Nations eye Africa's oil supply
Analysts urge steps to avoid corruption
JOHANNESBURG -- The world's growing demand for oil and the fears of supply interruption is expected to force the United States and other nations to increasingly rely on another volatile region -- central and western Africa.
Several sub-Saharan African nations, notably Nigeria and Angola, are in the early years of an extended oil boom that could supply the United States with 20 percent of its imported oil in the next decade, analysts predict.
But analysts warned in recent interviews that the United States and other nations, and multilateral groups such as the World Bank and International Monetary Fund, should insist the countries publish oil receipts and how they spend that windfall. Otherwise, massive unrest may follow and billions of dollars of oil wealth will continue to be snatched by a corrupt few.
"One of the overarching concerns we have is making sure that the mistakes made in our engagement with Middle East oil producers are not repeated in Africa," said Ian Gary, Africa policy adviser for Catholic Relief Services, a Baltimore private charity
Over the last year, officials from both the State and Defense departments have had ongoing internal discussions and meetings with African oil producers on the best ways to promote transparency in those countries and improving security. Of notable concern: off-shore oil platforms in the Gulf of Guinea that could become a target of terrorist attacks.
In recent months, sub-Saharan African oil -- a light, sweet crude that becomes high-grade gasoline -- has risen in potential value because of the instability of oil supplies worldwide, as evidenced by the continuing unrest in the Middle East and the threat last week by the Russian company Yukos to halt production. Those developments pushed oil prices this week to $43.80 a barrel, a 21-year high.
In the next seven to 10 years, sub-Saharan Africa is expected to add 2.5 to 3 million barrels a day to the world market -- a significant amount considering that today world oil producers, almost all at full capacity, have 1.5- to 2-million barrels daily surplus, a small cushion in case trouble arises with one of the major producers.
Nigeria, the fifth-largest supplier to the United States, and Angola, the ninth-largest, are the region's biggest oil producers. Smaller producers include Cameroon, Chad, Equatorial Guinea, and Gabon, while the islands of Sao Tome and Principe have proven reserves and hope to produce oil in roughly five years.
While Nigeria has received an estimated $280 billion over the last 30 years for oil and while 90 percent of external trade and investment in Africa is in the oil sector, the expected increases in production in the coming years should have even greater impacts on the countries.
The new oil flows could produce a benefit of $4,000 per person in Angola, and $820 per person in Nigeria. And for Sao Tome, which has a population of 140,000, the estimated signing bonuses for oil concessions alone is expected to be up to $185 million, or several times its current national budget.
But none of the oil-producing countries has invested its past oil money wisely, and none is particularly stable.
Those pushing the open handling of oil money will be watching Nigeria, long noted for its corruption but now promising reforms in the oil sector.
Oby Ezekwesili, a senior adviser to President Olusegun Obasanjo and a graduate of the Kennedy School of Government at Harvard University, has said the country has made great strides, saving $1 billion in public funds so far.
Some warned, though, it will not be easy to get rid of corruption. "It's a huge political challenge for Nigeria," said David L. Goldwyn of Goldwyn International Strategies, a Washington lobbying group. "Very little of the money has ever reached the people of the Niger Delta. Will it now?"
John Donnelly can be reached at donnelly@globe.com. 