Guest Post: Fate of Foreign Oil Investors In Limbo Amid Ghana-Côte d’Ivoire Border Dispute
Submitted by Gregory Copley of GIS/ISSA for Oilprice.com
Fate of Foreign Oil Investors In Limbo Amid Ghana-Côte d’Ivoire Border Dispute
A maritime boundary dispute between Ghana and Côte d’Ivoire that erupted this month casts doubt on future international oil claims near the contested area and raises questions about the reaction of foreign investors to the uncertainty.
Earlier this month, Côte d’Ivoire appealed to the United Nations to delineate its offshore border with Ghana, a bid seen as controversial since Russia’s Lukoil discovered oil reserves only days before off Ghana’s coast. Ghana’s Jubilee field will also begin operations later this year and give the country commercial oil-producer status.
Ghana found oil in 2006 and analysts estimate it has one billion to two billion barrels in proven oil reserves; Côte d’Ivoire is probably in the same range or has slightly less oil.
The Ghanaian parliament passed a boundary commission bill this week, according to media reports, which have also asserted that Côte d’Ivoire does not expect discussions to regress into a fight over oil rights. The commission would outline the country’s land borders and mark the limits of its maritime boundaries.
While an actual war may not be looming between the African neighbors over the rightful ownership of offshore resources, potential “unclear title right at the margin” will most certainly be a problem, argued Peter Pham, director of the Africa Project at the New York-based National Committee on American Foreign Policy and an associate professor at James Madison University in Harrisonburg, Virginia.
“I think both sides have a stake in settling this, because if there’s uncertainty, no one is going to invest anywhere near the disputed area for fear of having bought a license that’s worthless,” Pham cautioned.
A change of “one or two degrees” with respect to where a line is drawn out to sea can have a “huge impact 100 miles offshore,” and neither side will be in a position to profit from resources found there, Pham told OilPrice.com.
The Côte d’Ivoire challenge is being closely monitored by U.S. companies. The West African region, located in an Atlantic basin, is close to the United States and attracts U.S. companies, said Sebastian Spio-Garbrah, a New York-based analyst covering Africa at the Eurasia Group, a research and consulting firm.
The outcome of the maritime boundary row will also have a bearing on a number of small and mid-sized companies on both sides, Spio-Garbrah said. Firms like Kosmos Energy, Exxon, Total and Tullow Oil are all “sort of concerned” about the conflict, he said.
For the most part, though, oil investments have been made in blocks that are "unambiguously in one country’s economic zone or another,” Pham noted. But Ghana will move into a tricky “crunch” mode when most blocks have been spoken for and the location of the rest are questionable, he said, adding “that’s going to delay the sales on both sides.”
At the moment, the Ghanaian government has reached this key stage as far as licensing is concerned, Pham said. Both countries are operating off the “same ambiguous maps that France and Great Britain left” following the Congress of Berlin in the 1800s, he said. The conference outlined the rules of Europe’s conquest of Africa.
Once the Ghana border commission stakes out a claim, Accra will have to compare it to its neighbour’s claim, which also “needs to be better articulated,” he argued. From there, he noted, the two can figure out the exact area in dispute and start to negotiate.
At this point, Pham added, it is “nearly impossible” to say which argument is legitimate.
But the dispute will “get very expensive,” he predicted, and how long it takes to resolve will depend on the "political will on both sides.”
Africa, more accustomed to fighting over the movement of people across borders, now has more at stake as oil blocks are at risk, he told OilPrice.com.
Indeed, there is a “scramble” for natural resources in this “latent belt of oil” stretching from Sierra Leona eastward to Nigeria, noted Eurasia Group’s Spio-Garbrah, adding this region may one day become a major producer.
The disagreement between Ghana and Côte d’Ivoire foreshadows the sort of conflicts likely to take place in West Africa, as more oil wealth is unearthed in “marginal areas” and in countries that petroleum firms have not yet explored, said Spio-Garbrah.
These disputes, however, may simply become legal conflicts, he said, rather than slide into all-out war.
This article was written by Fawzia Sheikh for Oilprice.com who focus on Fossil Fuels, Alternative Energy, Metals, <a href=" http://www.oilprice.com/articles-oil-prices.php" target="new">Oil Prices</a> and Geopolitics. To find out more visit their website at: http://www.oilprice.com
Acting Nigerian President Moves Quickly, Decisively to Get Country Back on Track
Acting Nigerian President Goodluck Jonathan has moved decisively and rapidly to unify the Government under him, dismissing — on March 17, 2010 — the entire Cabinet which had been appointed by the now-incapacitated Pres. Umaru Musa Yar’Adua. This followed his move, the week before, to appoint Lt.-Gen. Aliyu Mohammed Gusau as the new National Security Advisor, a post which oversees all the intelligence and security services as well as the Armed Forces.
Sources told GIS/Defense & Foreign Affairs late on March 18, 2010, said that about half the ministers would be invited back into the new Cabinet.
The new cabinet would be announced within two weeks, and this should end the divided loyalties of the outgoing cabinet members, many of whom owed allegiance to Yar’Adua, and even to former Pres. Olusegun Obasanjo.
GIS/Defense & Foreign Affairs was able to confirm late on March 18, 2010, that Pres. Yar’Adua is still, in fact, alive, and on frequent kidney dialysis. However, given the fact that he has been in deteriorating health from this condition for a number of years, and the fact that doctors were unsure whether he would have even survived the past few days, there is now no question of him returning to office.
Acting Pres. Jonathan, who has taken over the function of Head-of-State and Head-of-Government, does not have time on his side. There are strong pressures to pretend that Pres. Yar’Adua is still recovering, and merely waiting to be restored to health and to office. The body which would ratify a transition of full power to Vice-Pres. Jonathan — now Acting President — is the Senate which must act to confirm a successor if the National Executive Council pronounces the President no longer fit to hold office, but if the President is declared no longer capable of holding office, and the full authority of the Presidency is passed to Dr Jonathan by Senate vote, then the office of President of the Senate could — under existing political party practice (within the ruling People’s Democratic Party) — rotate to a senator from a different region.
If the Vice-President was to move from his additional duties as Acting President to President, then a new Vice-President would need to be chosen. Meanwhile, there is still considerable in-fighting among the various Abuja power groups, and particularly within the group around the extremely ambitious and avaricious Mrs Turai Yar’Adua. No Nigerian First Lady has been able to wield the power which Mrs Yar’Adua amassed rapidly because of the declining health of her husband, and many orders were sent out by her in his name.
Quite apart from the hold which the wife of Pres. Yar’Adua has on a coterie of her husband’s staff and supporters — which gave her considerable access to influence and money until the past week — there are many rice bowls attached to the status quo, such as the Presidency of the Senate and the Speakership of the House of Representatives. There has been little incentive, from the personal standpoint of many in the Abuja hierarchy, to change things, and thus the fiction is preserved that Yar’Adua is still President.
Now, however, in the face of decisive action by Acting Pres. Jonathan, the camp around Mrs Yar’Adua is fracturing and bickering. Moreover, the success which Acting Pres. Jonathan has had in galvanizing the Nigerian polity in a matter of a few weeks has made him popular.
There seems little doubt but that Mrs Yar’Adua, who is believed to have amassed perhaps hundreds of millions of dollars in the brief period of her husband’s Presidency, will face legal action by the government which succeeds her husband.
For the time being, however, it may well even suit Acting Pres. Jonathan to not fight this situation, as long as he is able to get Nigerian governance back on track. He has the credentials, and now the leverage, to work credibly on calming the Niger Delta crisis, given that he is from the region as the former Deputy Governor, and then Governor, of Bayelsa State, one of the key Delta energy-producing areas, and a state with considerable unrest. He is also demonstrating that he is far more capable than most analysts had thought, even though he has lacked a strong political power base of his own in the past.
National Security Advisor Lt.-Gen., Mohammed, too, is anxious to move the Delta crisis toward resolution, even though he is a Northern Muslim. His insights into the crisis, even since he resigned as National Security Advisor to then-Pres. Olusegun Obasanjo before the last elections, have been profound, and have been praised by key European leaders.
Together, Acting Pres. Jonathan and Gen. Mohammed need to build and present a credible and decisive program which would be unveiled when Dr Jonathan makes his first official visit to Washington, DC, on April 11-12, 2010, to meet with US Pres. Barack Obama.
How this visit is handled will do much to calm the fears of the major foreign investors in Nigeria’s energy sector, and to calm the energy sector itself, given Nigerian significance in global oil and gas markets.
From the US standpoint, Dr Jonathan will have to convey the messages that he has brought allegations of police corruption or mismanagement under control; that he has put in place more secure oversight of the intelligence community to track and apprehend possible terrorists (following the December 25, 2009, attempted attack on a US airliner by a Nigerian national); and that issues such as the Niger Delta crisis and the communal violence of the type which occurred in March 2010 in Jos can be now brought to an end or at least addressed by the Federal Government.
In this regard, Dr Jonathan’s main credibility in talking with the US Government is the restoration to office of Gen. Mohammed, who is recognized by US security officials for his skills, absolute honesty, and his ability to bridge gaps between ethnic and religious groups in Nigeria. Moreover, Gen. Mohammed, as the former Chief of Army Staff, has been the key to mobilizing Nigerian — and African — participation in peacekeeping and conflict resolution operations on the Continent. He was instrumental in creating former Pres. Ibrahim B. Babangida’s policy of “African Solutions to African Problems”, for example.
Gen. Mohammed, perhaps uniquely, is aware of the fact that it is not sufficient for the stifling politics of Abuja to be swept aside so that strides can be made in re-starting the economy and ensuring the appropriate security conditions to allow this. He is aware that perceptions of Nigeria abroad now must be attended and the Western views of Nigeria be updated from their antique and usually incorrect stereotypes.
He, too, is facing urgent time constraints in this endeavor. While there is great reluctance by many to change a comfortable, and profitable, status quo in the national leadership, the ruling People’s Democratic Party (PDP), to which Dr Jonathan belongs, is insistent that this two-term period of governance belongs, at the Presidential level, to a Northern Muslim. This follows the two-term rule of Southern Christian (and Yoruba) President Olusegun Obasanjo so a Northern Muslim would be chosen to lead the slate for the Presidential elections of 2011.
The months of political stalemate, however, have fallen away and the public and political mood has swung firmly behind Acting Pres. Jonathan. The PDP has also come out fully behind his new Administration.
The question is whether Dr Jonathan remains Acting President until those elections, or whether Pres. Yar’Adua is to be declared no longer President (which would then confirm Dr Jonathan, the Vice-President, as successor President). Another issue to be faced, then, is who would succeed Dr Jonathan, and would he remain on the next ticket as Vice-President.
In the short-term, however, Dr Jonathan has first to clean the stables, which he began doing with the appointment of a separate advisory council headed by former Defence Minister T. Danjuma; the appointment of Gen. Mohammed as NSA; and the dismissal of the old Cabinet.
The second task, once the stable clearing is under control, will be to actually address the problems of the Niger Delta, the Jos violence (and related issues of communal unrest), and corruption and security. Nigeria must rapidly have itself removed from the US terrorist watch list, which inhibits travel by Nigerians to the US.
Indeed, progress must be seen to be done in all these areas very rapidly if the PDP is to be able to expect to achieve what it has considered its birth-right: an unbeatable position going into the 2011 Presidential elections. Moreover, Nigeria has no time to waste for another reason: other African economies are now discovering large oil and gas reserves, and if they are seen to be more stable than Nigeria then they will benefit from foreign energy sector investment, and Nigeria’s position will suffer from investment decline.
And with 140-million mouths to feed, and keep happy, Nigeria needs not only more foreign investment, it needs economic growth over a wide spectrum of activities — particularly agriculture — and across the entire country, not just in the energy-rich Delta.
Meanwhile, on March 18, 2010, the Jonathan Administration recalled Nigeria’s Ambassador to Libya after Libyan leader Mu’ammar al-Qadhafi called for Nigeria to be split into two separate countries. The Nigerian President’s pointed and rapid response to Qadhafi was also well received in Nigeria, where most locals do not see the recent communal violence as being in any way indicative of a polarizing of the country into a Muslim-Christian divide.
This article was written by Gregory Copley of GIS/ISSA for Oilprice.com who focus on Fossil Fuels, Alternative Energy, Metals, Oil Prices and Geopolitics. To find out more visit their website at: http://www.oilprice.com
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