EQUIPO NIZKOR |
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06Oct04
African oil fields: Rewards and risks.
Situation reminiscent of Persian Gulf challenges.
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.
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.
[W]est African oil production is expected to double by 2010, and natural gas production is quickly increasing as well.
Secure flows.
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....
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's interest.
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 Information Administration.
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 [sic].
Supply diversity.
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 reasons.
• 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 miles offshore.
"There is more piracy in the Gulf of Guinea than anywhere else in the world," said Chester Crocker [himself], 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."
[Source: By Jim Landers, Dallas Morning News, 06Oct04]
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