Can Petroleum Aid development?

The desire to capture more oil reserves is driving exploration and development of oil and gas fields in Eritrea, Ethiopia, Somaliland, Puntland, Somalia, Kenya, Uganda, Rwanda, Burundi, Tanzania, Mozambique, Madagascar, Malawi, Mauritius, the Comoros, Seychelles and the coast of Durban in South Africa.

The National oil spill detection and response agency (NOSDRA), the United Nations Environment Programme (UNEP) and the United Nations Development Programme (UNDP) have identified over 2,000 spill sites that need to be remediated. Some of these spills happened over 40 years ago. The Ebubu spill that occurred in 1970, has not been cleaned up and Shell, the company implicated in the disaster, is vigorously appealing a judgement of a federal high court which ordered it to pay US$40 million compensation as at 2001.[3]

Even though Ikiogha is the government bureaucrat in charge of penalising Shell for the spill and signing off on the cleanup, he is also the contractor hired by Shell to do the cleanup… His cleanup operation consists of four shirtless men scooping oil from the surface of the polluted river with Frisbees… he claims that most of the oil had earlier been removed with absorbent foam and blankets.’[5]

the Jubilee Ghana MV 21 BV – a special purpose company[5] comprised of energy corporations – is incorporated in the Netherlands, one of the world’s leading tax havens that provides specific loopholes for corporate activities. The consortium owns the Kwame Nkrumah MV 21 – the Floating Production Storage and Offloading (FPSO) facility that will be used to exploit Ghana’s offshore oil during the first phase of development. Commenting on the Jubilee Ghana special purpose vehicle (SPV), Elmer explains that the intent is manifold: Protecting secrecy and providing legal, tax and regulatory relaxation. ‘In this case,’ he says, ‘there is a strong suspicion that the SPV [will] charge certain services to the company, therefore reducing the profit and the taxable profit. Another option is that certain currency or derivative deals with the company [will be] made with the same effect that the taxable profit is reduced in Ghana.’ The use of the Netherland’s opaque legal and financial vehicles are likely to facilitate revenue leakage, diminishing Ghana’s projected oil revenue, estimated to inject US$800 million into the economy from 2011 and 2029 (beginning with US$20 per person in 2011 before increasing to US$75 per person by 2017, if revenues are directly remitted to citizens).

Ironically, though corporate mispricing accounts for 60 per cent of illicit flight from resource-rich developing nations, specifically those in oil and-mineral rich West Africa, Ghana vies to become the Netherlands of Africa. ‘Under the IFSC, Barclays Bank has been given the license to operate the first Offshore Bank in the sub region.’[10] Cumulatively, US$13 trillion in private wealth is stashed by tax evaders and avoiders in secrecy jurisdictions. If taxed at a moderate 7.5 per cent rate of return, these funds would yield US$865 billion dollars annually.

They pointed at the Policy, Government and Public Affairs Department of Chevron as the ''dirty trick'' arm of the oil company in the Gbaramatu ''crisis project'', alleging that a similar scheme by the company had earlier claimed the lives of three community youths.

In the mean time, efforts to get Femi Odumabo, an engineer and the oil company's General Manager in-charge of the Policy, Government & Public Affairs Department, did not pay off, as he was said to be attending to some ''urgent matters''.

What a coincidence: the world’s first major oil well, Empire, was established in 1861, in Pennsylvania, the same year the American Civil War began. With black liquid slaves gushing from the ground, there was less of a need to enslave black (or any other) humans, at least not so overtly. The new black slaves are also much more powerful, flexible, storable, transportable and tradable. Cheaper to maintain, they also don’t revolt.

Concurrent with the increase in oil and the actual wealth that it brought, we’ve also witnessed an explosion of magical or illusory wealth, in the form of images. It began with the invention of photography in the mid-19th century, just before the Empire oil well and American Civil War. With photos, then moving images, now on television, desktop, laptop, cellphone and Ipad, any man can own so much with his eyes.

Though the US has made so much noise about Tibet, it never mentions Manipur, a sovereign land invaded by an ally. The state will rob and murder, then grant you symbolic victories, such as a Martin Luther King Boulevard slicing through each ghetto, but enough of token bones tossed under the table. It’s time to overturn that table.

Forecast estimate that Jubilee oilfields can produce 55,000 barrels of light sweet oil per day. With further development of more oil wells, production could reach 120,000 barrels per day. At that rate, Ghana would soon be awash with petro-dollars, which if properly managed, would provide much-needed funds for the development of infrastructure and enhance the living conditions of the people. Before it struck oil, Ghana depended on cocoa and minerals like gold, diamond and bauxite as foreign exchange earners which it prudently utilized to build a fairly decent economy with a modest but steady four per cent yearly growth rate. With democracy now well into the third decade under a succession of enlightened and committed leadership, the country is now being touted as a model for the continent. With new-found oil wealth, the future promises to be rosier.

More oil finds would help ease the burden on the cedi, which is slipping badly against the major currencies. The cedi was quoted at almost one to one with the dollar, when the nation went to the polls in December 2008. It dropped sharply against the major currencies when the then incoming Trade Minister, Ms. Hannah Tetteh, dropped her infamous 'Ghana is broke' bombshell. The cedi then rallied, according to an official pronouncement, "as a result of prudent" economic measures put in place by the government. It is beginning to look like the measures are no more holding. At the last count, the cedi was being exchanged for the dollar at GH ¢1.53, an indication that the national currency has depreciated by about 30 percent in recent times.

The case stems from oil pollution in the Ecuadorean rain forest, but Chevron does not operate there and has no significant assets in the country. It was Texaco, which Chevron acquired in a merger in 2001, that was accused of widespread environmental damage before pulling out of Ecuador in the early 1990s.

Chevron has much larger operations elsewhere in Latin America, and the plaintiffs’ strategy of pursuing the company across the region could open a contentious new phase in the case — one that would test Ecuador’s political ties with its neighbors and involve some of Washington’s most prominent lobbyists and lawyers.

Advisers to the plaintiffs said Brazil, Argentina and Venezuela would be obvious candidates to pursue Chevron assets, but they acknowledged it would not be easy. Venezuela, for instance, is a close Ecuadorean ally and its president, Hugo Chávez, is a frequent critic of the United States. But Chevron has extensive operations in Venezuela and enjoys warmer ties with Mr. Chávez’s government than just about any other American company.

Nigeria is strategic to the global energy need, it is also crucial to the maintenance of security of the Gulf of Guinea region; the fear of the magnitude of the crisis and insecurity in that region forced the US to create the African Command.

This is the latest withdrawal of oil majors from Uganda and other 20 African countries, and is part of the growing trend of shifting away from retail and marketing to exploration and production, where returns on investments are high.

“We are reviewing our business globally and shall end up with a downstream footprint in larger markets with bigger profits because small markets are not profitable,” Kyayonka observed.

“The issue is about utilisation of capital. We have a pot of money from the shareholders and public funds from which they expect returns on their investments,” Kyayonka stated. “As managers, we have to think of where the dividends come from, and that is in exploration and production.”

Based upon the model implemented in England and Wales and in some parts of the United States and Latin America, reforms were geared towards restructuring and privatising state-owned electricity utilities in order to try to improve efficiency through competitive wholesale electricity markets.

The impact of reform on poverty reduction also became a cause for concern. Even where private sector participation had occurred, expanding access to non-industrial consumers had been considered unprofitable. Stark figures for household access levels, such as 2 billion people without access to electricity worldwide, were difficult to ignoreii.

interestingly, PSMPs tend to emphasise use of large-scale generation projects to exploit hydro and thermal potential and regional integration of grid networks. Whilst a stable grid serving the entire population might be an attractive long-term goal, rarely has such distributional equity been achieved. More often than not, grid extension programmes have failed to reach the rural poor because they have not always proven to be the most cost-effective means of expanding access to rural areas, mainly due to low population density and greater technical losses as transmission networks increase.

Jarch is chaired by Philippe Heilberg, who during the 1990s worked as a Wall Street banker in the commodities division of American International Group, a giant American financial company that nearly collapsed in 2008.

On the same BBC program, Steve Wiggins, a Research Fellow at the think-tank the Overseas Development Institute (ODI) said the deal raised concerns over land rights. “The concerns are very clearly first and foremost alienation of the land rights of people who are already there. And particularly some of the marginal and poor people who may not have legal title to their land and these people are obviously vulnerable to losing the means of their livelihoods.”

The Bowoto case is the legal reaction to Chevron’s role in a 1998 protest by Nigerian community activists in the Niger Delta. The unarmed demonstrators boarded an oil platform and adjacent barge, property of subsidiary Chevron Nigeria Ltd, in protest over the environmental and economic damage caused by oil production in the region. The activists were attacked on 28 May by Nigerian authorities ferried to the floating protest by the oil corporation. Two men were killed and several more protestors injured. Three others claim detention and torture.

After nearly 10 years of pre-trial motions wherein many claims were dropped by a pre-trial judge, the case finally debuted in trial in October 2008 and a decision was handed down on 1 December the same year. The nine-bench jury decided in favour of Chevron, clearing the corporation of any liability under the various claims. It was a defendant’s victory, but civil society groups and legal experts still label the case a milestone in advancing corporate accountability.

The Bowoto case is the first time the multinational magnate Chevron USA Inc. has been successfully taken to a US court for the actions of an overseas subsidiary. ‘Chevron has a very intricate structure, used in part to try and shield itself from liability,’ Simons said. The case has effectively scrapped this corporate strategy.

Nigerian lawmakers are currently working on a sovereign wealth fund that will save some of the windfall crude revenue for future generations and invest some in infrastructure, ensuring that the government can’t use it to finance running costs.