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BBC Africa debate

BBC Africa

This week BBC Newsday will look at what the newest discoveries of oil, gas and coal will do for Africa’s development. Today we are in Mozambique visiting the site of a new coal mine project and power station. Do you think Africa’s next generation will benefit from the continent’s natural resources? Listen live at 0300-0830BST http://bbc.in/WSlive

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Africa, oil and the West: Show us the money | The Economist

BARELY a month goes by without a new oil discovery in Africa. Only five of the continent’s 55 countries are neither producing nor exploring for oil. Most places are also extracting lots of lucrative minerals. A resource bonanza is in train across the continent, generating big government revenues and real benefits for Africans. Road networks are expanding, public services are improving. But most of this happens behind a veil of secrecy. Money sloshes out of public scrutiny at the insistence of officials and politicians who prefer it that way.

Even if squeaky-clean Western multinationals are involved, transparency over payments for resources is minimal. Ordinary people can rarely find out how much goes into government kitties. That makes it easier for insiders to line their pockets. Monitoring groups say corruption has been rising. Ministerial car parks are filled with the fanciest limousines. A lot of money still reaches public budgets, but without oversight it is often badly spent. Many new roads go nowhere or are barely used; shiny new hospitals are often understaffed.

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The resulting frustration can trigger violence. In Angola, Africa’s second-biggest oil producer, activists have been demanding a fairer distribution of revenues; the government has responded with a bloody crackdown (see article). South Africa has just seen the worst disturbances since the apartheid era, with 34 platinum miners shot dead during a wildcat strike. Resources can also fuel international conflicts. The two Sudans went to the brink of war earlier this year over oil.

African governments have become more democratic and better at delivering services. Yet the combination of rising mineral wealth and continuing poverty is explosive. After decades of misrule, even the most competent officials are often suspected of pinching funds. More transparency is what is needed to ensure that resource wealth is used better and distributed more fairly. Much of Angola’s income is managed by a national oil company that is shielded from oversight by commercial secrecy. The oil revenues of Equatorial Guinea, where three-quarters of the population live below the poverty line, are a state secret. This is both wrong and dangerous.

The challenge for Western firms and governments is how to help African citizens wheedle data out of their governments so as to hold them more to account. A decade ago Britain’s Tony Blair had a go, promoting the Extractive Industries Transparency Initiative. As many as three dozen countries, in Africa and elsewhere, agreed to publish details of payments from oil and mining companies. But the scheme was voluntary; the worst offenders either refused to join or dragged their feet.

Follow America’s lead

America’s Securities and Exchange Commission has now come up with a set of rules. The 1,100 resource companies listed on American stock exchanges, which make up half the global industry by value, will be required to publish all payments to foreign governments above $100,000. The European Union is talking of introducing similar requirements. It should do so.

Some Western investors say such rules involve costly red tape. Without some hidden payments to officials, business will be lost, they add. Divulging the details of every deal will give secrets away to competitors. Moreover, non-Western companies, especially Chinese ones, will gain an advantage because they will escape such scrutiny.

The bureaucratic cost will not be large, since companies will merely have to make public figures that are currently held privately. And some Chinese firms will find themselves subject to similar requirements, because many are, or plan to be, listed in America. Moreover, if the West changes its behaviour, China may too. After years of claiming that, unlike Western imperialists, it supports Africa’s people, not its dictators, it may feel it has to back the publication of data about payments.

But there is no guarantee that China will see the light; and, in the meantime, Western companies are likely to find themselves at a disadvantage. So be it. Western countries already spend money and political capital on trying to promote democracy, encourage development and discourage corruption in Africa. Helping Africa use its mineral wealth to achieve those ends is worth paying a price for.

via Africa, oil and the West: Show us the money | The Economist.

via Africa, oil and the West: Show us the money | The Economist.

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Confirmada existência de petróleo na zona conjunta São Tomé/Nigéria

Confirmada existência de petróleo na zona conjunta São Tomé/Nigéria Bloco 01 é considerado “bastante promissor” pelas autoridades dos dois países africanos. ÁLVARO VICTÓRIA,�2011-12-01 10:27:00 Walter Fernandes “Existe petróleo em quantidade comercial num bloco da zona marítima conjunta São Tomé e … Continue reading

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Shell accused of fuelling violence in Nigeria by paying rival militant gangs | World news | The Guardian

Shell accused of fuelling violence in Nigeria by paying rival militant gangs | World news | The Guardian.  

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Pambazuka – China and Nigeria’s oil

Pambazuka – China and Nigeria’s oil. China and Nigeria’s oil Khadija Sharife 2011-01-26, Issue 514 http://pambazuka.org/en/category/features/70400 Printer friendly version cc M B TA deal valued at nearly US$30 billion that will increase Nigeria’s refining capacity is on the cards. But is … Continue reading

Commodities: Are high oil prices bad for the global economy? – FT.com

Conventional wisdom, firmly anchored in the experience of the oil shocks of the 1970s, has it that high oil prices are not good for the global economy. And a look at the global economy now, with consumer confidence weakening sharply in the face of high gasoline prices, confirms it.

But two economists at the International Monetary Fund have published a research paper challenging the traditional view, arguing that high oil prices are not a big economic drag. The new analysis, “Oil Shocks in a Global Perspective: Are they Really that Bad?”, is particularly relevant as global economic growth starts to falter, with some policymakers blaming the impact of high oil prices for the slowdown.

Oil prices have so far this year averaged more than $100 a barrel. If Brent crude, the global benchmark, remains around its current level of $110 a barrel for the rest of the year, 2011 would set the highest ever annual average price, above the $98 a barrel in 2008, when Brent prices rose to an all-time high of nearly $150 a barrel.

Tobias N. Rasmussen and Agustín Roitman, the two economists at the IMF in Washington, argue in their analysis that although oil prices have “a negative effect on oil-importing countries”, the impact is not as large as previously thought. They say a 25 per cent increase in oil prices “will cause a loss of real GDP in oil-importing countries of less than 0.5 per cent, spread over two to three years”.

“One likely explanation for this relatively modest impact is that part of the greater revenue accruing to oil exporters will be recycled in the form of imports or other international flows, thus contributing to keep-up demand in oil-importing economies.”

Other economists believe the analysis could be extended to other commodities, including copper and iron ore. They believe high prices are a drag for consumers but are boosting economic growth in countries from Chile (in the case of copper) to Australia (for iron ore), helping to sustain global economic growth.

The new analysis is at odds with the view of other economists, notably James Hamilton, who, in his seminal “Oil and the Macroeconomy Since World War II”, published in 1983, linked episodes of high oil prices with economic recessions in the US. The new research is, however, more in line with some other papers, particularly the research by Olivier Blanchard and Jordi Gali, “The Macroeconomic Effects of Oil Price Shocks: Why are the 2000s so Different to the 1970s?”.

It is also in line with the thinking in Saudi Arabia, the world’s largest crude oil exporter, which has argued over the last few years that economists have been exaggerating the impact of oil prices. Ali Naimi, Saudi Arabia’s oil minister and the de facto leader of the Opec oil producers’ cartel, said earlier this year that the global economy could weather oil prices at nearly $100. And natural resources ministers in other commodity-producing countries have also argued that high prices have boosted their economies, thus compensating at the global scale the impact of higher costs in economic growth in consuming nations.

The different impact of higher oil – and some other commodities prices – today and in the past is due largely to the different nature of the most recent price shock.

While in the mid-1970s, early 1980s and 1990-91 high oil prices were the result of large supply disruptions, including the Arab oil embargo, the Iranian revolution and the Gulf war, the rally in oil prices of the last decade is mostly due to strong economic growth propelling oil demand. High oil prices are, therefore, the mirror of high economic growth. The same applies for other commodities.

Nonetheless, some analysts note that supply-side factors are also playing a role, particularly in agricultural commodities, due to export restrictions, mandatory minimum prices introduced by governments and lower crops resulting from bad weather. Oil prices have also been lifted by a supply disruption in Libya this year. And in metals and minerals, floods in Australia and strikes in Latin America have curtailed supply, helping to lift prices in spite of slow demand growth.

Mr Rasmussen and Mr Roitman acknowledge the difference between the current demand-driven cycle and previous episodes, warning that “the finding that the negative impact of higher oil prices has generally been quite small does not mean that the effect can be ignored”.

They add: “Our results do not rule out more adverse effects from a future shock that is driven largely by lower oil supply than the more demand-driven increases in oil prices that have been the norm in the last two decades.”

Copyright The Financial Times Limited 2011. You may share using our article tools.

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via Commodities: Are high oil prices bad for the global economy? – FT.com.

Oil is a Far Cry From Being Continent’s Curse

Africa:

Dianna Games

11 October 2010


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Johannesburg — THERE is no African oil curse, maintains global oil and gas expert Dr Duncan Clarke, only an inherited and continuing curse of politics.

Responding to the frequently cited “curse” theory that is linked to Africa’s natural resources, Clarke says: “The oil industry already contributes in huge measure to continent-wide economic growth and investment partnerships with the state and its national oil companies, and acts as a pillar of corporate governance in Africa. The misuse of oil revenues, where it exists, is a government matter, not a corporate one.

“Corporate ‘nannies’ and the Mother Theresa complex will not fix the malfeasance of some of Africa’s politicians: only Africans can do that,” he says in his typically outspoken and combative style.

Clarke, chairman of Global Pacific & Partners, has spent more than 40 years travelling across Africa and has, so far, visited 45 of the continent’s 53 states to keep tabs on the oil and gas game that is his company’s core business.

With resources now in the global limelight, his knowledge and observations of Africa’s peculiar problems and challenges make him a key commentator on the complex issues of this industry.

Africa’s oil industry dates back to the mid-1950s, when oil was discovered in the Niger Delta and the Maghreb. In the late 1980s Africa had about 60- billion barrels of proven oil reserves. Today, Africa-wide oil reserves stand at about 120- billion barrels, Clarke says.

Global Pacific & Partners covers a wide range of information disciplines including global oil and gas research, advisory services, strategy briefings and contributions to oil and gas media. Clarke is based in its Johannesburg office and the company also has operating offices in The Hague and London and a representative in Rio de Janeiro for Latin American business.

Clarke is also an adviser to African governments and oil companies, and the company runs the continent’s largest oil and gas events, such as Africa Oil Week, now in its 17th year, which comes up in November.

The third edition of his book, Africa, Crude Continent: The Struggle for Africa’s Oil Prize, was released in SA last week and television channel CNBC-Africa is airing a documentary based on the book, examining developments in the African oil industry.

The book, which looks at a century of oil in Africa and related issues, was first published in 2008 but the epilogue has been updated to tackle what he says are “public and media myths about the continent and its complex oil game”. Among the issues tackled is the commonly held perception of Africa’s riches being its “curse”. Clarke uses the example of Equatorial Guinea, which was a venal, antidemocratic state before oil was found. “The politicians have introduced a facade of democratic governance and when this is found wanting, oil is targeted as the cause.”

Africa, Crude Continent also raises new questions about some foreign state oil companies, notably players from China, given the emergence of what he calls the “Chinafrique” model.

This is not Clarke’s first tome on the oil and gas world. In 2007 he wrote his first book, The Battle for Barrels – a critique of the theory that the world is running out of oil. “The production peak is some decades away at least.”

He says rising prices, new technologies, improved exploration and access to restricted world oil zones, as well as changes in government policy and corporate strategy, are pointers to the unlikelihood of the world running out of oil anytime soon.

Clarke has spent most of his professional life focused on the world’s oil and gas business and says it is arguably one of the hardest things to understand and measure, let alone predict with precision – despite the fact that many try to do so.

“The oil sector’s history teaches many lessons, the failure of forecasting being one of them. It also instructs us about human ingenuity and adaptability. Like the weather, the oil industry could take many unexpected turns in future.”

His second book was Empires of Oil: Corporate Oil in Barbarian Worlds.

It examined the rise of resource nationalism and the issues confronting companies about the future.

Clarke, who comes from Zimbabwe, began his career teaching economics and advising institutions and business clients about Africa. While working in Geneva in 1978, he was doing extensive work on the continent for private companies, governments and multilateral agencies and was asked to work on the oil industry, which, in those Cold War days, was of particular interest.

He established Global Pacific & Partners in 1988 to build on the global experience acquired through his consulting and economic research work with various clients.

“We’re constantly monitoring the industry and selective specifics. I’m in the process of something that will come to market probably late next year or in 2012, about the African continent, a new book that will be wider than oil and gas.

“It will be about interpreting Africa’s economic past, present and future, and looking at it through our models which we’ve worked with for over 40 years.

“There’s still great ambiguity about actually understanding how Africa came to be what it is today, and indeed much contestation.

“This has huge implications. Only by understanding what’s actually taken place can one hope to shape models to best develop the African world.

“This is something that I think is lacking, and I’ve been working on it for some years,” he says.

Clarke maintains the oil and gas landscape is changing fast. More companies enter the continent each year, and investment commitments and numbers of projects executed are rising. Exploration is also increasing, he says, and, in turn, new oil discoveries.

These include significant oil finds in Uganda, Ghana and Sierra Leone and in other states around the continent. There are also new discoveries in older oil and gas markets such as Nigeria and Angola.

“I think competition will intensify over time as more players compete and the foreign state oil companies add to the overall portfolio.”

Clarke says increasingly, African players are becoming more prominent in the sector and as a result a greater foreign- local partnership matrix is evolving. “African private oil companies now number over 100 and come from 20 countries — a far cry from a decade ago.”

The future growth area is gas. He says with 500-trillion cubic feet of gas now proven in Africa, the continent’s total hydrocarbon reserves stand at about 250-billion barrels of oil equivalent.

“The future for gas is very strong, with more reserve growth, discoveries and markets being developed, as well as exports to Europe and within Africa,” Clarke says.

However, Africa will remain a net exporter of both oil and gas for the next couple of decades, he predicts, as the continent is moving slowly in terms of beneficiation.

And what about the future of the planet, given the much touted theory that carbons are the cause of global warming?

“The claimed global carbon crisis, with oil as derivative culprit, is a greatly oversold type of anti-oil politics, without sufficient anthropogenic causality. Africa would be wise to avoid buying into its proponents’ policy mandates, economic distortions, and the huge costs it would impose with related implications for the continent’s 1-billion inhabitants.”

http://allafrica.com/stories/201010110934.html