TIME has a new feature on how West Africa is again trying to capitalize on its oil wealth to foster development. However, development has been elusive in the past due to the "resource curse," the paradoxical phenomenon in which resource-rich countries fail to develop. The old bugbear of corrupt officials siphoning off oil revenues and sending them abroad still remains. However, the fact remains that this region has some of the world's highest-quality reserves (it is "sweet" and "light," thus easier to refine) as well as its largest untapped reserves. By the way, a book edited by Jeffrey Sachs and Joseph Stiglitz on Escaping the Resource Curse is one to look out for. It is mentioned in the article:São Tomé and Principe is part of a string of countries on the Gulf of Guinea, the right angle in Africa's west coast, which is the oil industry's new El Dorado. By some estimates, Africa holds 10% of the world's reserves, but that figure belies the importance West Africa has already achieved as a source of energy. According to Poisoned Wells, a new book on African oil by Nicholas Shaxson, an associate fellow with international affairs institute Chatham House in London, the U.S. imported more oil from Africa than from the Middle East in 2005, and more from the Gulf of Guinea than from Saudi Arabia and Kuwait combined. Nigeria, the giant of the region, supplies 10-12% of U.S. oil imports. "There's a huge boom across the region," says Erik Watremez, a Gabon-based oil and gas specialist for Ernst & Young. "Exploration, drilling, rigs, pipes. It's exploding." Ann Pickard, Shell's regional executive vice president for Africa, agrees: "The Gulf of Guinea is an increasingly important place."
Indeed, says Daniel Yergin, chairman of Cambridge Energy Research Associates, West Africa is "only going to get hotter. It has the location and the resources; the technology is now there to develop them; and companies from all over the world want to be in on the action." Rising demand from India and China and worries over instability in the Middle East have fueled higher oil prices, and those in turn have precipitated a new scramble for energy — oil rigs worldwide now have to be rented a year in advance. There are several reasons why the Gulf of Guinea is a key focus of this rush. African oil is high quality, with a low sulfur content that requires little refining to get it to the pump. The Gulf is relatively close to the U.S., cutting shipping costs to the world's biggest oil consumer, and most of the reserves are out to sea — which means there's no need to construct pipelines through different nations to get the stuff to market. Equally important: unlike some other oil-rich countries, African nations welcome foreign companies to their oil fields, as there are no indigenous African oil majors. In his 2007 book Untapped: The Scramble for Africa's Oil, John Ghazvinian, a visiting fellow at the University of Pennsylvania, explains the euphoria like this: "African oil is cheaper, safer and more accessible, and there seems to be more of it every day ... No one really knows just how much oil might be there, since no one's ever really bothered to check."
Security is a crucial part of the attraction. West Africa may have a history of political instability, but most of its oil is offshore, and the assets of international companies have so far not been prone to the sort of nationalist expropriation common in oil's history from Mexico in the 1930s to Russia today. And although there have been attacks on oil installations in Nigeria, the region does not experience the sort of out-of-control violence that now plagues Iraq. Such factors make "West Africa of great interest and great significance," says a senior American diplomat in the region. In fact, five years ago the U.S. State Department declared West African oil a "strategic national interest."
The National Intelligence Council, a U.S.-government think tank, predicts that the Gulf of Guinea will supply 20-25% of total U.S. imports by 2020, but Americans are not alone in their mounting dependence upon West Africa. Angola is now China's top oil supplier. Gabon is a key supplier of France. Oilmen from countries as diverse as Russia, Japan and India are showing up in places like Equatorial Guinea, Cameroon, Chad — even perennial war zones like the Democratic Republic of Congo. With all that interest, Paul Lubeck, Michael Watts and Ronnie Lipshutz of the Center for International Policy, a U.S. think tank, calculate that the Gulf of Guinea will earn $1 trillion from oil by 2020 if the price stays above $50 a barrel. That's roughly double all the post-colonial aid to Africa since independence in the 1950s and 1960s.
That should be good news for some of the poorest countries in the world's poorest continent. After all, Norway and Britain used North Sea oil to underwrite their welfare states, while small oil powers like Oman and Brunei found themselves catapulted out of subsistence living in a generation. Likewise, Alberta's burgeoning petroleum industry has transformed the province into a major driver of the Canadian economy. But oil is not always a boon. What if it fuels corruption rather than development, and creates the same combustible mix of great wealth, relative poverty, grievance and instability as it has in the Middle East? Economists often talk of the "curse of oil," pointing out that countries with resources such as oil often grow more slowly, more corruptly, less equitably, more violently and with more authoritarian governments than others do. The authors of Escaping the Resource Curse — Jeffrey Sachs, Joseph Stiglitz and Macartan Humphreys — assert that there is "a strong association between resource wealth and the likelihood of weak democratic development, corruption and civil war." Western oil workers in the Middle East lived in secure compounds with armed guards long before hijackers hit the Twin Towers. Is that same pattern developing in the Niger Delta today, where they also live in guarded compounds after the kidnap of more than 200 workers in the last two years?
