New scramble for Africa

Nov 14, 2006 01:00 AM

by Sinikka Tarvainen

As instability in the Middle East threatens energy security, the West is turning to Western and Central Africa, which is emerging as an increasingly important player in global oil markets. The region from the Gulf of Guinea to Sudan is becoming the subject of fierce competition by energy companies in a new scramble for Africa -- for its high-quality, easily refinable oil.
Although politically friendlier than the Middle East, Africa is, however, an unpredictable partner in other ways, with political and ethnic violence, crime and corruption rife in many oil-producing countries.

The gradual discovery of new oil fields could bring the biggest influx of income in the continent's history, but observers fear it will do Africa more harm than good, propping up corrupt regimes and exacerbating poverty. Africa accounts for about 11 % of global oil output, a figure which is expected to rise to 30 % by 2010. The continent holds nearly 10 % of the world's reserves.
Nigeria, Algeria, Libya, Angola and Egypt contribute more than 80 % of Africa's production of nearly 10-mm bpd. Other established producers such as Gabon, the Democratic Republic of Congo and Cameroon have been joined by Equatorial Guinea, Sudan and Chad.

The latest members in the club include Mauritania, where an Australian-led consortium is extracting 75,000 bpd, and the tiny island state of Sao Tome and Principe, which has received tens of millions of dollars in front-end payments from the United States oil company Chevron and its partners.
There are also thought to be significant reserves in Western Sahara, though a dispute between the occupying power Morocco and the independence movement Polisario over who controls the oil makes exploitation difficult.The United States, which already gets 15 % of its oil imports from Africa, is investing tens of billions of dollars in the West African energy sector. Oil investment is estimated to represent more than half of foreign direct investment in the continent, with emerging players such as China and India increasingly challenging the influence of the US, Britain or France.
Critics say the scramble for oil has obliterated concerns about human rights, as in the case of Equatorial Guinea, a country of half a million residents, which has raced ahead to become one of the main sub-Saharan producers. Washington re-opened an embassy in the country despite its reputation as a ruthless dictatorship.

The US and other Western countries are also seeking to increase military cooperation, such as training for African armies. The threat of terrorism is deemed relatively low for the time being, but the oil production faces other security concerns in the volatile region. In Chad, for instance, rebels are trying to overthrow the government, Sudan is mired in a long-running civil war and the Darfur conflict, and Mauritania's regime was toppled in a coup last year.
Africa's largest producer Nigeria is prone to political, ethnic and religious violence, which also targets oil companies. Attacks against oil facilities and kidnappings of oil workers have become commonplace in the Niger Delta, where militants are claiming a larger share of oil revenues, forcing dramatic cuts in oil production.

Oil companies have not hesitated to ally with repressive local power structures, with Shell accused by some activists of involvement in the deaths of Ogoni environmental demonstrators and the execution of writer Ken Saro-Wiwa in 1995. The instability is partly a result of the oil trade, "Africa's curse," which has encouraged reliance on only one product, preventing the development of other industries, while the oil wealth has nearly always been frittered away on enriching the ruling elite.
Critics say oil producers such as Nigeria, Angola and Gabon are doing worse than many countries without "black gold".

In Nigeria, tens of thousands of oil barrels get stolen every day, but that is only a reflection of the massive theft which has gone on at state level. Up to $ 400-bn have gone unaccounted since 1970 while the country's per capita income has plummeted, with more than 70 % of the 130-mm population now living on less than a dollar a day.
Another flagrant example is Equatorial Guinea, which has one of the world's highest per capita incomes, but where three quarters of the population do not have enough to eat. Oil companies making advantageous deals with corrupt regimes worry little about such concerns, but in the long run, they could become an additional problem for Western governments trying to secure energy supplies in Africa.

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