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Strategies & Market Trends : Booms, Busts, and Recoveries

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From: elmatador10/23/2004 5:38:13 AM
   of 74559
 
increased importance of Africa's oil and gas reserves and the border row Nigeria Cameroon

Oil: A regional and global issue
Dernière mise à jour : 29/01/03

France-Africa
diplomatie.gouv.fr

Oil: A regional and global issue


Soaring crude oil prices as a result of sabre-rattling in the Middle East have increased the importance of Africa's oil and gas reserves. Those of the Gulf of Guinea, in particular, have triggered sharp competition among the consumers, led by the United States. The Africans want to take advantage of this to strengthen their regional cooperation and give a boost to their development projects.

The Americans, the world's biggest consumers of energy, recognised after September 11, 2001, the strategic value of the continent's hydrocarbon reserves, which explains their renewed interest for African countries. US crude imports from Nigeria and Angola – the two leading sub-Saharan producers – are already matching those of purchases from Venezuela and Mexico, their closest oil-exporting neighbours. And the United States imports as much oil from the west coast of Africa as it does from Saudi Arabia.

Well aware of what is at stake for oil consumers in the industrial world – highlighted by the firmness of world crude oil prices at the end of 2002 as a result of uncertainties concerning Iraq and internal disorders in Venezuela – the Africans intend to use their oil windfall to reinforce their regional cooperation in this sector and favour their development projects. This double concern dominated discussions at the UNCTAD conference on oil and gas trade and financing in Africa, organised at Yaounde, Cameroun, at the end of September, according to one of the organisers of the meeting which brought together African oil executives and representatives of the international oil companies.

A boost for the African Petroleum Producers Association

The Africans thus want to breathe new life into the African Petroleum Producers Association (APPA), which has never really taken off, and put to work the African Energy Commission created by the OAU/African Union at the 2001 Lusaka summit.

The coastal states along the Gulf of Guinea have created their own instrument for regional cooperation to defend their common interests and resolve possible conflicts over the delimitation of their territorial waters. Meeting at the end of 1999 at Libreville, Gabon, they established the Gulf of Guinea Commission (GGC-CGG) to examine ways and means of preserving peace, security and stability in the Gulf of Guinea, establish a climate of trust and understanding, coordinate and intensify their cooperation, and prevent possible conflicts. The GGC regroups a number of countries including Nigeria, Angola, Cameroun, Equatorial Guinea, Gabon, Sao Tome and Principe, and Congo-Brazzaville.

The states along the Gulf of Guinea coasts have also embarked on the delimitation of their maritime frontiers, since most of their hydrocarbon resources are located offshore. The Exclusive Economic Zones (EEZ), which in most cases extend 200 nautical miles off the coastline, were established under the 1982 United Nations Convention on the Law of the Sea, which took effect on November 16, 1994. This provides a legal framework for the management and preservation of the resources of the sea. But negotiations among neighbours are not always without problems.

Angolan success, Nigerian setback

Angola and its neighbour and ally Congo-Brazzaville have struck a bilateral deal calling for joint exploitation of significant oil and gas discoveries in a zone straddling the borderline between their adjacent deepwater blocks. Sao Tome, with its more than promising indications of major reserves, has succeeded in reaching agreement with Equatorial Guinea, a new petroleum El Dorado.

But in Nigeria part of public opinion has risen in protest against a ruling by the International Court of Justice at The Hague, which on last October 10 granted Cameroun the sovereignty over the Bakassi peninsula. There has been a running dispute between the two countries since the end of 1993 over the ownership of this marshy strip of territory, which is rich in oil and fishing resources. After sporadic military clashes, Cameroun asked the International Court to determine the land and maritime frontier between the two countries.

Nigerian ill-feelings were further aroused by indications that Sao Tome's President Fradique de Menezes wants to call into question an agreement with Nigeria which established a joint development zone along part of their maritime frontier believed to contain major oil reserves. Sao Tome's leaders indeed consider that Nigeria, having taken over the interests of an American oil company which was a partner in the venture, but which has been declared bankrupt, has taken a too big bite of the cake.

US naval base in Sao Tome?

The Nigerians are all the more irritated because Sao Tome leaders have reported that the United States intends to set up a US Navy base in this tiny territory in order to provide improved protection for their Gulf of Guinea interests. The Americans have so far declined to confirm they have any such plans. But senior Washington officials have become frequent visitors there; Under Secretary of State for African affairs Walter Kansteiner spent three days there during a recent tour of Africa. President George Bush held one-on-one talks with Menezes in New York last September, when he met a number of African leaders, mostly from oil producing countries, in the wings of the UN General Assembly.

The importance of African oil to US national security was emphasised by a symposium organised in Washington in early 2002. Ed Royce, chairman of the Congressional sub-committee on Africa stressed on this occasion that the importance of oil imports from the Gulf of Guinea required the US to develop a strategy to protect this production from terrorism and to define its military role and its relations with the countries of the region.

The Americans are also interested in other African oil producers including Chad, Algeria and Sudan. The planned Chad-Cameroun pipeline project calls for the development of the Doha oilfields in southern Chad, which has reserves estimated at one billion barrels of crude, and the pumping of the crude to a terminal at Kribi on the Camerounian coast. As for Algeria, which is contemplating the privatisation of the powerful Sonatrach state hydrocarbons group, it has been strongly encouraged by the Americans to completely liberalise the oil and gas sector.
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