issued a final statement backing up the think tank’s original estimates and statements.
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Rather uncharacteristic of the secretive organisation, the Ghana National Petroleum Corporation (GNPC) finally issued a press statement to respond to concerns raised by civil society about Ghana’s underperforming oil industry. While the GNPC is to be commended for its increasing responsiveness and transparency … The truth is that the information the GNPC has now supplied to inform the public debate about Ghana’s oil sector would not have received broad coverage had IMANI not engaged in strong advocacy to demand such information.
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On a somewhat related note, a U.S. law firm has announced it investigation of potential claims against KOSMOS Energy, one of the Jubilee partners: The investigation concerns allegations that the Registration Statement and Prospectus issued in connection with the Company’s initial public offering (the “IPO”) were materially false and misleading and misrepresented or failed to disclose that:
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"I have a decent internet connection this morning, so I'll take advantage of that to post some of the back and forth between Ghanaian think tank, IMANI, and the Ghana National Petroleum Corporation (GNPC). IMANI has recently published some interesting articles on the Jubilee field's underperformance. In contrast to the excited tone of most of the business news about the country's oil industry, the IMANI articles raise serious questions about the industry's costs and prospects."
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In its bid to take control of one of the most lucrative oil fields in Nigeria, OPL 245, oil giant, Shell, ably assisted by senior Nigerian officials, condoned illegalities, subverted laid down rules and then lied repeatedly to cover its track, an ongoing PREMIUM TIMES investigation has shown.
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Further investigations by PREMIUM TIMES have however shown that 10 years before Shell made the controversial payment in 2011, the oil giant had tolerated illegalities committed by Malabu and colluded with the company in compromising Nigerian officials and subverting the regulations and guidelines under which the oil block was awarded.
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Fully aware of the huge reserve OPL 245 holds, Mr. Etete and Mohammed Sani (Abacha) used executive fiat to discretionally award the block to themselves, through Malabu, a company they hurriedly cobbled together. Mr. Etete was petroleum minister at the time while General Sani Abacha, Mohammed’s father, was Nigeria’s head of state. To conceal the fact that he awarded the block to himself and shield himself from public scrutiny, Mr. Etete designed an ingenious scheme. He created a fictional character, Kweku Amafegha, and made him one of the three shareholders of Malabu, the others being Mr. Abacha and Hassan Hindu (wife of Hassan Adamu, former Nigerian Ambassador to the UK, who is popularly known as Wakili Adamawa).
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Jeffery Tesler, a Briton, who distributed the infamous $180 million Halliburton bribes to senior government officials, also told a French court that Mr. Etete tricked him into believing that Mr. Amafegha was a real person and how he had paid millions of dollars into Mr. Amafegha’s account.
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Insiders in Shell said before partnering with Malabu, the Dutch firm did an extensive due diligence on the Nigerian company and was aware that a fictional character was on the board of the company.
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Apart from the illegality in partnering with Malabu, the outright purchase of OPL 245 license from Malabu (through the Nigerian government) was also an illegal act by Shell and ENI as it contravened condition 4b of the approval letter for the oil block given to Malabu.
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Sources say the Department of Petroleum Resources (DPR), the Nigerian agency overseeing the licensing of and regulation of companies operating in the upstream and downstream sectors of the country’s oil and gas industry, would not have approved the sale of OPL 245 had President Goodluck Jonathan not suddenly “restructured” the agency to plant favourite officials with specific instruction to subvert the law and due process in the Malabu-Shell deal.
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“There was pressure on Obaje to approve the sale, but he did not. That is why they brought the new Director, who is a Shell man all through,” an industry source said. “Do you think it is a coincidence that a Shell VP was brought in as head of DPR at a time when Shell and the FG wanted the DPR to approve the sale of one of Nigeria’s richest oil blocks,” the source queried.
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“Shell cannot say it was not aware that Etete gave the oil block to himself, they cannot say that they were not aware that the guideline on the block prevented them from partnering or buying it from Malabu,” an oil industry source with links to the multinational company stated
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Minister of Petroleum Resources Diezani Alinson-Madueke who also addressed the forum, said that by enacting the law and establishing a formidable Nigerian Content Development and Monitoring Board (NCDMB), which would help to implement the provision of NOGICD Act, the Federal Government had taken the lead with the provision of the enabling environment and would continue making the improvements required.She said that with the new drive, there would be “transformation of ownership profile of marine assets supporting industry activities from a current ratio of 20 Nigerian-owned vessels: 280 Foreign-owned vessels to a more equitable ratio of 180 Nigerian:120 (Foreign).”She noted that the Nigerian content would not only integrate indigenes and businesses residing in the oil producing areas into the mainstream of industry economic activity, but it would also capture of over 70 per cent of banking services, insurance risk placements, and Legal services supporting industry activities and transactions.
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Extractive Industries Transparency Initiative - 0 views
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3.5 billion people live in countries rich in oil, gas and minerals. With good governance the exploitation of these resources can generate large revenues to foster growth and reduce poverty. However when governance is weak, it may result in poverty, corruption, and conflict. The Extractive Industries Transparency Initiative (EITI) aims to strengthen governance by improving transparency and accountability in the extractives sector. The EITI sets a global standard for companies to publish what they pay and for governments to disclose what they receive.
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Attacks on the Press: Oil, Money, and the Press - Committee to Protect Journalists - 0 views
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Whether all this oil will benefit the average citizen depends largely on whether extraction deals are handled in an open, transparent manner. A comparison between Brazil and Nigeria is instructive. The South American country provides monthly updates on oil production on a state website. Brazil became the seventh-largest economy in the world with the help of oil output, with 2011 per capita income of $12,594, according to World Bank statistics. In Nigeria, five decades of oil output have been mired in secrecy and conflict. Although the country's oil exports are comparable to those of Brazil, its per capita income is just $1,452.
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While Uganda's 2005 Access to Information Act theoretically covers documents between the government and private companies, oil contracts typically have special provisions whereby both parties must consent before information is given to a third party, according to Gilbert Sendugwa, coordinator of the Africa Freedom of Information Centre in Uganda. The secrecy clauses prevent even parliament from getting key information, according to Dickens Kamugisha, chief executive of the Africa Institute for Energy Governance, a Kampala-based think tank that advocates for transparent energy policies.
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Since few Ugandan authorities comply with requests under the access law, few journalists bother to use it. Sendugwa noted that all government ministers are required to report how they implement the information act. "We decided to test the law and sent an information request to parliament in November 2010 asking for the ministers' reports on their implementation of the Access to Information Act," he said. "To this date, none have complied."
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The anti-corruption research organization Global Witness also analyzed the bills and concluded that all three lack guarantees on contract and financial transparency.
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Though the act offers broad assurances that oil information is public, a provision allows the ministry to determine whether or not a particular oil contract is published, said Dana Wilkins, a campaigner for Global Witness. No contract had been made public as of late 2012.
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Officials and oil companies in Uganda try to control the message by providing organized tours of oil drilling facilities. The Ministry of Energy and Mineral Development's 2011 communication strategy paper recommends two media tours of the Albertine Graben oil-drilling area each year. "Sure, it's easy to go to oil areas for oil company-organized events," Ssekika said. "You can talk to district officials, etc. But when you go alone with your own view, that's a different story."
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"When China National Offshore Oil Corporation [CNOOC] struck a deal with Tullow Oil to develop Uganda's fields, it warned [President Yoweri] Museveni that there wasn't time to wait for parliamentary debates over the issue--pausing now could mean Uganda losing its winning lottery ticket to Kenya," Lay wrote on the African Arguments news website. Tullow's communications manager in Kampala, Cathy Adengo, disputed that depiction. "Tullow did not push the Ugandan authorities into doing anything, considering we had a two-year wait to ratify the deal with CNOOC," Adengo said.
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The company has faced further lawsuits over pollution in the Delta and alleged ties to the Nigerian military, according to Reuters. "Imagine, it took a court case launched in America before activities of oil companies were discovered," said Omoyele Sowore, publisher of the anti-corruption website Sahara Reporters and a former Niger Delta resident. The legal disputes resulted in an estimated loss of one million barrels of oil a day for the Nigerian government and private companies, according to Nigerian writer Orikinla Osinachi.
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Oil revenues count for 80 percent of the national budget, yet the government is unable to determine the amount of oil extracted from its territory, according to Alex Awiti, an ecologist at Aga Khan University in Nairobi.
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Nigeria's situation is not unique. Although Angola is the second-largest oil producer in Africa with an annual GDP of $101 billion and per capita income of nearly $9,000, more than two-thirds of its 8 million people live under the $2-a-day poverty line, according to the World Bank and news reports. These statistics, said Awiti, are rooted in the lack of transparency in Angola's oil production--leading to corruption, millions of dollars being stashed abroad, and revenue sequestered in a secret "parallel budget." In 2012, the International Monetary Fund attributed a $32 billion gap in Angola's state funds from 2007 to 2010 to "quasi-fiscal operations by the state-owned oil company."
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With oil output still in early stages in East Africa, the region has time to learn from other oil-producing countries. Chad has drilled oil since 2003, with the contracts kept secret. "The fact is Chadians do not know how many barrels are actually produced and where the money goes," said former N'Djaména Hebdo journalist Augustin Zusanne, who now works for the United Nations. Without such information, residents can hardly press for more development. "Even the oil-producing region, Doba, does not benefit from oil revenues. The population of this area lives in poverty," said Eric Topona, a journalist with the state broadcaster. However, things might improve, as Chad is now a candidate for membership in the Extractive Industries Transparency Initiative (EITI), an international forum that seeks openness by ensuring that oil payments are published annually. Government officials, oil companies, and civil society organizations oversee the process.
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In its 2008 Oil and Gas Policy, Uganda said it would apply for membership in the EITI, but it did not say when and nothing has been implemented, according to news reports. "The way the EITI section is drafted clearly shows a government that is not sincere or ready to implement--it's so vague," Kamugisha of the Africa Institute for Energy Governance said in describing the Ugandan policy. Kenya has made no commitment to join the Initiative. Eddie Rich, deputy head of the EITI secretariat, confirmed that South Sudan and Uganda have made public commitments to implement the initiative and said "international partners are working with those governments to progress toward official applications." None of the African countries working with EITI are disclosing information on compensation to local people affected by oil production, Rich said.
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But East Africa does not have to look overseas for mentors: Ghana, Liberia, and even the Democratic Republic of Congo publish oil contracts. "It took years, but contracts are now in the public domain," said Ghanaian development economist Charles Abugre, who vigorously campaigned for publication.
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And for those of you wondering if Transocean or BP are involved in Ghana's oil industry, BP, along with China National Offshore Oil Corp. (CNOOC) and the Ghana National Petroleum Corporation, recently made a bid to buy Kosmos Energy's interest in the Jubilee Field operation. Kosmos rejected the bid. For the moment, then BP is not active in Ghana, but a subsidiary of Transocean, Challenger Minerals Inc., is part of an exploratory drilling operation in the country.
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Malabu then sued the government. After much legal wrangling, they reached a deal in 2006 that reinstated the firm as the block’s owner. This caught Shell unawares, even though it had conducted extensive due diligence and had a keen understanding of the Nigerian operating climate thanks to its long and often bumpy history in the country. It responded by launching various legal actions, including taking the government to the World Bank’s International Centre for the Settlement of Investment Disputes.
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Tom Mayne of Global Witness, an NGO, has followed the case closely; he believes things were structured this way so that Shell and ENI could obscure their deal with Malabu by inserting a layer between them. Mr Agaev, Malabu’s former fixer, lends weight to this interpretation. It was, he says, structured to be a “safe-sex transaction”, with the government acting as a “condom” between the buyers and seller.
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Shell and ENI reject the suggestion that their joint purchase was a thinly disguised transaction with a dodgy brass-plate company. Shell says it made payments to the Nigerian government only and that it has acted at all times in accordance with Nigerian law. It previously said it had “not acted in any way that is outside normal global industry practice”. ENI says its payments to the government “were made in a transparent manner through an escrow arrangement with a major international bank”. That bank was JPMorgan Chase. A Lebanese bank had earlier declined to handle the payments, it emerged in court.
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The companies’ claim that they bought the block from the state, not Malabu, is disingenuous, says Mr Mayne of Global Witness. It is also contradicted by Nigeria’s attorney-general, Mohammed Bello Adoke, who told a parliamentary committee last July that the companies “agreed to pay Malabu”, with the government acting as an “obligor” and “facilitator.”
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The EFCC’s report states: “Investigations conducted so far reveal a cloudy scene associated with fraudulent dealings. A prima facie case of conspiracy, breach of trust, theft anmd [sic] money laundering can be established against some real and artificial persons.” Officially, the EFCC’s investigation is still open, but a source familiar with it says that its sleuths have been discouraged by higher-ups from moving forward. However, other countries’ fraudbusters have taken an interest. At least one of the parties involved in the oil-block sale has been contacted by America’s Department of Justice.
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The saga is a striking example of an ethical dilemma that is growing more acute for international oil companies. They are desperate to replace their shrinking reserves with new finds, but many of the most attractive fields are in unstable or poorly governed places.
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Mr Hughes argues that when foreign companies turn a blind eye to questionable aspects of a deal, it can sometimes benefit developing countries with natural resources. The publicly traded oil majors are, on balance, a force for good, raising overall standards of behaviour by trying to operate as cleanly as possible in most circumstances, he says; better that than leaving the field to less scrupulous operators.
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Global Witness prefers to see the OPL245 affair as “a lesson in corruption” that demonstrates how important it is for rich-world governments to press on with transparency initiatives
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The thrust of Crude Continent is precisely (and often, not so precisely) this: oil, far from being a curse, could actually save Africa. It is oil that will modernise Africa and oil that will lead it out of what Clarke dubs – without ever defining – ‘African medievalism’. Clarke argues that those countries without oil are the ones that are truly cursed, for they will be left ‘largely backward’.
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This intriguing notion is preached throughout Crude Continent, with Clarke seeking to expose as fools those who argue that Africa's oil-rich countries are being poisoned to the core by the so-called ‘resource curse’. Our candid author is particularly incensed by two experts' ‘scribblings on oil’, both released last year: Oil and Politics in the Gulf of Guinea by Ricardo Soares de Oliveira, an Oxford lecturer; and Poisoned Wells: The Dirty Politics of African Oil by Nicholas Shaxson, an associate fellow at Chatham House, London.
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Clarke asks us to consider what he calls the long-term ‘multiplier effects’, the direct and indirect benefits of the oil and gas industry, including employment creation, foreign exchange inputs and capital inflow, technology transfers, fiscal funding and ‘indirect supply chain effects’. These are much more significant than the ‘palliative band-aid…of corporate social investment’ that Clarke clearly detests. He berates the fact that no one has ever ‘properly identified and measured’ the social and economic benefits of oil and gas projects in Africa.
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Regularly tumbling into appalling metaphor and analogy, Clarke nevertheless concludes: ‘North and south Sudan may be bound by the umbilical cords of a chequered politics and oil history, but as with Siamese twins these links can also be severed.’
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Parts three and four provide the reader with 140 pages of comprehensive information on corporate oil operations in Africa and the global scramble for the big prize. Leaving aside his irritating penchant for metamorphosis – lions becoming countries, rhinos turning into multinationals – Clarke offers readers the chance to delve into his vast wealth of knowledge. Together with a comprehensive index, these two sections make it easy to find out which company is drilling what wells, where and with whom. Our expert guide also leads us around the world explaining how different nations are capturing Africa's oil and gas potential. All fascinating stuff.
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The perpetuation of the petroleum age might make the current crop of oil executives and certain political leaders happy, but it is dangerously optimistic to suggest that the future well-being of African people depends primarily on drilling oil.
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The thrust of Crude Continent is precisely (and often, not so precisely) this: oil, far from being a curse, could actually save Africa. It is oil that will modernise Africa and oil that will lead it out of what Clarke dubs - without ever defining - 'African medievalism'. Clarke argues that those countries without oil are the ones that are truly cursed, for they will be left 'largely backward'.