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The new face of Nigeria’s oil industry

China has emerged as a major investor in Africa’s oil-rich Niger Delta. Godwin Nnanna hopes that the west's past mistakes will not be repeated.
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For all those desirous to see greater flow of foreign direct investments into Africa, the year 2006 opened on a very optimistic note. China National Offshore Oil Corporation (CNOOC) announced an investment of US$2.3 billion in Nigeria, the continent’s most populous nation. The deal, China’s biggest investment foray into Africa, gives the corporation a 45% stake in an off-shore oil field. China now has partial control over a Nigerian oil field that has the capacity to produce as much as 180,000 barrels per day.

China’s investment in that African country is just one out of many of such moves into the continent in last few years, one driven – among other things – by the increasing conflicts and uncertainties in Iraq and other parts of the middle east. Angola, another of Africa’s major oil producers, has now overtaken Saudi Arabia as China’s biggest single provider of oil. 

Zambia, South Africa, Gabon, Cameroun and the Democratic Republic of Congo are some other African countries that have witnessed surging Chinese economic interest. From South Africa, China seeks iron ore and platinum. From DR Congoand Zambia, it seeks copper and cobalt; and from Cameroun and Congo Brazzaville, it seeks timber. All of these are raw materials that China needs to drive its ever growing industrial sector. And the results are already beginning to show. From a US$3 billion mark in 1995, trade between China and Africa last year stood at US$32 billion. Projections are that the figures will hit US$50 billion by the end of this year and will triple by 2015, the UN’s target year to halve poverty worldwide. 

The “new scramble for Africa”, as some have christened China’s romance with the continent, has been more dramatic in some countries than others. Despite its lingering political crisis, which has attracted international attention and calls for sanctions, Sudan’s exports to China have soared from 10% in 1995 to 70% of its total exports as of 2005. Beijing also said earlier this year that it will plough US$35 million into the construction of west Africa’s biggest theatre in Senegal, its first major foray into the continent’s entertainment industry.

But China’s growing interest in Africa, which has attracted criticisms from other global players such as the US, has been most profound in the continent’s oil-producing states. China has promised to commit US$4 billion to building refineries and power plants in Nigeria. Similar largesse is in the offing for Angola, where China has also promised to raise another US$4 billion to help the reconstruction of roads and other infrastructure.

Does the “new scramble” share any resemblance with that of the 17th and 18th century, which saw the massive shipment of African youths to Europe and America? I don’t think so. Western imperialism had no “business” colouration at all. It was simply a rape predicated on ignorance for which some Africans still seek reparation. But today’s oil deals are business: legitimate business consciously entered into by the parties involved, and from which all parties can benefit. For Nigeria, the principal challenge is how to ensure that a greater majority of its 130 million population benefits from the huge inflow of petrodollars.

Experience from the past has not been particularly heart-warming. Half a century of oil exploration in the Niger Delta has left the people of the region poorer than they were before the discovery of oil in their neighborhood. Even more worrisome is the ecological damage that the reckless acts of oil spillage and gas flaring have caused in the region. 

Goodluck Diigbo, an activist from Ogoni, an oil-producing community in the Niger Delta, believes that oil has done his community more harm than good. “All you see in Ogoni is agony,” he told me in New York last month. He has been living in New York since 1995, when the military regime of Sani Abacha made attempts on his life. Diigbo was a close ally of Ken Saro Wiwa, leader of the Movement for the Survival of Ogoni People (MOSOP), who was killed by Abacha’s government 11 years ago. 

A high level of resentment exists in the Niger Delta against all individuals and institutions that people perceive as instrumental to the ecological disaster they currently face. Another Niger Deltan, whom I spoke with during a visit to the region in March, was as rhetorical as Diigbo. “The presence of Shell in Niger Delta has made the place nothing but hell for its people,” he said. I felt a little bit of the hell when I toured some gas flaring sites in the region.

Nigeria flares 75% of its daily gas production

photo by Karlsruhe

Nigeria currently flares 75% of its daily gas production. Experts say that in Nigeria, an average of around 1000 standard cubic feet of gas is produced for every barrel of oil. With a production rate of about 2.2 million barrels per day, that equals 2.2 billion cubic feet of gas wasted daily. By all assessments, this is a monumental waste and a significant contribution to global greenhouse-gas emissions.   According to a World Bank 2002 report, “the most striking example of environmental neglect [in Africa] has been in the oil sector, where natural gas flaring has contributed more emissions of greenhouse gases than all other sources in sub-Saharan Africa combined.

Gas flares release a cocktail of toxic substances into the atmosphere, including the greenhouse gases carbon dioxide (CO2) and methane (CH4). Scientists say methane has higher global-warming potential than carbon dioxide. Assessments by the Intergovernmental Panel on Climate Change (IPCC) indicate that after 20 years, 1 kg of methane is 62 times more potent than 1kg of carbon dioxide.

What do these facts mean for the latest bride of Nigeria’s oil sector? For one, it calls to attention the need to be an environmentally-friendly operator right from the very beginning. Shell began operations in the Niger Delta at a time when the country was still under colonial rule. Many people in the region believe that the company has yet to shed that colonial attitude, decades after Nigeria became an independent state. 

CNOOC cannot afford to carry out its operation with the same arrogance that Shell has exhibited in the region over the years. To do so will be very counter-productive. The desire of every investor is gain, not pain. And real gain is that which benefits all the stakeholders in the deal. No matter who signs the contract papers authorising its operations in Nigeria, CNOOC must see its immediate host community as stakeholders in its operations.

Last year’s series of hurricanes in the United States and Latin America, which some scientists blame on global warming, show that the consequences of oil companies’ reckless environmental activities are no longer just a problem for the communities directly impacted by acts of environment recklessness. There are many consequences that are faced by all. Evidence linking global warming and hurricane intensity might still appear fuzzy, but it is a potential danger worth taking very seriously.

Neglecting these responsibilities would ultimately be self-defeating. Prosperity built on the despoilment of the natural environment is no prosperity at all. It is only a reprieve from future disaster. The issue is not environment versus development or ecology versus economy; the two can and should be integrated. This is a challenge that CNOOC must show a strong commitment to meeting.

Godwin Nnanna is Assistant Editor at Business Day Nigeria and winner of the Kalaam Award for Consumer Journalism 2005.

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Default avatar
匿名 | Anonymous



Natural gas flaring

Can anyone explain to me why natural gas is flared rather than being used and sold as an energy resource?

Default avatar
匿名 | Anonymous



1. 中国在有意识的和发达国家竞争有限的资源。

2. 中国有准备的用其影响力来达到目的。

3. 中国正向西方竞争者没有进驻或者比较薄弱的领域进军。

4. 中国的注意力集中在其本国的进步,既非生态和道德上的进步,亦非非洲国家的进步。

China towards imperialist?

Is China behaving as an imperialist? Its quest for resources to fuel its industries, and thus its climb out of poverty and to world-power status, has some of the hallmarks of a scramble for Africa.

1. It is consciously in competition with developed countries for finite resources.

2. It is prepared to use its influence to achieve its ends.

3. It is moving into areas where other western competitors are not established, or not strongly established.

4. It's concerns are focused on national advancement rather than ecological, moral advancement or the advancement of African nations.

Default avatar
匿名 | Anonymous

回复: 走向帝国主义的中国?






同西方国家相比,中国确实有开发非洲资源的优势。这是 得益于中国和非洲国家间的兄弟般的紧密联系。在这方面,西方国家是可望而不可及的。冬莹

Re:China towards imperialist?

it is a misleading opinion to say quest for resouces for industrial development is imperalist practices.

Imperialists are those who seize resources in an exploitative way without offering deserved reward (pay) to workers.

I do not see China behaves this way in Africa. International cooperation in resource development under equal conditions should be encouraged.

Rational investment by China in Africa will do the continent good instead of damaging it.

But the question is how are the Chinese investors in Africa aware of their corporate responsibilities.

And How do they achieve a good balance between businesses and responsibilities in helping sustainable development in Africa.

China do have advantages to explore the resources in Africa, due to the brotherly affinity between China and African nations, which the West is covetous of, but has less to do to change it.


Default avatar
匿名 | Anonymous



Re: Natural gas flaring

Good question - I'm no expert, but I think the answer is mostly economic. There are initiatives in place to reduce gas flaring and to promote capture of the gas, but overall it is cheaper to simply burn it off - resulting in a terrible price to the climate and to the health of local communities. Gas flaring is widely condemned, but seems to still be widespread. Economic measures to make capture affordable should be promoted. Any ideas?

Default avatar
匿名 | Anonymous




An answered prayer

China's investments in Africa doesn't seem portend any problem for the continent. Rather it is an answered prayer for most of the countries that has long prayed for foreign investment. Those who criticise it are simply selfish and self-centred

Default avatar
匿名 | Anonymous




Re: An answered prayer

This is a 21st century colonial move that Africa must be careful about. Experience has shown that often times oppressors come very subtle. Mike, I wonder how much of an answered prayer the new scramble is.

Default avatar
匿名 | Anonymous









Natural gas flaring

Oil fields typically produce both oil _and_ gas, in some quantity. It is usually not possible to extract the oil without also liberating the gas.

Oil well engineering is quite an art - once you have a filed producing, how do you get the right balance between the rate of extraction and the total amount that you can extract from it. Some oil fileds are "trashed" by the wrong engineering decisions being made.

These decisions can involved re-injecting the gas into the well, thus increasing pressure and potentially increasing the total recoverable reserves. But re-injection equipment is expensive.

In some fields, gas production is sufficiently great as to make it viable to ship as natural gas. The North Sea, for example, has many joint production fields.

However, this requires not only separation, but also pipelines to take the natural gas to the end-user.

Natural gas is expensive to store and transport in liquified form, and the world demand for this form of energy is not huge - it is hundreds of times more expensive than natural gas shipped through pipelines. It is only really used as a "last resort" source of gas for the coldest winter days.


Default avatar
匿名 | Anonymous


在尼日利亚油井气燃烧是非法的,并且已经执行了一些年头。我觉得这个附加的信息应该考虑在内。油井气继续被燃烧就是因为那些在尼日利亚的公司可以在尼日利亚和他们自己的国家通过这样的方式侥幸操作。这也是因为这些公司不会使用已经存在的管道来传输气和石油的混合物,而是直接从纯气田里使用气来填充管道。最后燃烧油井气,这也是最经济廉价的方式。腐败也允许这样做,而且国际法律体系也忽视这个问题。这些公司应该承担相应的社会责任,但他们却忽视这些责任。凯文 •琼斯 (气候变化行动)

Why is gas flared...

I think that an additional piece of information should be considered.

Gas flaring is illegal in Nigeria and has been for a couple of years.

So the reason that gas continues to be flared is that the companies can get away with it in Nigeria and in there home countiries.

It is also because they fail to use the existing pipelines for gas co-produced with oil and instead use gas from pure gas fields to fill these pipes.

In the end gas is flared because doing so is economically lowest cost, corruption allows it, international legal systems ignore the problem, companies have corporate socail responsibility contracts and ignore them.

Calvin Jones
(Climate Change Action)

Default avatar
匿名 | Anonymous




I am happy to hear all this about Africa. All this being promise to make country good will it come true or will it be a story as we have being hearing? sula

Default avatar
匿名 | Anonymous


难怪我们一辈子都是愚蠢的。好吧,当我到天堂时,我会私底下问上帝为什么他把我们创造成这样。天啊,何时尼日利亚政府才会改变呢?仍然像小孩一样作出如此愚蠢的举动。你的意思是,所谓的中国公司在赚回自己的钱之前将一直对公司的80%负责?喂!请问有谁能告诉我他们什么时候才能赚回来呢?让我猜猜:2099年、2100年、2150年、2200年、2250年… … 到那时我们都会进地狱了,愚蠢的人。


no wonder we remain fools for life. well, when i get to heaven i'll personally ask God why he made us this way. for God's sake, when will the nigerian government change?, still acting stupidly like small kids. you mean the so called chinese company would remain in charge of the company with 80% untill they regain their money back? hay. can someone tell me when they intend to regain their money back please? let me guess.. 2099, 2100, 2150, 2200, 2250,....... by then we would all be in hell fools.