The Other Oil-Rich Gulf

April 25, 2007

The Other Oil-Rich Gulf

Pursuing a mutually beneficial outcome for America and Africa in the oil-rich Gulf of Guinea will require a daunting, but surmountable, synthesis of military mobilization, diplomatic engagement and commercial competitiveness.

While most media attention on African oil focuses on the sensational, spectacular or just plain lurid, important developments are taking place at sea. Widely considered to be one of the most promising new oil sources in the world, the 34 billion barrels of proven reserves buried in the deep waters off Africa's western coast in a region expected to account for as much as 25 percent of U.S. oil supplies in the coming years represent a critical opportunity for the United States to diversify its energy supplies. But doing so will require being mindful of the considerable security risks and adeptness in engaging in the cut-throat competition for contracts that often makes no accommodation for scruples.
When oil fields in the Persian Gulf were tapped for the first time in the twentieth century, few made a connection between energy policy and national security. The no-questions-asked investment helped prop up regimes with little concern for their citizens' well-being and has contributed to that region's well-known volatility. Now it is the oil blocks in another gulf-Africa's Gulf of Guinea-that are being leased, and policy-makers need to be sure to balance commercial interests and energy supplies with security concerns. In their book Oil, Terrorism, and West Africa, two professors at the U.S. Military Academy say, "This is our chance to get it right."

Getting it right will not be easy. The Gulf of Guinea harbors no shortage of dangers. The use of radar technology is rare, which means governments oftentimes only learn about violations of their airspace from pilots who come across suspicious traffic. "No country on the Gulf has a naval force worthy of the name", says J. Peter Pham, an African affairs specialist at James Madison University. The abundance of water and dearth of surveillance has made it a haven for pirates. There were 26 reported incidents of piracy and armed robbery off the western coast of Africa by the International Maritime Bureau from January 1, 2006 to September 30, 2006, making it second to the Malacca Straits in Southeast Asia for the most dangerous and deadly area of water in the world.

Oil companies seem to be aware of the immediate dangers-a recent article in The New York Timesnoted the increase in outsourced security and that one oil company coated the pylons of an oil platform off the coast of Nigeria with waterproof grease to "prevent attackers from climbing the rig"-but their vigilance needs to be teamed with smart American policy that aims to counter the causes of sabotage attempts.

The U.S. military could increase its presence in the gulf, directly contributing to security efforts. Moreover, joint exercises with the navies of key countries like Cape Verde and Sao Tome and Principe serve as force multipliers, building up their capacity to track activity while generating goodwill towards the United States.

Sao Tome and Principe has been a special target of attention for the U.S. Navy. Home to as much as 11 billion barrels of oil in its waters, there have been rumors that the U.S. presence in the tiny twin-island state could become permanent with the establishment of a naval base (the president of the country announced that talks were underway in 2003, but U.S. officials denied it). A base in Sao Tome makes sense. The U.S. Navy would need to construct the necessary deep-water port, which would benefit Sao Tome's fishing, trade and other industries. The location of the recently announced U.S. Africa Command (AFRICOM) has not been made public, but a forward operating base in Western Africa could serve as a valuable complement to U.S. interests.

U.S. designs in Sao Tome have not gone unnoticed by Nigeria, the region's major power broker and owner of many offshore oil blocks. Abuja promotes a regional security forum called the Gulf of Guinea Commission to provide a forum for its interests. Seen by its neighbors for many years as a proxy for Nigerian economic might, the group has recently grown to include all of sub-Saharan Africa's big energy producers. Earlier this month it announced the establishment of its headquarters in the Angolan capital, Luanda.

While the Gulf of Guinea Commission could grow into a meaningful counterweight to American influence in the region, its very growth could pay important dividends. Aside from improved security, Nigeria might be tempted to leave the Organization of Petroleum Exporting Countries (OPEC). A Nigerian exit from OPEC has been a long-time (and lofty) goal of many American policy-makers and companies eager for Nigeria to leave the Middle East-centered cartel and boost its output. Nigeria output has repeatedly violated OPEC's strict quota system and Nigerian officials have stated a goal of producing 4 million barrels a day of oil by 2010 in spite of OPEC restrictions proscribing such a large amount.

Complicating the drive for political accountability are third-party actors like China who make significant investments in the region seemingly without regard for ethical questions or transparency. In an incident reported in The Los Angeles Times last year, three U.S. companies that won contracts to operate oil blocks in Sao Tome's territory withdrew from the process after delays over signing contracts. They were replaced by China's Sinopec Group and Addax Petroleum, a Canadian-listed Nigerian company.

The United States can champion its comparative advantages, like its hiring of local labor, to the more progressive regimes. Unfortunately, there is still no worthy compensation for the weak hand it plays when trying to convince thoroughly corrupt regimes of the virtues of cooperating with international financial institutions (IFIs). The reason is because lately countries like the oligarchy in Angola always seem to get a better deal from bidders like China, which offers large cash infusions directly to the government without asking for much except permission to take its oil.

If that sounds like a familiar tune, it's because it's the same song that America played in the Middle East decades ago. A different ending to the music-for the sake of American security and African prosperity-will require a daunting, but surmountable, synthesis of military mobilization, diplomatic engagement and commercial competitiveness.

Daniel Morris is the program director of the National Committee on American Foreign Policy, a New York-based think-tank.