Oil, Environment and Disaster Economics

8 / 2008 at 12:39 am Leave a comment

Simple lessons are not necessarily easy to learn.

For example: oil is a non-renewable and limited resource (1).

Oil and conflicts appear to be twins in today’s world. When people think of oil, in general terms, what come to mind are ‘progress and development’. Thus, people speak of oiling the wheel of progress. Today, however, what we see and experience is that oil greases the wheels of conflict. And this is very much the case in the oil fields of Africa.

The crisis we are witnessing needs to be viewed both in economic and political terms as a major for profit venture. Understanding it through this filter is crucial to our seeing why we appear trapped in intractable murky waters and it may also help us construct bridges over which we may come out of the malaise.

The lure of cheap oil has kept the rigs drilling through the soul of Africa, destabilizing governments and dividing communities. Oil is cheap mainly because its extraction in much of the tropical world is carried out in ways that pay scant attention to environmental costs. Thus the poor people continue to subsidize the costs of crude oil by the losses they suffer in environmental services, quality of life and extreme environmental degradation. This results in continued conflicts as opportunistic groups as well as gangs find space to extract financial gains from the system.

Global end of Oil

The world has finally woken up to the reality of climate change. Harsh weather events have shown that not even the most developed countries of this world can fully withstand these freak weather events. The world is increasingly seeing floods, hurricanes, tornadoes, drought and wild fires of huge proportions. With these events, citizens of the world are recording increased incidents of disease, poverty, losses and untold hardships. And because the climate crisis also manifests in restriction of access to resources, incidents of conflicts are on the increase too. Africa is the worst hit and the most vulnerable.

It is generally believed that the world will soon witness a peak in oil production and this will coincide with the world having used more than half of all currently proven reserves (2). Some experts estimate that Nigeria reached her own peak oil level two years ago. Already Nigeria is saying that production here can be increased from the current reported 2.5 million barrels a day to 5.2 million barrels a day by the year 2030 so as to meet the oil demands of the USA as access to Middle East crude may get more difficult. It was recently reported that by early 2007 Nigeria became the third largest supplier of crude oil to the United States, after Canada and Mexico (3).To underscore the strategic importance, the U.S. is setting up a military command (Africa Command or AFRICOM) in the Gulf of Guinea possibly to ensure that nothing disturbs the flow of oil from the region.

The Nigerian dream would only be realised if the geologic findings were wrong, as estimates already say that her oil will run out in less than 30 years if production keeps to the current rate. In addition, escalating conflicts have resulted in huge shut-ins through the rise of armed groups in the area. The power of oil to generate conflicts can also be seen to be growing in the continent as Cameroon and Nigeria flex muscles over ownership of an oil-rich marshland (called Bakassi) at the Southeast tip of Nigeria. A ruling of the International Court of Justice that the land belongs to Cameroon does not appear to have resolved the crisis in those backwaters.

The almost desperate move by nations to find crude oil is leading to audacious activities as well as innovations in the extractive fields. Recently we heard of Russia claiming ownership of the North Pole by planting a flag in the sea bed there, 4.2 km bellow the surface! (4). Claiming ownership by flag planting is an emblem of gaining victory through warfare. We may soon expect to hear that since the USA planted a flag on the moon in 1969, they are the owners of the celestial body.

Oil and conflict are Siamese twins. It is doubtful if oil just happens to be found in places where there is conflict. Consider Darfur region of Sudan for instance. While northern transnational corporations are often the culprit in terms of environmental despoliation, in Sudan the culprit is Sinopec, the Chinese state oil corporation. In 1999, as the first barrels of crude oil were shipped from Sudan, so did the war between government forces and those of the Sudanese People’s Liberation Army escalate. When we turn our eyes to the Middle East we see the raw situation of war waged for profit and resource appropriation and control.

Profiting from Crisis: the economics of war

The path of crude oil development has been strewn with skeletons and soaked in human blood across the world. The ongoing case in Nigeria is a glaring example. The case of Angola is still fresh in memory. Naomi Klein has expertly exposed the issue of the profitability of disasters in her new book. She states that “With resource scarcity and climate change providing a steadily increasing flow of new disasters, responding to emergencies is simply too hot an emerging market to be left to the nonprofits – why should UNICEF rebuild schools when it can be done by Bechtel, one of the largest engineering firms in the U.S.?” She also asks the question, “Why deploy UN peacekeepers to Darfur when private security companies like Blackwater are looking for new clients?” (5)

It should be instructive that at a time when oil fields have become hotbeds of conflicts and insurgency that is precisely when oil companies are making record- breaking profits. This boom is also enjoyed by those involved in weapons trade, deconstruction/reconstruction, private soldiers and the like. In the month of October 2006 when the highest Iraqi civilian casualties of 3,709 were recorded, a market analyst stated that Halliburton’s quarterly profit was “better than expected.” By the last quarter of 2006 this company had enjoyed an inflow of up to $20 billion from the Iraqi war alone.

Communities trapped in the barrel

One activist (6) posited that the Nigerian government is a victim of disaster capitalism and that the new government is caught in the web of supremacist gangs engaged in the business of kidnappings and abduction of oil workers and children and parents of politicians. In a phrase, while both the government and oil companies are the beneficiaries of the crisis raging in the oil fields through huge profits and so called windfalls, both are equally vulnerable. Both face the challenge of access to oilfields and with time, not even the offshore installations will be so secure. This will come to pass unless steps are taken to look away from short-term profits and to work for security of the environment, livelihoods and the rights of the people to live in a way that is favourable to their development (7).

Moreover, deep seas and far off offshore locations do carry special financial risks besides the physical ones. Offshore activities are being intensified in the Gulf of Guinea: Nigeria, Sao Tome and Principe, Equatorial Guinea, Angola and new comers like Ghana and Sierra Leone. One factor that make offshore drilling and platforms so attractive is their perceived security and the lack of need for accountability to ‘host communities’ since no one can easily monitor their activities out at sea. A recent attack of one of the Bonga Floating Production Storage and Offloading (FSPO), 75 kilometres offshore, allegedly by Niger Delta militants has made the claim of security to be seen as a mere dream (8). Perhaps the ultimate security will be the landing of USA troops in one of the nations under their AFRICOM. Note that this command will come into full operation as a unified command by October 2008 (9).

Following the attack on the World Trade Centre on 11 September 2001 United States of America’s policy to Africa has been largely built on oil and terrorism (10). The USA is seen as building deeper military ties with neoliberal protégés such as Nigeria, South Africa and Mozambique; working to weaken OPEC by getting her allies to leave the cartel, and doing this, as an industry operative put it, by peeling off certain countries. By 2002, President Bush’s Africa policy was already characterised as “build the military and extract the oil.” (11).

About 42% of Nigeria’s crude is exported to the USA. Together with the prodigious fields of the rest of the Gulf of Guinea, about 25% of the crude needs of the USA is to be met from here by 2015. Already the USA has suggested that the Gulf of Guinea is an ungoverned space making it very clear that she intends to provide this governance here through military bases and under the banner of the AFRICOM. This region is a vital source of this vital raw material as other regions like the Middle East become too expensive to manipulate. Africa is the nice lady who accepts rape without complaints. But for how long?

AFRICOM as a command solely set up to focus on Africa goes beyond mere military reorganisation, but is fundamentally paving the way for other changes that places military solutions above diplomacy. The Department of Defence, for instance, will take over functions previously handled by civilian agencies. Such functions will include building schools and digging wells. The command seeks to protect oil resources to ensure supplies to the USA and to counter Chinese incursions into the region. In the words of Resist AFRICOM, it is “designed to fulfil the immediate special interests of the United States with little heed to the implications for the people of Africa.” (12).

In a policy brief, transAfrica forum describes AFRICOM as “the newest iteration of a failed foreign policy agenda driven by exploitation of natural resources and the expansion of the Global War on Terror.” (13). The body describes the U.S. foreign policy in Africa “as one of the unilateral prioritizing of U.S. government and corporate interests over African development.”

The African continent appears to have been divided among the oil corporations in concessions and plots for their exploitation and destruction. The scramble for Africa is seeing oil activities rapidly spreading in Eastern and Southern Africa. While the oil and gas fever grips the tycoons in Tanzania, Mozambique, Madagascar, Chad, Mauritania, Ethiopia, Eritrea, Somalia, etc, the local communities are never brought into the picture of what is about to hit them.

A case in point is the West African Gas Pipeline project which is already in operation. Right at the inception of the project, communities had complained that environmental rules of even the supporting World Bank were not being followed. It is only now that the World Bank admits to this serious flaw. According to reports, “Following a request by some communities in Nigeria, which claim that the WAGP project was adversely impacting on their safety, environment and means of livelihood, an inspection panel was set up by the bank…. the global bank’s board, the panel headed by Mr. Warner Kiene, on Wednesday, contended that the bank failed to comply with its policies and procedures on environmental assessment, project supervision, and involuntary resettlement, posing irreparable harm to the communities’ livelihoods.” (14).

As already noted, oil corporations are huge beneficiaries, and may even be said to be instigators, of the crisis related to the industry. The surge in global awareness about peak-oil and climate change, all-time-high price of oil as a result of conflicts in Nigeria, Iraq and disturbances in Turkey, Pakistan, Iran, etc can become rather unsettling. Joint venture arrangements are incredibly lopsided in favour of the corporations not just in financial terms but also in responsibility and accountability over the environment and to the communities. Nigerians complain about the gross wastage of natural gas being flared by oil corporations, but the government is a partner in this heinous crime. US$15 million worth of gas is flared daily, pumping massive quantities of greenhouse gases as well as toxic substances into the air. There is no breath of fresh air near these flares. They cause asthma, bronchitis, cancers and blood disorders. They also pour acid rain on the land, vegetation, buildings and the people. (15)

Oil Communities: beaten by all sides

The usual assertion that Nigeria suffers from a resource curse may not be true because the resource that we are endowed with is a blessing rather than a curse. Resource wealth does not necessarily have to subvert development. One would agree however that the scramble for the wealth does subvert our collective ability to resolve the conflicts into which we are immersed. And this is primarily because of the privatisation of public funds generated through the exploitation of these publicly held resources.

The crisis situation can best be seen as a result of interplay of a web of interrelated factors, and not the result of a single determinant. As an analyst put it, “While most of the attention is often placed on local actors: the state/political elites, militia groups/warlords, and weak and inept bureaucracies, very little attention is paid to the role of external and transnational actors and the lack of transparency that shrouds the extent of their involvement in these conflicts.” (16)

Oil communities in Africa are asking questions today. They want to know why oil should still be drilled in their land when the process and the resource are poisoning their lands, waters and atmosphere. They want to know why they must live with the oil spills, gas flares and the moral, economic and social dislocations that trail the industry. They want to know why they must be silent in the face of serious deforestation caused by the oil industry. They are asking that the crude oil be left in the ground where they rightly belong.

By Nnimmo BASSEY, Environmental Rights Action, Nigeria

End Notes

[1] Floegel, Mark, Half a Tank: The Impending Arrival of Peak Oil (Washington: Multinational Monitor, January-February 2007) p. 15
[2] Multinational Monitor, The End of Oil (editorial), (Washington: January/February 2007 edition). P. 6. This issue of the Multinational Monitor illustrates, among others, that the “Corporate control of energy policy and energy resources, especially in the United States, the country that consumes more energy than any other, is the single greatest obstacle to slow and hopefully reverse the world’s headlong rush to disaster.”
[3] Akande, Laolu, Nigeria is third largest oil exporter to U.S., (Lagos: The Guardian, 13 June 2007). http://www.guardiannewsngr.com/news/article02
[4] BBC: Russia plants flag under N Pole, http://news.bbc.co.uk/2/hi/europe/6927395.stm
[5] Klein, Naomi, The Shock Doctrine, (London: Penguin Books, 2007) p. 15
[6] In a private conversation with the writer
[7] As enshrined in the Africa Charter on Human and Peoples’ Rights, Article 24
[8] see http://www.vanguardngr.com/index.php?option=com_content&task=view&id=11187&Itemid=0
[9] US Africa Command Reaches Initial Operating Capability, Press Release 08-001, October 1, 2007. See http://www.africom.mil/
[10] Feller, John, ed. Power Trip- U.S. Unilateralism and Global Strategy After September 11, Seven Stories Press, New York, 2003, P.149
[11] Montague, Dena. Africa: The New Oil and Military Frontier, Arms Trade Resource Center Update, 20 September 2002
[12] See www.resistafricom.org for more information on this and related topics.
[13] See transAfrica Policy Brief AFRICOM: The “Freedom Agenda” on the African Continent. June 2008 www.transafricaforum.org
[14] World Bank tackles effects of W’Africa gas project, The Guardian, Lagos. 8/8/2008 available at
http://www.guardiannewsngr.com/news/article05//indexn2_html?pdate=080808&ptitle=World%20Bank%20tackles%20effects%20of%20W’Africa%20gas%20project
[15] Conant, Jeff and Fadem Pam. Community Guide to Environmental Health, Hesperian Foundation 2008
[16] Obi, Cyril, Oil and Development in Africa: Some Lessons from the Oil Factor in Nigeria for the Sudan (Copenhagen: DISS Report 2008:8: Oil Development in Africa:Lessons for Sudan after the Comprehensive Peace Agreement Edited by Luke Patey, 2007) p.14

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