Oil and Gas in Africa
On each topic, the articles are in chronological order.
Bottom of the Barrel: Africa's Oil Boom and the Poor. Report by Catholic Relief Services, 2003. Summary (PDF) Full Report (PDF) Portuguese
Poverty Reduction or Poverty Exacerbation? World Bank Group Support for Extractive Industries in Africa, by Scott Pegg, April 2003. (PDF)
Time for Transparency: Coming clean on oil, mining and gas revenues from Global Witness details scandals in Kazakhstan, Congo Brazzaville, Angola, Equatorial Guinea and Nauru. March 2004. Entire paper (PDF) Portuguese
Publish What You Pay special report on Africa, January 2006
Source: Oil and Gas Journal. June 11, 2001, p. 86
African countries collectively hold only one tenth of the proved oil reserves and one fifth of the proved gas reserves of the Middle East, but Africa is beginning to pull ahead from its traditional low ranking among the world's regions in production and reserves.
Africa's crude and condensate production has neared 7 million b/d in recent months after remaining nearly flat at 6 million b/d for the 1970s, 1980s, and much of the 1990s.
The recent gains stem from good increases in Sudan, Nigeria, and Algeria. Large increases are on the way in the next few years mainly from world class fields off Angola, Algerian fields, Nigerian deepwater fields, and Chad.
African oil and condensate reserves were 75 billion bbl at the beginning of this year, having returned to about the same level as in 1971. At that time the main players were the same: Algeria and Nigeria with about 30 billion bbl each and Libya a distant third with 9 billion bbl.
In a recent monthly estimate, OGJ put Africa's gas production at 350 bcfd in March 2001, up from the year 2000 average of 274 bcfd. Algeria provides 70% of Africa's total gas output, and Egypt is second with 13%. Gas development and utilization initiatives in several countries portend further production gains this decade.
Africa's gas reserves at 394 tcf are more than double the 191 tcf evident in 1971. The continent's refining capacity, now more than 3.2 million b/d, was still less than 1 million b/d as recently as 1970.
BIG AND SMALL PROJECTS
Large projects are driving Africa's production growth for the most part. A major share of oil production growth will come from projects attached to large oil field discoveries off Angola, Nigeria, and Equatorial Guinea the last 4 years.
One report indicated the magnitude of what is in store off West Africa the next 5 years . The list includes 176 field developments fueling a production increase of as much as 3 million b/d, including 192 new platforms with more than 700 platform wells, close to 300 new subsea well installations installed or on order, and as much as 4,000 km in new pipelines.
West Africa had 633 platforms at the time of the study. North Africa has already seen large oil production gains from staged developments of a string of discoveries by Anadarko Petroleum Corp., Agip SPA, and others in the Ghadames and Illizi basins of Algeria, the opening and initiation of production from the Murzuk basin of far southwestern Libya, and large oil and gas developments in Egypt's Western Desert.
A Talisman Energy Inc. group is producing well above 200,000 b/d from southern Sudan, and more discoveries have been reported there. Within 2 years a separate group will start up a large heavy oil development project in Chad.
On the gas side, projects to make use of gas now being flared are mandated in much of West Africa. Algeria is supplementing its already large pipeline shipments of gas to Europe with the In Amenas and In Salah projects, both under development hundreds of kilometers from Hassi R'Mel.
A string of gas and gas-condensate fields is being developed in Egypt's Nile Delta, where deepwater exploration is at an early stage.
South Africa, Tanzania, Mozambique, and Namibia are trying to get fledgling gas infrastructure projects off the ground.
As long as oil and gas prices hold up, exploration could also flourish in Africa's nonproducing and lightly producing areas. These stretch across the continent from Morocco and nonproducing coastal countries to its south, through Niger, Chad, and Central African Republic, to sub-Saharan countries north of South Africa.
OFFSHORE OIL DEVELOPMENT
Over the 2000-2005 period, the report forecasts companies will invest the following in the offshore provinces of the 10 West African nations: Angola, $15.645 billion; Benin, $39 million; Cameroon, $982 million; Congo, $1.859 billion; DR Congo, $61 million; Equatorial Guinea, $1.450 billion; Gabon, $1.587 billion; Ghana, $714 million; Ivory Coast, $1.756 billion; and Nigeria, $11.208 billion.
PIPEDREAM. THE WEST AFRICAN GAS PIPELINE PROJECT AND THE ENVIRONMENT
ERA Lists Dangers of West African Gas Pipeline Project
An information booklet which unravels hitherto hidden facts about the environmental hazards that could result from the proposed West African Gas Pipeline Project (WAGP), has been released by the Environmental Rights Action/ Friends of the Earth, Nigeria.
ERA explains that it decided to publish the booklet titled ‘PIPEDREAM: The West African Gas Pipeline Project and the Environment’ to provide information and tools for organisations and individuals of conscience around the world working against the WAGP in its present form’ and ‘to challenge the picture put out by Chevron and its partners.’
The 32-page booklet contains a profile of the WAGP as presented by its sponsors, the various actions taken by them since the project was conceived about 10 years ago, the fears of the communities and past actions of Chevron and other oil companies operating in the Niger Delta which justify such fears.
PIPEDREAM shows evidently that environmental degradation of monumental proportion, escalation of communal conflicts and dislocation of local economies is looming over the entire West Africa should the WAGP continue as presently conceived by its sponsors.
ERA in the booklet, also warns that since the project sponsors have refused to hold consultations with local communities whose lands and waters the pipeline will traverse,’ and with a prevailing climate of insecurity in the Niger Delta area, there is no guarantee that killings and other rights violations will not be consequence of the WAGP.’
The $400 million project is conceived as a 12-30 inch, 500-mile (800-kilometre) onshore and offshore pipeline to transport natural gas from the Niger Delta to choice consumers in Benin Republic, Togo and Ghana. A consortium comprising Chevron Nigeria Limited (CNL), Nigeria National Petroleum Corporation (NNPC), Shell Petroleum Development Corporation (SPDC), Ghana National Petroleum Corporation (GNPC), Socièté Benioise de Gaz S.A (SOBEGAZ) and Socièté Togolaise de Gaz (SOTOGAZ), has concluded plans to establish the West African Gas Pipeline Company (WAP Co). Their various stakes in WAPCO which will ‘construct, maintain and operate the pipeline’ are: CNL (36.7 per cent); NNPC (25 per cent); SPDC (18 per cent); GNPC (16.3 per cent); SOBEGAZ (2 per cent) and SOTOGAZ (2 per cent). Chevron is designated Managing Sponsor.
Though WAGP sponsors are yet to conduct an Environmental Impact Assessment (EIA) study, legal papers on the project have been signed, contract for the sale of gas negotiated and sealed while the construction of the pipeline is expected to commence in 2001 and end in 2003.
PIPEDREAM questions the veracity of Chevron's claim that the WAGP is ‘ a clean energy project which should qualify for credit under the Kyoto protocol of the United Nations Framework on Climate Change’ and that it will boost industrialisation, promote regional trade and integration and promote sustainable development. Environmentalists and other experts quoted in the booklet say these claims are no more than corporate misinformation on the part of Chevron.
‘The pressure to ensure that the multimillion dollars West African Gas Pipeline is up and running has nothing to do with the health of the people or the protection of their environment’, says ERA Deputy Director Oronto Douglas. ‘The project has to do with the realisation that there is new profit and dividend of environmental goodwill to be reaped’.
While citing the absence of Chevron officials at a consultation meeting in Warri where it was invited to discuss the positive and negative impact of the project with local communities, ERA in PIPEDREAM decries the secrecy surrounding the pipeline project, saying it points to a hidden agenda by the project promoters.
The booklet specifically punctures claims by Chevron that WAGP is
It cites a 1995 World Bank report, which shows that claims by oil companies that gas projects would lead to flare elimination were usually made to deceive and commit environmental fraud.
‘Without any clear plan of eliminating flaring of associated gas, Chevron is attempting to deceive the world into believing that that the West African Gas Pipeline will result in the immediate reduction of gas flaring. And they are asking to be paid for that claim’, the World Bank report says.
‘As a matter of fact not all gas produced by oil companies in the Niger Delta is flared... A large reserve of natural gas exists, unassociated with crude. It is from these unassociated gas that most of the gas is drilled and utilized by oil companies is drilled.’
ERA stresses that the WAGP like related projects in the Niger Delta of Nigeria and other tropical countries, will certainly affect the natural environment upon which the communities depend for their material and cultural needs.
‘The wetlands and the mangroves that the pipeline will traverse are universally registered as fragile ecosystems. For the WAGP to contribute to constitute to sustainable development in the subregion, the diverse ecological zones through which the project will pass deserves to be protected. This does not seem to be on the agenda of the WAGP consortium.’ While urging the World Bank to withdraw its support for the project, ERA advocates that the project should wait until:
A formal presentation of the booklet will take place in Lagos on Monday along with the release of a petition endorsed by groups and individuals from across the world speaking out against the WAGP.
More information: Doifie Ola (email@example.com) or Isaac Osuoka (firstname.lastname@example.org)
Many groups sent an Open Letter to the World Bank about this pipeline in December 2000.
Chad’s Oil: Miracle or Mirage? Following the Money in Africa’s Newest Petro-State. Report by Catholic Relief Services and Bank Information Center, February 2005
CONTRACTING OUT OF HUMAN RIGHTS: The Chad–Cameroon pipeline project Amnesty International, September 2005
Chad and the World Bank: PWYP urges all stakeholders to resume talks to end current stalemate over oil revenue management law dispute, Publish What You Pay, 3 February 2006
OilWatch Resistance 11, Dec. 2000
The State Oil Company of Mozambique, Empresa Nacional de Hidrocarbonetos de Moçambique (ENH)Sasol Petroleum International (Pty) Ltd (SPI), signed a Memorandum of Understanding in May 1997 with the subsidiary in the Sasol Group responsible for crude oil and natural gas exploration and production. It enabled Sasol to negotiate a Production Sharing Agreement over the Mazenga exploration block onshore Mozambique, about 250 kilometre north of Maputo.
In July 1997 Sasol announced that it had formed an alliance with Arco International Oil and Gas Company Limited, a division of Atlantic Richfield Company, and Zarara Petroleum Resources, to undertake further exploration for gas in Mozambique. In terms of that agreement, SPI acquired 47,62% in three additional blocks in Mozambique, namely Temane, Sofala and M-10.
Arco and Zarara held participation interests of 47,62% and 4,76% respectively and Arco was nominated as the operator, but Sasol had the right to take over operatorship three to six years after the first sale of commercial gas or oil.
Sasol, Arco and Zarara signed a Production Sharing Agreement with ENH in May 1998, relating to the Temane gas field. Through this agreement Sasol and its partners committed themselves to the drilling of up to five wells in Temane over a period of seven years. Up to December 1998 they have drilled five wells in Temane, where significant gas discoveries were made.
In July 1998 Sasol, Arco and Zarara signed two more Production Sharing Agreements with ENH, relating to the Sofala and M-10 gas fields. This agreement committed SPI and its partners to the drilling of five wells in Sofala and four wells in M-10 over a period of seven years. Sasol subsequently relinquished its interest in the Mazenga block.
In March 2000 Sasol increased its position in the gas fields of Mozambique through the acquisition of Arco’s and Zarara’s interests in the Temane and M-10 blocks. It allowed Sasol to hold 100% interest in the Temane and M-10 gas fields. Sasol and Zarara also reached agreement through which Sasol was assigned 90% of the interest in the Sofala block with the remaining 10% held by Zarara.
In May 2000, Sasol reached agreement with Enron to co-operate concerning their respective gas and pipeline rights in Mozambique, with the aim to construct a single pipeline from central Mozambique to Maputo and South Africa. At the time, Enron held the rights to develop the Pande gas field and to own and operate a pipeline from that field to Maputo for the development of the Maputo Iron and Steel Project. The agreement enabled Sasol to negotiate with the government of Mozambique the rights to exploration and production of the Pande gas field as well as the right to construct a single pipeline to serve all gas customers in Mozambique and South Africa.
The government of Mozambique has signed three major agreements with Sasol Limited, to bring natural gas to South Africa.
These agreements follow a period of intense negotiations between Sasol and the government of Mozambique. In broad terms, the agreements provide for the joint development of the Pande and Temane gas fields and the piping of the gas to customers in Mozambique and South Africa.
A Petroleum Production Agreement has been signed, providing for the unification of the Pande and Temane gas reservoirs. A Production Sharing Agreement is granting Sasol the rights, with an interest of 100%, to explore for hydrocarbons in the remaining acreage around the two reservoirs. Subsidiaries of Empresa Nacional de Hidrocarbonetos de Moçambique (ENH), the State Oil Company of Mozambique (holding 30% equity share) and Sasol (70% equity share) will be partners in the development of the Pande and Temane gas fields.
The gas reserves in these fields will be dedicated to Sasol Gas through a gas sales agreement, for on-selling to customers in Mozambique and South Africa.
Sasol and the government of Mozambique have also agreed on the terms of a Pipeline Agreement. Sasol and a subsidiary company of ENH will jointly own and build a pipeline from Temane to Ressano Garcia on the border between Mozambique and South Africa, to take 120 million GigaJoule per year to South African customers.
Provision has also been made for the supply of gas to the Maputo Iron and Steel Project (MISP) as well as for free transportation of some of the gas taken by the Mozambican government. A similar company is to be established in South Africa to transport gas from the border to Secunda. It is expected that the South African government will also be a partner in the pipeline project.
The three agreements are the first step and several conditions will have to be met before the project can commence. The partners are, however, confident that these conditions will be met. Subject to these conditions, the natural gas project is expected to commence in June 2001 with the start of construction work on the pipeline as well as the development of field facilities in Temane and Pande. The pipeline will cover a distance of 895 kilometre, from the Temane gas field in Vilanculos, Mozambique, to Secunda in South Africa, crossing areas with extreme climatic conditions.
Sasol is considering three main options for the use of natural gas from Mozambique in South Africa: As a supplementary feedstock to coal for the Sasol Synthetic Fuels plant in Secunda, to facilitate future expansion of the plant’s production capacity for synthetic fuels and chemicals.
To replace coal as feedstock at the Sasol Chemical Industries plant in Sasolburg. Sasol Chemical Industries Ltd announced in May 2000 that it had initiated a detailed investigation into the use of natural gas as feedstock, to replace coal at its chemicals plant in Sasolburg.
To expand Sasol’s existing pipeline gas market. Sasol already supplies synthetic natural gas, produced from coal at its plants in Sasolburg and Secunda, to more than 600 industrial users in Gauteng, Mpumalanga and KwaZulu-Natal via a pipeline network of 1.600 kilometres.
Mozambican Natural Gas Project Launched by South Africa, Mozambique and Sasol
OilWatch Resistance News 29, June 2002
The Mozambican natural gas project, a venture between Sasol, the Republic of Mozambique and the Republic of South Africa, was officially launched today.
The launch was conducted by the President of the Republic of Mozambique, Mr Joaquim Chissano, and the President of the Republic of South Africa, Mr Thabo Mbeki, at a ceremony held at the Temane gas field in the Inhambane Province of Mozambique. Several senior Mozambican and South African government officials and diplomatic dignitaries attended the ceremony.
The project will bring natural gas to South Africa during the first half of 2004 and it is expected that it will bring significant benefits to both countries. It will increase Mozambique’s GDP by more than 20 percent. The project consists of a major gas field development in Mozambique, a pipeline of some 865 km to Secunda in South Africa, the conversion of Sasol’s current gas pipeline network and the supply of natural gas to industries in South Africa, including Sasol’s factories. The pipeline will be owned by a joint venture between Sasol and the governments of South Africa and Mozambique. The parties have made provision for the future inclusion of black economic empowerment (BEE) shareholders as well as privatisation initiatives.
About a thousand new jobs will be created and maximum use will be made of local suppliers during the three-year construction period. Natural gas will also enable local industry in South Africa to use the latest technology, which has been steadily moving to pipeline gas, which is an environmentally friendly energy carrier of choice in many countries.
Pieter Cox, chief executive of Sasol Limited, said: ‘The cross-border agreements between Sasol and the governments of Mozambique and South Africa have an important significance, because they represent a substantial step towards achieving the vision of President Mbeki, of a New Partnership for Africa’s Development (Nepad). Sasol is proud to play a leading role in this African Renaissance, by making substantial investments in South Africa and the surrounding region. Our capital expenditure for this year alone amounts to more than R13-billion, of which more than R12-billion (about 92%) will be spent in Southern Africa’.
Cox paid tribute to the presidents of Mozambique and South Africa, for their vision and leadership in guiding the two countries towards prosperity for all their people.
Sasol will enable the project by converting its existing pipeline-gas market to natural gas, switching its Sasolburg plants from coal to gas feedstock as well as taking gas into Secunda to supplement coal-based growth there. Sasol will grow its current gas market through new market developments to achieve the initial anchor load volume of 120 million Gigajoules per year.
The South African Government and Sasol have signed an agreement governing the regulatory environment to enable the introduction of natural gas into South Africa, as well as to provide for the governments’ participation as shareholders in the transmission pipeline company.
Agreements have also been signed between the Government of the Republic of Mozambique, Empresa Nacional de Hidrocarbonetos (ENH, the Mozambican national oil company) and Sasol which provide for Sasol’s access to the Temane and Pande gas fields as well as the granting of pipeline rights to Sasol in Mozambique. A shareholder agreement for the pipeline company is in the process of being finalised by Sasol and the two governments. ENH and South Africa’s Central Energy Fund (CEF) are parties to this agreement.
The agreements with the Governments make provision for economic empowerment groups to participate in the transmission pipeline from Mozambique. Sasol has already signed memoranda of understanding with two BEE groups for local gas distribution companies in Mpumalanga and KwaZulu-Natal, and it is expected that more will follow.
An agreement has been concluded with the Grinaker-LTA, McConnell Dowell and CCIC Consortium for the engineering and design, procurement management and supply, construction and commissioning of the gas pipeline from Mozambique to South Africa.
Itochu and Europipe will jointly manage the supply of the line pipe which involves pipe manufactured by Hall Longmore (South Africa), Kawasaki (Japan) and Salzgitter (Germany).
Oilwatch Africa Members visit Mozambique
From January 18 - 24, 2003 Asume Osuoka from the Oilwatch Africa office joined Ardiel Soeker of Groundwork, South Africa and Mauricio Sulila of Mozambican focal point organisation, Livaningo for a tour of Mozambique. The tour was to meet with communities affected by new gas exploitation in the Pande and Temane gas fields and the 865km pipeline from the gas fields to Secunda, South Africa, being built by Sasol - apartheid era energy giant.
Oilwatch members visited Vilankulos, Pande, Mangumgumete, Kandise and other communities sharing experiences and recording concerns of community people.
The people are angry that jobs have not been created and proper compensation has not been made for loss of farmlands. At Kandise we heard from community chiefs and elders how Sasol staff returned to the village to retrieve compensation earlier paid to villagers - a clear case of stealing. The village had been promised schools and water. But the company returned with their men concluded pipeline construction in the area, taking a large chunk of land, and left leaving the people with nothing but their regrets. No schools have been built.
Livaningo and groundwork are planning a set of activities to enlighten and support communities affected by the gas development.
For more information contact Mauricio Sulila at email@example.com
Global Witness report a crude awakening: The Role of the Oil and Banking Industries in Angola’s Civil War and the Plunder of State Assets (PDF, 1999)
Global Witness report All the President's Men (PDF, 2002)
Global Witness Time for Transparency: Coming clean on oil, mining and gas revenues, 2004. Entire paper (PDF) Portuguese
Recent oil discoveries (1999)
Source: Petroleum Review. Vol 53. May 1999.
So far, 12 large oil discoveries have been made in Angola's deepwater blocks, eight of them in 1998. Three operators have found four fields each - Chevron, in block 14; Exxon, in block 15; and Elf in Block 17. Additionally, Shell has a smaller discovery of heavy crude in block 16.
The first deepwater field was due on stream in Autumn 1999. Chevron's Kuito field will produce from subsea wellheads to a floating production, storage and offloading (FPSO) vessel, with 100.000 b/d expected under the initial phase of development and perhaps twice this rate subsequently. Water depth is 400 metres. The three other discoveries made by Chevron are Landana, Benguela and Belize - Landana and Benguela at water depth of 400 metres and Belize at a depth of 350 metres. Flowrates were high and all are likely to be developed.
The other discoveries are in much deeper water. Exxon has Kissange at 1,011 metres, Marimba at 1,289 metres, Hungo at 1,199 metres and Dikanzo at 1,154 metres. All test results were positive, and - as the finds are grouped fairly closely together - there are possibilities for the sharing of some production and transport facilities. Exxon describes the finds as ‘a word-class development opportunity with a recoverable reserves potential in excess of 1 billion barrels of oil’.
Elf's discoveries are Girassol at 1,350 metres, Dalia at 1,250-1,360 metres, Rosa at 1,405 metres and Lirio at 1,365 metres. Girassol is under development, in a US$2.5 billion project which will involve drilling 23 production wells, 14 water-injection wells and three gas-injection wells. The field will produce some 200,000 barrels/day on plateau to the world's largest FPSO, with a storage capacity of 2 million barrels. The project had been fast-tracked for start-up for the end of next year, but Elf has now deferred the target to the first half of 2001. Development of Dalia is also being slowed from earlier plans, with sanction now targeted for mid-2000 and start-up following in mid-2003.
OilWatch Bulletin 20, September 2001
Angola is the biggest oil producer in the Sub-Sahara region of Africa, after Nigeria. Its oil is of excellent quality, and almost 70% are exported to the United States.
At the moment Angola produces almost 800.000 barrels daily of oil and hopes that with new investments that this production will grow in the next few years. They hope to be able to produce 1'000.000 bdp at the end of this year, 1'400.000 for the year 2003 and 2'500.000 in 2015.
In 1999 Angola occupied third place in the world for new discoveries and oil sites with reserves of 1300 million barrels. Its main discovery was the offshore site of Cabinda in the north of the country,
During the last few months, a large part of the territory that was in the hands of the UNITA forces have been recuperated by government forces, and that has led to new foreign investment in the country.
TotalFinaElf and Chevron/Texaco (for more than 40 years) have been operating in the country for some time, under licences obtained from Sonangol, the state company.
Sonangol owns around 12 concessions or oil blocks for which its exploration arm, ‘Pesquisa & Produçao’ is directly responsible. Of these, Block Zero is the biggest, the Cabinda offshore site, close to the border of the Democratic Republic of Congo. Here about 70% of the country’s oil is produced.
Chevron started operating in the Kuito Block, in deep waters in the province of Cabinda with a production of 100.000 bdp. It has also made two important discoveries in Block 14 with an average of 14.000 bdp.
Another important offshore discovery by TotalFinaElf is in Block 17, in the Girasol camp, to the northeast of Luanda (at 4.500 feet deep). It is hoped that this camp, with reserves of thousands of millions of barrels, will produce close to 200.000 bdp until the end of this year.
BP Amoco, announced their discovery in Block 18 with reserves of 500 million barrels. Exxon/Mobil, in Block 15 will exploit the thousands of millions of barrels that it has discovered.
Sonangol, the state company, controls the downstream industry, of refining, distribution and commercialisation. The plans now are to develop the new refinery in Lobito with a capacity of 200.000 bdp. The South African Development Community (SADC) exports the majority of products derived from oil.
Together with Texaco, Sonangol has developed a liquid gas project (LNG) to transform natural gas for domestic use. It is hoped that the project will be up and running by the year 2005.
Besides Chevron/Texaco and TotalFinaElf, there are more than 30 companies interested in investing in Angola. Among these are BP/AMOCO, Exxon/Mobil, Petrogal and AGIP.
Angolan fisherman demand more compensation from Chevron
OilWatch Bulletin 22, November 2001
Source: Dow Jones via Energy, 4 July 2001
Around 300 fishermen in Angola's Cabinda enclave have gone to court to demand more compensation than a subsidiary of US oil company Chevron is offering for damages stemming from a 1999 oil slick. The Cabinda Gulf Oil Company has given 150 fishermen $ 2,000 each to make up for the accident in late 1999 when 40 barrels of crude oil were discharged from a treatment tank into the ocean.
However, 300 others say the amount isn't enough. The fishermen filed a complaint Thursday at a Cabindan court to press the company to pay them $ 3,500 each. The Chevron subsidiary says the compensation sum was proposed by the government.
Report Alleges U.S. Role in Angola Arms-for-Oil Scandal
Sources: Wayne Madsen. Special to CorpWatch. May 17, 2002 http://www.corpwatch.org/issues/PID.jsp?articleid=2576
As the US Congress continues its investigation of the Enron affair, human rights advocates are calling for a probe of the Bush administration's possible role in another energy and influence-peddling scandal. According to a recent report by the British-based non-governmental organisation Global Witness, Bush and US oil interests have ties to some of the key figures in the arms-for-oil scandal which has devastated Angola.
Known as ‘Angolagate’ in France, the scandal involves arms-for-oil deals between French businessman Pierre Falcone, the head of a firm called Brenco International; his colleague Jean-Christophe Mitterand, the son of the former French president; and a Russian-born Israeli named Arkadi Gaydamak.
According to ‘All the Presidents' Men,’ a March 25 report on Angolagate by Global Witness, Gaydamak funneled billions of dollars in arms and oil-backed loans to Angola's government in return for lucrative oil contracts with Western oil companies. Falcone and Gaydamak, relying on the special access that Mitterand had to the Angolan government, managed to transfer some $463 million in arms to Angola.
ANGOLA FINES CHEVRON FOR OIL SPILLS
Sources: OilResistance-Africa information & strategies to support African oil struggles
ANGOLA FINES CHEVRON $2 MLN FOR POLLUTION - AGENCY
OilWatch Resistance News 34, December 2002
Reuters, 1 July 2002, LISBON - Angola has fined U.S. oil major ChevronTexaco Corp $2 million for causing environmental damage, Portuguese news agency Lusa reported last week.
The fine is the first the African nation has levied against an oil company operating in its waters, a spokesman for the Ministry of Fisheries and the Environment said.
The fine was levied because of pollution of beaches and damage to fishing in the Cabinda region, one of the former Portuguese colony's main offshore oil regions, Lusa said.
ChevronTexaco has been notified of the fine, with the knowledge of the Supreme Court and the Petroleum Ministry, Lusa said.
Investigations in May and June showed that Cabinda oil spills were caused by obsolete tubing. ChevronTexaco has promised to invest $108 million to replace pipes, Lusa said.
Last week, ChevronTexaco said it reduced crude production in Angola by about 55,000 barrels per day or 12 percent after a leak at a crude pipeline.
The pipeline transports oil from the Malongo area to its export terminal in Cabinda. The pipeline has been shut for about two weeks after leaks were discovered.
The Riddle of the Sphynx: where has Congo’s oil money gone? Global Witness, December 2005
SOURCES: www.mbendi.co.za, August 2002.
The West Central African country of Democratic Republic of Congo (DRC, formerly Zaïre) is rich in mineral resources, especially copper and cobalt, which provide the country's main source of income. However, production from the upstream oil industry, mainly from offshore fields, is an important contributor to the national economy.
War still ravages the DRC. Despite a ceasefire signed in July 1999, hostilities broke out again in DRC in March 2000.
Until 1999, the main government agency in the petroleum sector was the Enterprise Petroliere du Congo (PetroCongo). PetroCongo was dissolved in August 1999 and replaced by a new state company called Cohydro (La Congolaise des Hydrocarbures). The company is responsible for all activities related to the oil sectors from oil exploration and production to refining.
The exploitation of the country's hyrdocarbon resources, mainly from offshore fields, is an important contributor to the national economy. Production is approximately 25,000 bpd.
Production levels have dropped from approximately 30,000 bpd in the mid 1990's to 25,000 bpd at the beginning of 2000. Two major three-year projects have been started in an attempt to increase production levels both onshore and offshore. The project led by Finarep (TotalFinaElf) aims to more than double onshore production from 7,220 bpd to 16,000 bpd by 2001, while offshore, Chevron Oil Congo (DRC) together with its partners, hopes to increase production from 15,361 bpd to 21,000 bpd by 2002.
Exploration for oil and gas in DRC began in the 1960's along the country's 22 km Atlantic Ocean coastline at the estuary of the Congo River (Congo) which is sandwiched between the prolific offshore producing region of northern Angola and its oil-rich enclave of Cabinda.
Congo became an oil producer in 1976 when its offshore fields came on stream. Congo's entire crude output is exported, as its crude characteristics are incompatible with the configuration of the country's only refinery.
Various foreign companies are operating in partnership with the government in the upstream oil sector. The most significant is a consortium operating the offshore concessions which comprises Congo Gulf Oil (Chevron), 50%, Teikoku Oil of Japan (Congo Petroleum Company) (32%) and Union Oil of California (Unocal) (18%). Operating an onshore concession in the Congo River estuary is a consortium known as CongoP (Société de Recherche et d'Exploitation des Pétroles au Congo) which, until 1999, included Petrofina and Shell. In 1999, Ocelot International bought out Shell's interest in three onshore production concessions. The Japan National Oil Company (JNOC) has also been involved in exploration activities.
The collapse of many state structures, inefficiency and bribery together with political instability have led to extreme difficulties within the industry. Once peace is restored to the country, however, it seems likely that the Kabila government, like its predecessors, will try to promote foreign interest in the onshore Lemba Trough, Tanganyika Graben blocks and Cuvette Centrale.
The Ministry of Energy is updating petroleum legislature to supervise and control the awarding of exploration permits and production concessions. In the DRC, acreage is licensed under a concession system.
Congo has only one oil refinery, the Société Congo-Italienne de Raffinage (SOCIR) (formerly the Société Zairo-Italienne de Raffinage (SOZIR)) refinery in which Agip and the government each had a 50% shareholding. In 1999, AgipPetroli sold Agip Congo SARL, which held a 50% interest in a number of service stations and in Societé Congo-Italienne de Raffinage SARL (SOCIR).
The refinery has a nominal operating capacity of 750 000 tons of crude per annum but generally operates at a rate of 50% or lower. As the country's domestic crude is too heavy to be processed by the refinery, crude for refining has to be imported, mainly from Nigeria. Congo also imports other finished products from Kenya and Zambia. The government are looking to upgrade the refinery to 50,000 bpd at an estimated cost of US$ 150 million. This upgrade is dependent on finding foreign investors and on the return of political stability to the country.
Marketing of fuels and lubricants products is carried out by Mobil, Shell, Agip, Fina and PetroCongo.
Distribution is handled by the oil companies through Congo Services des Entreprises Pétrolières (SEP), a jointly owned organisation. The distribution infrastructure consists of river, road and barge systems, all of which are in need of improvement. The lack of an adequate transportation network, wide-scale corruption and inefficiency together with the political instability and civil war hamper development in all sectors of the economy and frequent product shortages are experienced. In the eastern part of Congo there is a scarcity of tanker trucks since many have been trapped or abandoned in Rwanda and Burundi by the ongoing political turmoil.
A barge system is used to transport imported crude to the refinery. Distribution starts at the Ango-Ango depot at inland river port of Matadi. All products, except fuel oil are pumped about 350 km by pipeline to 3 Kinshasa depots. From Kinshasa, petroleum products are barged to various river ports (Mbandaka, Bumba and Kisangani) on the Congo (Congo) River for further distribution either by road or rail. Finished product from Kenya and Zambia are imported by road. SEP together with the marketing companies own and operate two pipelines between Muanda and Ango-Ango, and between Kisangani and Walikale.
Product storage is considered to be adequate for both crude and finished products. The SOCIR refinery provides a large portion of the country’s total storage capacity. The government is looking to upgrade this refinery in order to increase production.
The government controls petroleum product prices. Pricing is based on a single pricing formula for all products setting a fixed price based on refining and distribution costs and providing 70 different retail prices for the different destinations in the country. Annual petroleum tax revenue represents almost half of government indirect taxes. In 2000, there was a 200% increase in the petrol price following a devaluation of the DRC currency.
São Tomé e Príncipe
São Tomé and Príncipe Enacts Model Oil Revenue Management Law
Earth Institute News, Columbia University, USA
On December 29, 2004, São Tomé and Príncipe President Fradique de Menezes signed a law that establishes a new international standard for transparency and control of oil revenues. The law, adopted unanimously by the National Assembly, governs the receipt, investment and use by São Tomé and Príncipe of oil payments to best promote the economic and social progress of the country. It provides for the establishment of an oil fund to be held by an international custodial bank into which all oil payments are to be made. The law limits the amount of annual withdrawals from the fund and restricts expenditures to national development, poverty reduction and strengthening of good governance. A portion of the monies paid into the fund will be retained to create a permanent reserve to foster development even after oil resources have been exhausted.
At the signing, the President speaking of the law said, "Nothing will be hidden, nothing will be wasted." Arlindo Carvalho, the Minister of Natural Resources and Environment added, "This law will permit us to manage our petroleum resources in a sustainable way so that not only the current generation, but also future generations, will benefit." Carlos Neves, the Chairman of the Oil Commission in charge of drafting the law, stated "The law is very important for our development because it guarantees that we will use potential petroleum resources in a rational, balanced and controlled way."
A team of experts from the Earth Institute and Hogan & Hartson LLP, working pro bono, assisted São Tomé and Príncipe in its year-long effort to develop and enact the new law.
Responding to the news, Jeffrey D. Sachs, Director of the Earth Institute at Columbia University, said, “All too often oil resources have been misused. This law, by creating new standards of transparency and accountability, can help São Tomé and Príncipe avoid the pitfalls of being an oil exporter and ensure that its potential oil resources are used for sustainable economic development benefiting the people of São Tomé and Príncipe. I congratulate President de Menezes and the National Assembly on this effort. It will certainly become a model for others.”
Joseph Bell, leader of the Earth Institute team and partner at Hogan & Hartson LLP, said, “In adopting this law, São Tomé and Príncipe has established itself as the leader in the development of transparent and responsible systems for the management of oil revenues. The law is a major step forward in the country’s efforts to use its potential oil resources wisely.”
The activities of the fund are to be fully transparent with public access to all information regarding payments into and out of the fund, as well as the holdings of the fund. In addition, the law provides for all oil related contracts to be subject to public tender and to be made public. It also prescribes severe penalties for violations.
As an innovation, all of this information including information about the fund is intended to be available to the general public through web access as well as through a new public information office. Additionally, the law mandates certain public integrity and compliance-related contractual provisions, creates a rule against conflicts of interests and requires internal and external audits of the oil fund.
The law incorporates the transparency principles adopted by President de Menezes and President Obasanjo of Nigeria in the Abuja Joint Declaration, issued in July 2004, which among other things requires public disclosure of receipts from oil companies in unprecedented detail. It also creates a new Public Oversight Committee which includes representatives of civil society to monitor the government’s implementation of the law.
The work conducted by the Earth Institute was funded by the Open Society Institute.
São Tomé and Príncipe is Africa’s smallest democracy. Located off the West Coast of Africa, it shares with its neighbors significant potential oil resources. Initial exploration is now being initiated in the Joint Development Zone shared with Nigeria. Copies of the legislation are available at http://www.earthinstitute.columbia.edu/cgsd/STP/index_stp.htm.
The Earth Institute at Columbia University is the world’s leading academic center for the integrated study of the Earth, its environment and society. The Earth Institute builds upon excellence in the core disciplines—earth sciences, biological sciences, engineering sciences, social sciences and health sciences—and stresses cross-disciplinary approaches to complex problems. Through its research, training and global partnerships, it mobilizes science and technology to advance sustainable development, while placing special emphasis on the needs of the world’s poor. For more information, visit www.earth.columbia.edu .
SAO TOME AND NIGERIA SIGN OIL EXPLORATION DEAL
It has been reported that Sao Tome and Principe and Nigeria have signed a shared offshore oil exploration deal, ending a dispute over their maritime border.
According to Sao Tome government officials, Nigeria will hold a 60% stake in the 2,500-meter deep operations to be launched in 2004 near the island of Principe, about 240 kilometers off the coast of Gabon.
MBendi - Information for Africa
A Patrol Boat Goes Missing, And Tiny São Tomé Is Left Without a Coast Guard
Chinguetti Oil Field Appraisal (Block 4, PSC Area B) - Hardman equity 21.6%: one firm step-out exploration well on the field is planned as the first well in the programme. A second contingent well may be drilled as the third well in the field to fully delineate the size and scope for oil production in the Chinguetti Field. Testing equipment will be available to conduct an oil production test on one of the appraisal wells as warranted.
PSC Block 6 (Area C) Exploration Well - Hardman equity 35.5%.- a firm well is to be drilled to test the Lead 4 structure in Block 6, to the north of Area B. The primary target at Lead 4 comprises a sand channel system of Cretaceous age interpreted from 3D seismic. The flank of this prospect was partially tested by Shell in the 1970s with small quantities of oil recovered from wireline testing.
PSC Area B Exploration Well (Chinguetti vicinity) - Hardman equity 21.6%: the intention is to drill one of the identified exploration prospects that are located within 25 kilometres of the Chinguetti oil discovery. Currently two prospects are being considered, pending completion of further seismic acquisition and interpretation. This well is therefore being carried as contingent pending the completion of this work and a decision by the Joint Venture to drill one of the prospects in the 2002 drilling programme. Prospects being considered have similar aged reservoir sands to Chinguetti. If the new exploration well is a discovery, it could be linked to the Chinguetti production facility, thus enhancing the project economics.
3D Seismic Acquisition: acquisition of large 3D seismic is currently in progress as follows:
PSC Area A : 900 square kilometres
PSC Area B : 515 square kilometres
PSC Area C (Block 2): 1,000 square kilometres
This new seismic data will further delineate the petroleum prospectivity of the deep water basin in areas adjacent to the existing 3D seismic data, and identify additional prospects for drilling in 2003 and beyond. Under a farming agreement signed with Energy Africa in January 2002, the bulk of the 3D survey in Block 2 is to be funded by Energy Africa which will earn 20% interest in that area. Hardman will retain a 28.8% interest in Block 2.
The 2002 work programme will add considerably to the understanding of the Mauritanian deep water basin and is aimed at upgrading the prospectivity of this new oil province. In particular, additional drilling of the Chinguetti Field will allow an accurate estimation of the recoverable oil volumes in the structure and the economic viability of the project.
In January 2002, Woodside advised that the Scope For Recovery reserves based on the results of only the Chinguetti-1 well were 65 million barrels (recoverable). It should be emphasised that this estimate is based on a risked reserve estimate, whereby parts of the field which have not yet been evaluated by drilling have had a risk factor applied, thereby reducing the volume estimates.
Studies of the Chinguetti Field by Hardman have indicated that the Most Likely (P50) technically recoverable volume for the primary reservoir target only (A Sand) is in excess of 100 million barrels. There may also be further potential in deeper Tertiary sands below the A Sand, which was not encountered in the Chinguetti-1 well, and also in the B Sands which contained a 7 metre gas column in Chinguetti-1.
K Davies. COMPANY SECRETARY AND CHIEF FINANCIAL OFFICER
Mauritania: On a bumpy road towards democracy
4 July 2003, from IRIN website
SUMMARY & COMMENT: A look at the Mauritania "system", a combination of multipartism and dictatorship. An attempted coup took place on June 8, 2003. Note that this report does not necessarily reflect the views of the United Nations.
Last month's bloody coup attempt highlighted the fact that beneath a veneer of multi-party democracy, Mauritania remains very much a traditional society where control of the army and membership of clan and family are the real keys to power.
The pro-western government of President Maaouiya Ould Sid Ahmed Taya, an army colonel who seized power in a coup 19 years ago, survived a two-day battle with rebel soldiers to the relief of neighbouring governments and Mauritania's Western donors.
Many Mauritanians condemned the coup, but they regarded it as being motivated more by family vendettas among the ruling elite than about "bread and butter" issues affecting the country's largely poor population.
One French-trained economist said that while Ould Taya was not a popular figure, Hanenna's coup attempt had attracted little popular support. "Between the bad and what could have been worse, Mauritanians want neither," he told IRIN.
On the night of 8 June, rebel military units, led by a former army colonel, Saleh Ould Hannena, rolled a column of tanks into the capital Nouakchott and began shelling the presidential palace.
State radio and television went off the air and for 36 hours the capital of this desert nation of only 2.5 million people echoed to the sound of gunfire.
However, military units loyal to Ould Taya eventually crushed the uprising and Ould Taya reappeared on TV screens to confirm that he was back in control.
The rebels never said why they wanted to overthrow Ould Taya or what they stood for and the government has not publicly identified the coup plotters. One official dismissed the bloody battle which left 29 people dead and dozens wounded, as "just a bump on the road."
But Mauritania's neighbours and western donors took it seriously enough. Within days, French foreign minister Dominique de Villepin jetted in for a lightning visit, followed shortly after by Morocco's King Mohamed VI. Sighs of relief and messages of support, meanwhile came from the United States, Senegal and Algeria.
Although Ould Taya was quick to announce that presidential elections would go ahead as planned on 7 November, security in Nouakchott has been beefed up since the coup attempt. Heavily armed soldiers have mounted guard outside the presidential palace, radio and TV studios and other government buildings. And at night military check points have been thrown up across the city of one million people to search cars and check the identity of their occupants.
Initially there was widespread speculation that the coup attempt was partly a reaction to a month-long crackdown on Islamic radicals by Ould Taya.
Diplomats feared that had he been overthrown, Mauritania might have severed its unpopular diplomatic relations with Israel, loosened its ties with the United States and become more closely identified with the Arab world.
But many Mauritanians suspect that the coup attempt was more about family and clan rivalries, than fundamental issues of government policy.
Ould Hannena has gone into hiding, but many of his relatives in government have been sacked or arrested.
Victims of the purge included the head of the Supreme Court, the mayor of the northern port city of Nouadhibou, the deputy director of the government news agency, the minister in charge of women's affairs, the national secretary of the ruling Republican Social Democrat Party (PRDS) and several military officers.
The joke around town is that most of these people stood accused of "kinship" with Ould Hanenna, rather than any active role in the rebellion.
Ould Hanenna himself was drummed out of the army in 2001 and was subsequently seen driving a taxi and selling cars. No official reason was given for his discharge, but he was widely believed to have been linked with a group of officers that wrote a letter to the president seeking better pay and conditions.
Little is known about Ould Hanenna's political beliefs, although he is suspected of sympathy towards the deposed Baathist regime of Sadaam Hussein in Iraq. Like the man he tried to depose, he is a member of the fair skinned Bidan elite.
He hails from the Ayoun region, near the eastern border with Mali and received military training in the Middle East, where Mauritania formerly sent cadets to military academies in Egypt, Saudi Arabia and Iraq. The fugitive coup leader is also believed to have opposed Ould Taya's controversial decision to establish full diplomatic relations with Israel in 1999.
Mauritania provides a delicate bridge between the Arab states of the Mahgreb and the black nations of Sub-Saharan Africa and ethnic tensions smoulder just belong the surface. There are therefore many vested interests in maintaining the stability in this former French colony, now an Islamic Republic that uses Arabic as its official language.
Increasingly it has looked to the Arab world rather than Sub-Saharan Africa for inspiration. Mauritania first withdrew from the CFA franc zone to establish its own currency in the 1970's and then left the Economic Community of West African States (ECOWAS) in 2000.
Two thirds of the population are Moors, who are culturally closer to Mauritania's northern neighbour Morocco than Senegal to the south. During the early years of independence Morocco claimed Mauritania as a southern province. It only recognised the government in Nouakchott in 1969.
But a third of Mauritania's populations are Black Africans who live near the southern border with Senegal. They belong to the same Wolof and Fulani ethnic groups that live in greater numbers on the south bank of the Senegal River, which forms the border between the two countries.
The Moorish community is sharply divided between the "Bidan" or white Moors, who dominate government, and the "Harratin" or black Moors, who were formerly slaves and today still generally occupy a lower rank on the social scale.
Slavery was only abolished by law in 1980 and ethnic tensions erupted into communal fighting in 1989 that led to many southern blacks being forcibly deported to Senegal and Mali.
Ould Taya has, on the surface at least, begun to modernise the country.
He legalised opposition parties in 1991 and drafted a new constitution that turned Mauritania into a multi-party democracy. Over the past decade he has also liberalised the economy, which is dependent on exports of iron ore and revenues from licencing foreign fishing boats, and has presided over a modest improvement in living standards.
According to the African Development Bank, the economy grew by four percent a year between 1990 and 2000. The United Nations Development Programme (UNDP) estimates that the number of Mauritanians living below the poverty line fell from 56 percent of the population to 46 percent over the same period.
Now there are hopes that offshore oil will start flowing in 2005 and help to spread the wealth currently enjoyed by a small urban elite more widely. Woodside Petroleum of Australia struck a promising oil reservoir with its Chinguetti exploration well in May 2001, since then other companies have been gearing up to drill more.
But behind the facade of modernity and progress, drought and famine still plague subsistence farmers in the southeast of the country. Opposition leaders question the economic success story told by official statistics. They accuse Ould Taya of running a corrupt government packed with members of his own family and clan that has failed to tackle the country's real problems effectively. "Tribu" the French word for tribe, crops up continuously in political discussions.
"The fundamental problem is to know if the State is fulfilling its primary roles? Is it promoting economic justice and social equality? Democracy and human rights?" said Hamidou Baba Kane, an economist and parliamentarian of the opposition Rally of Democratic Forces (RFD).
He expressed fears that the hope for oil boom would only widen the gap between rich and poor. While a minority of western-educated men wears smart suits and drive around Nouakchott in expensive cars, most of the city's middle class are growing slowly poorer and beggars line the streets. And among the drought-hit millet and sorghum fields of the south, many subsistence farmers and their families are quietly starving.
Although Ould Taya boasts that he introduced multi-party democracy to Mauritania, he has continued to ban political parties that he accuses of "threatening state authority" and detain their leaders. Critical newspapers have been shut down for similar reasons.
Political analysts say that as a result the opposition remains muzzled, weak and divided.
"The job of the opposition becomes very difficult under a tyrannical regime," Kane, the RFD leader, said.
Cheick Saad Bouh Kamara, a law professor at Nouakchott university, told IRIN that after 19 years of strong-arm government by Ould Taya, Mauritanians were yearning for change, but did not want to plunge the country into armed conflict to achieve it.
Kamara, who is vice-president of the International Federation of Human Rights, said Mauritanians wanted "peace at all costs, but not at any price."
So far three opposition politicians have announced plans to challenge Ould Taya in the November presidential election, including for the first time, a woman. Aicha Mint Jiddana, a 43-year-old businesswoman, is campaigning against female circumcision and forced marriage.
But it remains to be seen whether Ould Taya's western friends will pressure him into running a freer, fairer and more transparent poll than the last presidential election in 1997 which was boycotted by most of the opposition.
MAURITANIA: Petro-dollars could be a catastrophe, government critics warn
Offshore oil will start flowing in 2006
NOUAKCHOTT, 23 Feb 2005 (IRIN) - Mauritania, a land of desert nomads, will join the growing league of African oil exporters, when its first offshore oilfield starts production next year.
But government critics, aid workers and diplomats are nervous that the impending flood of petro-dollars into this poor and sparsely populated country could spell disaster.
They fear this new source of government revenue will simply benefit the ruling elite, fueling political instability and deepening social divisions, rather than promoting general prosperity and economic development.
“Oil will be a catastrophe for Mauritania. We don’t have a middle class that will benefit from this influx of money and it won’t be allowed to develop either,” said Brahim Ould Ebety, a prominent lawyer, who has defended opposition activists accused of plotting against President Maaouiya Ould Taya.
"People are either very rich or very poor," he told IRIN.
Ebety is one of the few professionals who dares to speak out openly against the government and the authoritarian political system in this vast desert country.
“This government does not listen to people’s needs nor work for the people’s needs,” he told IRIN.
“That needs to change as does the reluctance to tackle corruption and issues of due diligence in this country,” the lawyer said, speaking in his dimly-lit office in the capital Nouakchott.
Changes need to be made soon
But time is running out if changes are to be made before the government starts receiving a regular income from offshore oil sometime next year.
"Development of the Chinguetti Field began last year and it is expected to come on stream in mid-2006," said Teju Akande, an Oil Analyst at Wood Mackenzie, an energy research and consultancy company based in Edinburgh, Scotland.
Wood Mackenzie anticipate that a second, larger offshore field called Tiof, will come on-stream approximately one year later.
“By 2009 we estimate that combined production of the two fields will peak at 165,000 barrels per day,” Akande said.
At current crude prices of around US$50 per barrel, that would be worth about $300 million a year in foreign exchange earnings - half as much again as Mauritania currently earns from exports of fish and iron ore.
“Mauritania’s oil fields are small compared with the recoverable reserves from other West African deep water projects," Akande said. "We’re not talking another Nigeria or Angola, but when full capabilities come on stream it will be comparable to producers like Cote d’Ivoire and Equatorial Guinea.”
However, with a population of just three million people and an annual gross domestic product (GDP) of around US$ 1.1 billion, oil money is sure to have a major impact - just as it has in Equatorial Guinea.
There, according to figures from the International Monetary Fund (IMF), oil has fuelled a 40-fold growth of the economy between 1995 and 2005.
In 1995, when oil production began, the economy of Equatorial Guinea was about one-tenth the size of Mauritania's.
Now, it is over six times larger.
But some revenue has already been received
Even before the first barrel of oil is pumped out of the seabed off Mauritania's Atlantic coast, the first petrodollars have already started to flow in.
In October 2004, Sterling Energy, an independent UK-based oil company, announced that it had struck a deal with Mauritania to share the revenues from the government's 12 percent stake in the Chinguetti field, which is forecast to produce 75,000 barrels per day.
In return for this privelege, Sterling paid Mauritania a cash bonus of US$15.5 million and raised a $130 million loan to help the government pay for its share of the oilfield's development costs.
However, diplomats and oil industry observers say there are no mechanisms in place to guarantee transparency in the government's handling of oil revenues, as there are in Chad and will be shortly in Sao Tome and Principe.
Despite numerous attempts to contact the Ministry of Mines and Industry which is resonsible for petroleum development, IRIN was unable to obtain comment from the Mauritanian government.
Fears of corruption
"When it comes to this (oil) issue, it is practically impossible to find someone reliable within the government who is willing to speak out. It is a big problem that we have here," said one UN official working in Nouakchott.
Aid workers, who asked not to be named, pointed out examples of corruption that they came across on a regular basis.
“There are sacks and sacks of food aid on sale in the main market. And all of those houses in E-north,(a smart neighbourhood where large colonnaded houses are being built) - they’ve all been built with stolen development money,” one said.
“The corruption in Mauritania really is unbelievable,” said another. “I’m supposed to be giving out free condoms, but I have to accept the fact that half of what I bring into the country ends up being sold out of pharmacies,” said another humanitarian worker.
“Things are bad, but I can imagine it will only get worse when they get their hands on the oil money,” he said.
“Politics is marked by corruption,” veteran opposition leader and former central bank chairman Ahmed Ould Daddah told IRIN. “It is politics for the group in power not for Mauritanian.”
“If that does not change, if the government does not open up to dialogue with the political opposition, if they do not allow criticism and discussion and develop a system of justice in which we can have confidence, then oil will be a disaster - it will be a curse for Mauritania,” said Ould Daddah.
Calls for dialogue
Ould Daddah, half brother of Mauritania’s first president Moktar Ould Daddah, was recently imprisoned on charges of funding an attempted coup d’etat against Ould Taya, a former army colonel who has ruled Mauritania with an iron hand for 21 years.
Last year, the government put on trial a total of 195 defendants accused of plotting three successive attempts to topple Ould Taya. The trial took place at a remote police barracks in the desert, some 50 km east of the capital, Nouakchott.
Most of the defendants were soldiers accused of taking part in a bloody uprising in June 2003 which was eventually put down by forces loyal to Ould Taya. Others, including a number of civilian opposition leaders were accused of mounting two further attempts to topple the president in August and September 2004 which were nipped in the bud.
The prosecution demanded a five years in jail for Ould Daddah, who was eventually let off with a suspended sentence and released in early February.
Speaking from his headquarters of his Assembly of Democratic Forces (RFD) party in central Nouakchott, that is still draped with the banner calling from his release from prison, Ould Daddah stressed that dialogue was essential for Mauritania’s future peace and security.
The opposition parties, which range in hue from pro-western liberals to Islamic fundamentalists, are petitioning for a national dialogue with Ould Taya and a new era of open-door government, but with little conviction that they will get it.
“I have met President Ould Taya on two occasions, but only to shake his hand. In all his 21 years in power, I have never had a discussion with him,” said Ould Daddah, who looked thin after spending several months in prison.
Ould Taya rarely makes public appearances, and according to lawyers and journalists, selected foreign reporters have been paid handsomely to visit Mauritania in order to write favourable articles about the president and his country.
Indeed, one local journalist told IRIN that these are the only kind of interviews the president is comfortable with.
“Ould Taya has a problem in expressing himself - he is not used to speaking with journalists. If he has a decision he hands it to his spokesman to make the announcement,” the journalist said.
Few have any illusion that anyone but Ould Taya takes all the important government decisions.
“The government is not a team - it does not work together to obtain results," Ebety, the outspoken lawyer, said. "They are simply enforcing the orders of the President,” he added.
“The head of state is totally cut off from reality - that is a big problem - he is surrounded by his supporters and allies,” Ebety said.
Ould Taya came to power in a military coup in 1984. Elections in 1992, 1997 and 2003 were marred by allegations of voter intimidation and electoral fraud.
“There is no possibility for a change of government through the electoral system in Mauritania as things stand now,” said Ould Daddah.
The veteran opposition leader said he condemned violence unreservedly, but he warned that without dialogue and efforts to truly democratise the Mauritanian political system, tensions would only mount.
“The opposition does not want violence, but it’s like physics, if you block all the escape routes the pressure will build until it explodes,” he said.
Copyright © IRIN 2005
The material contained on www.IRINnews.org comes to you via IRIN, a UN humanitarian news and information service, but may not necessarily reflect the views of the United Nations or its agencies. All IRIN material may be reposted or reprinted free-of-charge; refer to the IRIN copyright page for conditions of use. IRIN is a project of the UN Office for the Coordination of Humanitarian Affairs.
See "Mauritania's Poor Skeptical on Oil Riches", Washington Post, August 2005
Western Sahara hold possibly the world's richest fishing grounds. Contained within its borders are significant untapped phosphate and oil reserves.
The area is also home to one of the world's longest-running conflicts. Morocco which marched into the territory in 1975 under invitation from Spain, the departing colonial power -- and the native Sahawari people and their national liberation movement, the Polisario Front
Before the ceasefire, the war cost thousands of lives and disappearances and prompted Morocco's King Hassan to construct the huge fortified wall around two-thirds of the desert.
The Sahawari are nomadic tribes, formed from a mixture of Arabic, Berber, and black African cultures, their ancestors were Yemeni Arabs who originally traveled across north Africa in the 13th century. Sahawaris now live in refugee camps inside southwestern Algeria, or under harsh repression in Moroccan-controlled territory.
About 165,000 Sahawaris live in the Algerian camps (plus another 65,000 in the Moroccan "Occupied Territories"), which are run on a semi-autonomous basis by the Polisario -- or, as they call themselves, the Sahawari Arab Democratic Republic. Set up during frequent bombing by Moroccan jets (which also attacked the refugee columns fleeing the Western Sahara), the camps are still here, 24 years later.
In October 2002, of two large contracts were signed between international oil companies and the Moroccan government to explore promising oil fields off the coast of Western Sahara.
The companies are TotalElfFina and Kerr McGee. Under the contracts, TotalFinaElf may explore 115, 000 kilometre square area off the coast of Dakhla Western Sahara for a 12 month period. Kerr McGee signed a deal to explore 110, 000 kilometre square area of deep water off the northern coast of Western Sahara.
President of the Sahrawi Arab Democratic Republic, Mohamed Abdelaziz, said that contracts signed by oil companies Kerr McGee and TotalFinaElf to explore the oil resources offshore Western Sahara were a "provocation." The President appealed to the United Nations to annul the contracts with Morocco because they violate international law.
President Abdelaziz claim this on behalf of the UN refusal to recognise the Moroccan occupation of Western Sahara and the territory's status as a colony. They refer to a 1991 UN resolution, stating that "the exploitation and plundering of colonial and non-self-governing territories by foreign economic interests, in violation of the relevant resolutions of the United Nations is a grave threat to the integrity and prosperity of those Territories."
According to the US Geological Survey of World Energy, year 2000, estimated oil and gas resources off the Saharan coast are substantial and the probability (including both geologic and accessibility probabilities) of finding lucrative oil and gas fields is very high. While it is assessed that Western Sahara has relative large and probable offshore oil resources, numbers for Morocco proper are low and insecure.
The Paris-based oil multi TotalFinaElf announced that it "has signed a reconnaissance contract with the Moroccan state oil company, Office National de Recherches et d'Exploitations Pétrolières (ONAREP), for the Dakhla Offshore zone. Located offshore the town of Dakhla, the zone covers an area of 115,000 km2." Dakhla was the capital of the Spanish Western Sahara colony before 1975.
According to a TotalFinaElf release, "the contract covers an initial period of 12 months, during which regional geological and geophysical studies will be undertaken in order to assess the petroleum potential of the zone. These studies will complement the knowledge base that TotalFinaElf has been building-up over several years along the length of the Atlantic coast of Africa.
The American oil company Kerr-McGee is far more restrictive on its information. The company's website only informs that Kerr-McGee is involved in "focusing on international deepwater opportunities offshore ... Morocco, ... where it has lease positions". In November 2001, the US company has acquired 33.33 percent interest in the 3 million-acre Cap Draa Haute Mer exploration license offshore Morocco.
Previous attempts to explore Western Sahara oil resources have all been abandoned due to the political risks. Gulf Oil, WB Grace, Texaco and Standard Oil were considering a joint venture with the Spanish authorities in the 1960s.
In the second half of the 1960's the US companies Pan American Hispano Oil, Caltex, Gulf Oil and Phillips undertook an exploration of 2443.192 hectares of Western Saharan desert which led to the discovery of a small layer of 100 km at Faim el Oued. In total 27 strata of oil were discovered in 1964.
In 1978, offshore blocks were awarded to Philips and BP but were quickly abandoned because of the war. In the basin between El Ayoun, Western Saharan capital and Tarfaya (Morocco) bituminous shale was discovered with reserves of 100 million barrels of crude but this can only profitably be extracted if oil prices rise to US$ 40 a barrel. Shell signed a contract to build a treatment works in 1981 but the work was never completed.
Sources: UK Sahara Campaign, AARASD, afrol archives. 2002
Nick Ryan. North Africa's Forgotten War: Western Sahara. 1999
The Timor-Leste Institute for Development Monitoring and Analysis (La’o Hamutuk)