Global Policy Forum

WHY are Americans suddenly flocking to western Africa? Men with Texan drawls and colourful overalls crowd the beachside bars in Luanda, Angola's capital. In September Colin Powell paid a flying visit to Angola and Gabon; early next year George Bush is expected to follow suit. Last month ten African heads of state visited the American president. Rumours fly at cocktail parties in African capitals that the United States plans a military base in Sao Tome and Principe, an island country in the Gulf of Guinea.

The reason is oil. Walter Kansteiner, America's assistant secretary of state for Africa, suggests that "African oil has become of national strategic interest to us." In quiet moments he confides that it is the only American interest in Africa. Although the continent has a mere 7% of the world's known oil reserves, big new discoveries off the west coast are exciting oil firms. At a meeting this month in Cape Town, South Africa, they queued up to boast of their planned investments.

Chevron Texaco said it had spent $5 billion in the past five years in Africa, and would spend $20 billion in the next five. Shell said it would double its oil and gas production in Africa over the same period. BP plans billions of dollars of spending in Angola alone. This month President Thabo Mbeki launched a new South African state company, PetroSA, so that his country can also tap west Africa's reserves of oil and gas.

There are strategic reasons why western countries and firms are keen. Dick Cheney's National Energy Policy Report suggests that the region is one of the "fastest-growing sources of oil and gas for the American market". African oil already provides 15% of American imports; that is likely to rise to 25% by 2015, lessening to a degree dependence on supplies from the troubled Persian Gulf.

More African exports would also mean more non-OPEC oil. In sub-Saharan Africa only Nigeria is part of OPEC, and there will eventually be a lot of non-OPEC exports from Chad, Sao Tome, Equatorial Guinea and especially Angola. Angola produced roughly 750,000 barrels per day (bpd) in 2001, and capacity is soaring. In Nigeria capacity is already well over its production quota of 1.8m bpd. As that rises, some observers hope that the country may be persuaded to break away from the largely Arab cartel, though this is a long shot.

Investments are not driven by American strategic interests alone. "It is more important that African oil is good quality and companies can get good recovery rates," says Duncan Clarke, an expert on African oil. Though not as pure and light as Saudi oil, west African crude is easily good enough for refineries on America's east coast. It is also usefully close, half the distance of Persian Gulf supplies. And most big discoveries are being made off-shore. In some cases companies are identifying oil that is under extremely deep oceanic shelves, and must wait until technology makes efficient exploitation possible.

Another appeal of off-shore oil is its lower risk of bad publicity, such as that Shell earned for its activities in Ogoniland in Nigeria while the country was under military rule. There a local activist, Ken Saro-Wiwa, and eight others were arrested and hanged in 1995 after campaigning against the misuse of local oil revenues. On October 23rd Human Rights Watch produced a report on the impact of oil in Nigeria, concluding that ordinary people have seen hardly any benefit while elites have become extremely rich. Confrontations with oil companies continue.

But even off-shore extraction carries some risks. Oil rigs are sometimes invaded by protesting activists. Ownership of off-shore reserves may be disputed. On October 23rd, Nigeria rejected a world court ruling handing the oil-rich Bakassi peninsula region to Cameroon. Last week a leaked report from the IMF suggested that Angola's rulers had personally pocketed as much as $1 billion a year from oil revenues. Activist groups such as Global Witness are increasingly vocal in criticism of oil firms, which pay hidden "signature bonuses" to gain access to west African oil. BP revealed that it had paid Angola's government such a bonus in the late 1990s, and drew a storm of criticism from other oil companies—especially American ones, which may be fearful of falling foul of the Foreign Corrupt Practices Act—and from Angola's rulers.

But none of that will deter investors, who see good oil to extract and a hungry market across the Atlantic. Mr Bush's planned visit is likely to stir up even greater interest in African oil. Expect many more American oil workers to spend their free time in west Africa's bars.

INDONESIA Already antsy oil and gas companies in Indonesia grew nervous after last week's terrorist attacks. Indonesia is the world's largest exporter of liquefied natural gas, with big customers in Taiwan, Japan, and South Korea. The economies of all three nations rely entirely on imported energy. Any cut in the supply lines could quickly turn catastrophic, with effects on the manufacture of goods sold to U.S. consumers.

ConocoPhillips, BP, Unocal, and ExxonMobil all have Indonesian interests. One export terminal was shut for five months last year following a separatist bombing that damaged the apparatus and caused ExxonMobil to pull out its staff.

American troops have not participated in Indonesia since 1999 because of that country's human rights abuses in East Timor. But after 9-11, President Bush moved to increase military aid and relax restrictions on American military presence. A supplemental appropriations bill provided $16 million for the training of Indonesian police and $4 million for the military.

VENEZUELA This hemisphere's established line to cheap crude, Venezuela has always been a bastion for the international oil companies. It's our third largest supplier, so our interests there are regarded as a matter of paramount concern.

Evidence, though inconclusive, points to U.S. officials' having fomented the abortive coup against Venezuelan president Hugo Chavez last April because they feared his populist politics. More to the point, as a recent head of OPEC, Chavez could direct the oil cartel from Bush's backyard, although in recent months he's been doing just the opposite--busting OPEC's price levels to rake in dollars and help pay off Venezuela's debt. Nonetheless, Washington has always dreaded the prospect of Venezuela linking up with Mexico inside OPEC.

COLOMBIA The U.S. has maneuvered itself smack into the middle of Colombia's civil war, ostensibly with the goal of eradicating dope (an endless and futile effort), but also to protect an Occidental Oil pipeline that has been carrying increasing amounts of oil destined for the U.S. Local rebels have attacked this line 170 times, and last week struck again, disrupting operations.

Our answer to the war has been the $1.3 billion Plan Colombia, a program that got another $98 million early this year for protection of the Occidental works.

The Occidental pipeline made the news during the Clinton administration because Al Gore's family had been a longtime holder of Occidental stock and the company contributed to Gore's political campaigns, including his run for president.

CANADA AND MEXICO Buoyed by the North American Free Trade Agreement, the U.S. is steadily implementing a "continental policy" of draining more and more petroleum products from the huge storage bin in the Canadian north, while increasing our take from Mexico. In both places, big international oil companies call the shots.

When it comes to energy, Canada is a U.S. satrapy. American investment replaced British rule at the turn of the 20th century. By the 1970s, American companies controlled two-thirds of the fuel industry, including a good three-quarters of the petroleum-refining sector. A Standard Oil affiliate led the way. Americans owned the key long-distance oil pipeline, although the Canadian government at that time controlled the flow of natural gas.

Today, U.S. companies look forward to exploiting the oil-rich Mackenzie Delta, Arctic land encompassing parts of the Northwest Territories and the Yukon, and to harnessing Canada's substantial hydroelectric resources for New York and other East Coast cities. What's more, the industry is again considering a scheme to build a natural gas pipeline, costing billions of dollars, from Alaska through Canada down toward Chicago. Ripping up the Arctic means wholesale invasion of Inuit and other native people's lands--but it also means filling up SUVs.

What we don't get out of Canada's privatized oil industry, we will suck out of Mexico. There the industry is controlled by a corrupt state company, but much of the oil and gas reserves are in the hands of American lessees. The idea is to gradually build up a network of pipelines leading into the southwestern U.S.

There's also the issue of moving liquefied natural gas, or LNG. Because of the danger of enormous fires, most of the U.S. coastline is off limits to LNG tankers. Most recently, oil companies have come up with a plan to build an LNG terminal in Baja California. Gas from such places as Australia, Indonesia, and Latin America could enter there, then be transported by pipeline into the U.S., where the clean fuel is in keen demand for making electricity.