The West and Others

Why The West Is Killing And Plundering In Africa; Nigeria and The Oil Gluttons



U.S. Oil Imports from Nigeria

According to the Energy Information Administration (EIA) of the U.S. Department of Energy (DoE), Nigerian oil production averaged 1.94 million barrels per day (bbl/d) in 2008, although the EIA estimates that Nigeria’s effective oil production capacity was 2.7 million bbl/d. Of this, 990,000 bbl/d were exported to the United States.

The United States, thus, imported 44 percent of Nigeria’s oil exports, making the country the fifth largest foreign oil supplier to the United States. Nigeria’s oil export blends are light, sweet crudes with low sulfur contents, meaning that they are highly viscous, easy to transport, and comparatively inexpensive to process into gasoline and other petroleum products.

In 1977, the Nigerian government created the Nigerian National Petroleum Corporation (NNPC) to manage oil production and exports. The majority of Nigeria’s major oil and natural gas projects (95 percent) are funded through joint ventures with the NNPC as the major shareholder. Shell Petroleum Development Company operates the largest joint venture in Nigeria. Additional foreign oil companies operating in joint ventures with the NNPC include ExxonMobil, Chevron, ConocoPhillips, Total, Agip, and Addax Petroleum.

The Link Between U.S. Oil Imports and U.S. National Security Policy

Compared to the Middle East, Africa possesses a relatively modest share of the world’s petroleum reserves: approximately 9.4 percent of proven world reserves, compared to 61.7 percent for the Middle East. Nevertheless, the world’s major oil-consuming nations, led by the United States, China, and the Western European countries, have exhibited extraordinary interest in the development of African oil reserves, making huge bids for whatever exploration blocks become available and investing large sums in drilling platforms, pipelines, loading facilities, and other production infrastructure.

Indeed, the pursuit of African oil has taken on the character of a gold rush, with major companies from all over the world competing fiercely with one another for access to promising reserves. This contest represents “a turning point for the energy industry and its investors,” in that “an increasing percentage of the world’s oil supplies are expected to come from the waters off West Africa,” the Wall Street Journal reported in December 2005. By 2010, the Journal predicted, “West Africa will be the world’s number one oil source outside of OPEC.”

It is in this context that we must view the world’s growing interest in African oil. African oil output may never reach the Olympian heights long associated with Middle Eastern production, but it is expected to continue growing in the years ahead at a time when output from many other areas is in decline—and this, more than anything else, makes it significant.

According to the U.S Department of Energy (DoE), combined oil output by all African producers is projected to rise by 91 percent between 2002 and 2025, from 8.6 to 16.4 million bbl/d. Even if this projection proves overly optimistic, Africa will still figure among the very few major producing areas (the Caspian Sea basin is another) that are expected to post significant production increases in the years ahead. In an environment where any increment in output will be highly prized, Africa is thus a powerful magnet for the world’s giant oil companies.

The United State now obtains between 22 and 24 percent of its total oil imports from Africa, depending on periodic variations in production levels, particularly fluctuations in Nigerian oil production as a result of attacks on oil facilities by MEND and other political unrest in the Niger Delta. As a result, the United States now imports more oil from the African continent than from the entire Middle East, and is expected to get an even larger percentage of its oil imports from Africa in the coming years.

In December 2000, the National Intelligence Council of the U.S. Central Intelligence Agency (CIA) concluded that Africa would be supplying 25 percent of America’s total oil imports by 2015. Most oil industry analysts now believe that this estimate was too conservative and that Africa will actually be supplying a considerably greater percentage of U.S. oil imports throughout the next decade.

Despite the inauguration of President Barack Obama in January 2009, U.S. government policy on the procurement of African oil is largely governed by the National Energy Policy Report—the final report of the National Energy Policy Development Group (NEPDG)—which was issued on May 17, 2001. The NEPDG was chaired by Vice President Dick Cheney, a high-level body appointed by President Bush in February 2001, and its final document is often referred to as the “Cheney report.”

In the most general terms, the report calls on the federal government to undertake numerous initiatives to substantially increase the nation’s supply of energy, including energy derived from petroleum. As is well known, these initiatives include measures aimed at increasing oil output from domestic U.S. sources, most notably by commencing drilling on the Arctic National Wildlife Refuge (ANWR). But because America’s need for energy is expected to expand substantially in the years ahead, the report also calls for increasing U.S. reliance on foreign sources of energy.

In light of Africa’s unique ability to increase its oil output in the years ahead, the Cheney report highlighted Africa’s potential to supply an ever-increasing share of America’s energy needs. “West Africa is expected to be one of the fastest-growing sources of oil and natural gas for the American market,” the report states. Moreover, “African oil tends to be of high quality and low in sulfur, making it suitable for stringent refined product requirements.” Particular mention is made of the oil potential of Nigeria and Angola.

Nigeria’s 2001 production is estimated at 2.1 million bbl/d in the report, and that country is said to harbor “ambitious production goals as high as 5 million barrels of oil per day over the coming decades.” Angola is also described as a “major source of growth,” with the potential “to double its exports over the next ten years.” On this basis, the Cheney report calls for vigorous action by the United States to promote increased oil output in Africa and to channel these additional supplies to markets in the United States. To accomplish this, American oil companies are encouraged to increase their investments in Africa and African countries are encouraged to welcome and facilitate such investment.

The Bush administration also sought to enhance U.S. access to African oil in order to reduce—to some degree, at least—American dependence on the ever-turbulent Middle East. While it is impossible to escape dependence on the Middle East altogether, the Cheney report notes, it is important to reduce U.S. vulnerability to supply disruptions caused by Middle Eastern instability as much as possible – a strategy known as “diversification.” “Concentration of world oil production in any one region of the world is a potential contributor to market instability,” the report notes. Accordingly, “encouraging greater diversity of oil production…has obvious benefits to all market participants.”

In accordance with this outlook, the Cheney report calls for vigorous U.S. efforts to increase imports boost from all potential alternatives to the Middle East, but West Africa is viewed with particular favor in this regard because many of its most promising new fields are located offshore, in the Atlantic Ocean, and thus safely removed from the strife and disorder of the African mainland. “Technological advances will enable the United States to accelerate the diversification of oil supplies,” the report notes, “notably through deep water offshore exploration and production in the Atlantic Basin, particularly West Africa.”

The direct linkage between growing U.S. dependence on oil imports from Africa—and particularly from Nigeria—is based on the assertion that U.S. national security—and our continued enjoyment of the “American way of life”—requires unimpeded access to African oil. Commenting on this development, the former U.S. ambassador to Chad, Donald R. Norland, told the Africa Subcommittee of the U.S. House International Relations Committee in April 2002, “It’s been reliably reported that, for the first time, the two concepts – ‘Africa’ and ‘U.S. national security’ – have been used in the same sentence in Pentagon documents.”

Michael A. Westphal, Deputy Assistant Secretary of Defense for African Affairs, also noted this linkage in a Pentagon press briefing on April 2, 2002. “Fifteen percent of the U.S's imported oil supply comes from sub-Saharan Africa,” he declared, and “this is also a number which has the potential for increasing significantly in the next decade.” Walter Kansteiner, the Assistant Secretary of State for Africa, further acknowledged the national security implications of African oil during a visit to Nigeria in July 2002. “African oil is of strategic national interest to us,” he declared, and “it will increase and become more important as we go forward.”

As a result, the “Carter Doctrine,” proclaimed by President Jimmy Carter in January 1980 has been extended to Nigeria, the rest of Africa, and indeed the entire world. In his final State of the Union Address, President Carter designated the free flow of Persian Gulf oil as a “vital interest” of the United States and declared that this country would use “any means necessary, including military force,” to defend that interest.

To implement this policy, widely known as the “Carter Doctrine,” the U.S. Department of Defense established the U.S. Central Command (Centcom) to oversee U.S. military operations in the Gulf area and built up a substantial military basing infrastructure in the region. Later presidents subsequently cited the Carter Doctrine as the basis for U.S. combat operations during the Persian Gulf War of 1991, the war in Afghanistan from 2001 until the present, and the invasion of Iraq in 2003.

An oil industry watchdog said that Shell paid Nigeria’s military and police $65 million over two years to secure company facilities, alleging the firm had bankrolled forces widely accused of rights abuses. Citing leaked company documents, London-based Platform said Shell spent a total of $383 million (310 million euros) on security in Nigeria between 2007 and 2009, when a rebel insurgency in the oil-rich Delta region was at its peak.

Those funds partly paid for the Anglo-Dutch company’s own 1,200-member force as well as the protection provided by some 1,300 government forces who guarded Shell’s facilities, Platform said. An estimated $127 million was spent on unexplained category marked “other” the documents show. A spokesperson at Shell’s Nigeria subsidiary did not comment on Platform’s figures, saying that protecting company staff and assets is “Shell’s highest priority.”

“Shell’s total support for government forces in Nigeria reached an estimated $65 million. This is a staggering transfer of company funds and resources into the hands of soldiers and police known for routine rights abuses,” Platform charged. The group’s Nigeria researcher Ben Amunwa told AFP those payments were “a stunning failure of due diligence,” as Shell was well aware that Nigeria’s security forces had long been accused of brutality by international and domestic rights groups.

Amunwa said the report was based on documents given to Platform by a source closely familiar with Shell’s security budget who approached the watchdog independently. The largest category in Shell’s security spending over the two-year period was labelled as “Other,” Platform said. “There is evidence that indicates Shell used this ‘other’ budget for a variety of questionable purposes,” the report said. US diplomatic cables published by Wikileaks indicated some of the company’s funds were channelled to militant groups in the Delta, according to Platform’s report.

“All our staff and contractors are expected to adhere to the highest levels of personal and corporate ethics,” Shell said in the statement sent to AFP. “We have always acknowledged the difficulties of working in countries like Nigeria. In the period that this report refers to, the armed militancy in the Niger Delta was at its height, requiring a relatively high level of security spending there,” it added, referring to the Platform report.

A 2009 amnesty deal sharply reduced unrest in the Delta and production, which had been curbed by the violence, has rebounded. Earlier this month (August, 2012), Nigeria said output had reached an all time high of 2.7 million barrels per day.

Resources: African Security Research Project and African Spotlight