Socialist Worker

Multinationals’ scramble for Africa fuels new conflicts

by Simon Assaf
Issue No. 2113

The high price of oil is driving a new scramble for Africa that will bring more misery to the continent.

Giant oil multinationals face a problem. With the exception of Iraq, where a new oil law has reversed 32 years of nationalisation, global energy firms are shut out of most key reserves in the Middle East, Latin America and Russia.

Before the oil price boom of the 1970s the multinationals had access to the Middle East. But a wave of nationalisations driven by nationalist revolutions limited the scope of oil companies.

By the mid-1980s the price of oil collapsed, taking the heat out of exploration for new fields.

As long as Saudi Arabia and the other Gulf Arab states could pump out cheap, high quality oil, the giants satisfied themselves with upstream processing and selling gas at petrol stations.

Over the past few years this trend has been reversed. Limited capacity in the face of growing demand – especially from the Asian economies – has helped to spur a frantic search for new oil sources.

The focus of this search is Africa. The continent holds around 9.3 percent of known global reserves. The bulk of this oil is in large basins that make it easy to extract.

There are 12 major oil producers in Africa, but four states – Nigeria, Algeria, Libya and Angola – account for 85 percent of output.

Libya’s Sirte Basin is the largest site, holding more than 20 percent of the continent’s 300 billion barrels of oil. A deal between Libyan dictator Muammar Gaddafi and the US in 2003 – in which Libya was declassified as a “state sponsor of terror” – has drawn the Arab country into new production deals.

Boom

High oil prices have also aroused interest in less productive fields.

In 2006 Africa supplied 12 percent of the world’s oil. Today this has grown to 30 percent. This unprecedented boom has attracted European, North American, Russian and Chinese oil giants.

Russia’s Gazprom is in negotiations with Nigeria, while China has been snapping up exploration contracts in return for infrastructure projects and military deals worth billions of dollars.

In 2006 Angola, with its vast reserves of sweet crude, became the main supplier of oil to China.

This is fuelling rapid economic growth rate of the African country, but the petrodollars are flowing into the pockets of government officials.

One Angolan newspaper revealed that 12 of the top 20 richest men in Angola are government officials, while five are former officials. Meanwhile the United Nations estimates that 60 percent of the population are living in extreme poverty.

The story is the same for all the oil producing countries.

According to the Financial Times, “between 2002 and 2006, publicly listed oil companies tripled their spending in Africa, a rate that was 20 percent more than their spending across the world during the same period”.

This oil boom has turned Africa into a major arena of imperialist rivalry. The consequences for ordinary people of this will be severe.

As in the Middle East, the scramble for oil has drawn blood. Last year the US dished out £500 million to friendly governments in their battle against Islamist militants.

CIA

The CIA calls this the war “for the wide open spaces” of North Africa – the arc from the Horn of Africa to Morocco.

George Bush has created Africom, a military command centre for Africa that would operate in a similar way to Centcom – the US military command for Middle East and central Asia.

In 2006 Bush unveiled a new strategy that would shift oil imports away from US reliance on the Middle East and towards Nigeria. The US wants to get up to a quarter of its oil imports from the Niger Delta.

This area has now become a flashpoint between angry locals – organised in the Movement for the Emancipation of the Niger Delta (Mend) – and the central government and global oil interests spearheaded by the US.

Militants destroyed a key pipeline two weeks ago, cutting production by 40,000 barrels a day.

With its vast reserves flashing on the geopolitical radar, the US attempted to strong-arm Nigeria into allowing it to station troops in the country. Nigeria refused, so the US set up camp in nearby Liberia.

Africa’s new found oil wealth is either flowing out of the continent or greasing the repressive state machinery.

This week, BP announced record second quarter profits of £4.8 billion, Shell posted £3.9 billion for the same period, and Exxon Mobil £5.95 billion. Companies pumping oil from the Gulf of Guinea are making 20 percent profit on every barrel of oil.

This is while the high price at the pumps is pushing fuel beyond the reach of ordinary people.

The Financial Times notes, “The increase in the cost of oil in 13 non-producing countries, including stable economies such as South Africa, Senegal and Ghana has since 2004 been equivalent to 3 percent of their combined gross domestic product.”

“This is more than the debt relief and foreign aid received during the same period.”


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