WASHINGTON – West African oil holds great promise for companies in
search of diverse sources.
But it's giving U.S. national security planners a new Gulf to worry
about: the Gulf of Guinea.
Imports from Nigeria have almost doubled in the last two years, and U.S.
companies led by Irving-based ExxonMobil Corp. are beginning to produce
from new fields in the deep waters off Nigeria, Equatorial Guinea and
further south off Angola.
Yet much like the Persian Gulf countries, the Gulf of Guinea nations
harbor terrorists and insurrectionists who pose a big threat to the flow
of oil, particularly from onshore fields in Nigeria's Niger River delta.
When a rebel group threatened to attack Nigerian oil installations last
week, prices rose to $50 a barrel. The rebels now say they've reached a
truce with the government. And fears about continued violence in Nigeria
and Iraq, coupled with concerns about the slow pace of recovery in Gulf
of Mexico oil output, pushed crude to $51.09 a barrel Tuesday.
Such threats are nothing new.
A third of Nigeria's average production of 2.1 million barrels a day was
either shut down by rebel violence or stolen last year. Heavily-armed
gangsters continue to steal oil at a rate of about 100,000 barrels a day.
A report done for Royal Dutch/Shell Group, which produces half of
Nigeria's oil, found more than 1,000 deaths a year from crime and
political violence in the Niger Delta, putting the region on a par with
Chechnya and Colombia.
But West African oil production is expected to double by 2010, and
natural gas production is quickly increasing as well.
Some say Nigeria could before long become the most important source of
U.S. energy outside Canada – making secure flows of oil in the Gulf of
Guinea as important as secure flows of oil in the Persian Gulf.
Air Force Gen. Charles Wald, deputy commander of the U.S. European
Command, has made three visits to Nigeria this year to discuss oil
security and terrorist threats.
Sen. Chuck Hagel, R-Neb., chairman of the Senate international economic
policy subcommittee, accompanied Gen. Wald in August, and said West
Africa deserves a higher priority in U.S. energy security planning.
"We could be importing as much as 25-30 percent of our oil imports from
the Gulf of Guinea over the next few years," Sen. Hagel said. "That
certainly would rival the Persian Gulf as a supplier of crude oil."
Certainly, most analysts say oil from West Africa won't replace Persian
Gulf oil in the global energy picture. Oil reserves are far larger in
Saudi Arabia and Iraq.
But a diversity of sources increases U.S. oil security. And West African
oil is regarded as one of the few major alternatives to the Middle East
for future oil production.
The Bush administration featured West Africa as a key to greater oil
import diversity in its 2001 national energy plan. President Bush has
met repeatedly with Nigerian President Olusegun Obasanjo, including last
month at the United Nations. U.S. officials say oil security has been
part of the discussion, though not the sole theme.
U.S. policy has concentrated on helping the Gulf of Guinea nations clean
up corruption, which is seen as a major cause of political instability,
said Deputy Assistant Secretary of State Paul Simons.
Meanwhile, U.S. military and diplomatic negotiators are arranging
security assistance to guard offshore oil platforms and access to
contingency staging areas if U.S. forces are sent to the region.
China, too, is looking to West Africa for future oil needs. China has
offered to invest in Nigeria's oil refineries, which U.S. analysts say
are a nightmarish maze of corruption and poor maintenance.
The Africa Oil Policy Initiative Group, a lobbying outfit with ties to
the Israeli Institute for Advanced Strategic and Political Studies, has
urged the Bush administration to offer an oil-for-debt deal to Nigeria.
And Israel has urged the United States to lessen its dependence on Arab
oil producers since the 1973 Arab oil embargo. Nigeria is seen as a way
to achieve that objective.
The Oil Policy Initiative has urged forgiveness of Nigeria's $32 billion
in foreign debt, in return for Nigeria leaving OPEC. That would let
Nigeria escape its OPEC production quota and move to its stated goal of
producing 4 million barrels a day by 2010.
Unless Nigeria's quota rises substantially, some of its new deepwater
oil fields could bump into production ceilings.
"The multinationals have to offset their investments with oil from those
fields, which makes no sense under Nigeria's OPEC quota," said Elias
Johnson, who follows Nigerian energy developments for the U.S. Energy
Washington is trying to work with Nigeria to reduce its indebtedness,
and Nigeria is expanding its oil production capacity. But U.S. officials
say Nigeria's OPEC membership has not been discussed.
Supply diversity is important to such U.S. giants as ExxonMobil and
ChevronTexaco Corp., which have invested heavily in the Gulf of Guinea
to boost their global oil reserves.
ExxonMobil has helped build an oil pipeline to the Gulf of Guinea from
Chad. And it has a big share of new deepwater oil fields coming into
production off Nigeria, Equatorial Guinea and Angola. The company's West
Africa oil production has risen about 25 percent this year to 542,000
barrels a day.
Dallas-based Hunt Oil Co. signed deals with Togo, Namibia and Senegal to
search for offshore oil.
The companies find West African oil commercially attractive for several
• It's much closer to U.S. refineries than Persian Gulf oil.
• Most African crude oil is lighter and has a lower sulfur content than
Persian Gulf oil – qualities that increase gasoline yields and create
less air pollution.
• And it is one of the few promising oil regions where companies can
take ownership in reserves they discover. Mexico, Saudi Arabia, Kuwait
and several other big producers bar foreign ownership, and investors
still face equity obstacles in Russia and Iraq.
Recent exploration in West Africa has concentrated on offshore fields,
using technologies developed in the deep waters of the Gulf of Mexico.
Political violence has played a role in moving the search as much as 200
"There is more piracy in the Gulf of Guinea than anywhere else in the
world," said Chester Crocker, a professor of diplomacy at Georgetown
University and former assistant secretary of state for Africa. "Armed
pirates in pretty big boats have gone to some of the rigs near shore
demanding protection money."