The eagle, the dragon and African
oil By Chietigj Bajpaee
With oil prices hitting record levels of
US$70 per barrel in recent weeks, major energy
consuming countries are engaging in an
increasingly heated competition for energy
resources on the world stage. Nowhere is this more
evident than between the United States and China,
the world's first and second largest
energy-consuming countries respectively. In the
contest for energy resources, numerous "stages" of
competition are emerging, including the Middle
East, Central Asia, Latin America, and the East
and South China Seas. Africa is fast emerging as
one of the most volatile of these stages, given
its vast reserves of energy
resources and
concentration of internal security crises.
Africa owns about 8% of the world's known
oil reserves, with Nigeria, Libya and Equatorial
Guinea as the region's leading oil producers. 70%
of Africa's oil production is concentrated in West
Africa's Gulf of Guinea, which stretches from the
Ivory Coast to Angola. The low sulphur content of
West African crude makes it of further strategic
importance.
However, the region is also
vulnerable to instabilities ranging from piracy to
terrorism, interstate and tribal conflict, AIDS
and political uncertainties. Given the weak
governments and significant Muslim populations of
the region, the African continent may also emerge
as a hub for al-Qaeda-linked terrorist groups.
Finally, oil-rich countries in Africa have
been unable to escape the "curse of oil," which
has fueled corruption, conflict, and environmental
degradation across the region. For instance, while
Nigeria has earned $300 billion in oil revenues
over the last 25 years, per capita income remains
below $1 per day. Nigeria is also subject to
ethnic violence, oil strikes and sporadic attacks
on oil infrastructure by the Niger Delta People's
Volunteer Force. Adding Sino-US energy competition
to this volatile mix could further destabilize the
region.
US-African energy
relations The US currently derives 15% of
its oil supplies from Africa as compared to 22%
from the Persian Gulf. Within the next ten years,
the US could be depending on Africa for a quarter
of its oil supplies according to the US National
Intelligence Council. Nigeria alone is the fifth
biggest source of US oil imports with the United
States accounting for half of Nigeria's oil
exports. Washington has also re-established its
historically important diplomatic and energy
relations with Libya, following the removal of
economic sanctions in September 2003 after Libya
abandoned its nuclear weapons program.
In
addition to securing energy supplies in the
region, the US has a burgeoning economic
relationship with the region and has been
increasingly concerned with Africa's security
situation, political freedoms and human rights
record. US-Africa trade stood at $44.5 billion in
2004, with oil-rich Nigeria being the
second-largest destination of US investment on the
continent after South Africa. Since the September
11 attacks, the US has also stepped up security
cooperation with African states. The US Coast
Guard has increased patrols of the region as well
as engaged in training, intelligence sharing and
public relations exercises with numerous states
including Sao Tome and Principe, Cape Verde,
Ghana, Benin, and Equatorial Guinea.
Meanwhile, the US State Department's
Trans-Sahara Counter Terrorist Initiative has
trained troops in Niger, Mauritania, Mali and
Chad. Since the September 11 incident, the US has
also maintained a military base in Djibouti, from
which it coordinates anti-terrorism operations on
the continent. Nevertheless, with military assets
tied up in Afghanistan, Iraq and the Persian Gulf,
the US has not been able to devote the necessary
attention to Africa, which in turn has allowed
other countries such as China to make further
inroads.
Sino-African energy
relations China currently derives a quarter
of its oil imports from Africa, with oil interests
in Algeria, Angola, Chad and Sudan and increasing
stakes in Equatorial Guinea, Gabon, and Nigeria.
China's energy interests in Chad are of particular
interest, given that Chad still maintains
diplomatic relations with Taiwan.
China's
growing energy partnership with Sudan represents
one of a number of areas where Sino-US energy
interests diverge in Africa. China National
Petroleum Corporation (CNPC) established oil
exploration rights in Sudan in 1995. Two years
later, when Washington cut ties with Sudan, China
filled the vacuum, making Sudan China's largest
overseas production base. More than half of
Sudan's oil exports go to China, accounting for 5%
of China's total oil imports. CNPC owns a 40%
stake in the Greater Nile Petroleum Operating
Company and pumps over 300,000 barrels per day in
Sudan. Another Chinese firm, Sinopec, is
constructing a 1500 kilometer pipeline to Port
Sudan on the Red Sea, where China's Petroleum
Engineering Construction Group is building a
tanker terminal.
As in the case of US
relations with Africa, China's relations with
Africa are multidimensional. However, in recent
years China's political, economic and military
relations with Africa have been subordinated to
its quest to secure energy resources in the
African continent as energy resources are being
secured in exchange for aid, arms or
infrastructure investment. China's goodwill with
African states can be traced back to its support
for anti-colonial struggles in the 1960s. However,
China's relations with Africa have shifted from
holding a strong ideological bias in support of
communist regimes and Marxist insurgencies, to
being led by market and resource considerations.
Today the only ideological component to
Sino-African relations is the "One China"
principle, although there are even exceptions to
this, as seen in the case of growing Chinese
energy interests in Chad, which still has
diplomatic relations with Taiwan. At present, only
seven African states hold diplomatic relations
with Taiwan. African states are also drawn to
China by its non-ideological, non-interventionist
approach, which contrasts with the Western
approach that places an emphasis on democracy,
governance, human rights and humanitarian
intervention.
China has also appealed to
Africa through numerous goodwill gestures. For
example, the Chinese foreign minister has
maintained a policy of making his first official
overseas trip to the African continent every year.
For decades, China has also supported numerous
infrastructure projects across Africa, as well as
sending doctors and nurses to the region,
establishing scholarships for African students to
study in Chinese universities, providing training
to African businessmen and trade officials, and
supplying funds to encourage Chinese businesses to
invest in Africa.
China also maintains
dialogue with Africa through several bilateral and
multilateral forums such as the Asia-Africa Summit
and the China-Africa Business Council, which was
jointly established with the United Nations
Development Program in November 2004 to support
China's private sector investment in Cameroon,
Ghana, Mozambique, Nigeria, South Africa and
Tanzania. In 2000, China also initiated the
China-Africa Cooperation Forum, comprising 46 of
the 53 African countries. Among its
accomplishments is canceling $1.2 billion in debt
for 31 African countries. China is also engaged in
negotiations to create a free trade area with the
Southern African Customs Union, as well as
coordinating with African states in international
organizations such as the World Trade Organization
and the United Nations.
On the economic
front, Sino-African trade increased by 50% between
2002 and 2003 to $18.5 billion, a total expected
to grow to $30 billion by 2006. At present, 700
Chinese companies operate in 49 African countries
and eight African countries have been granted the
status of "officially approved travel
destinations" by China. China has also expanded
its military presence in the region, as seen by
its deployment of peacekeepers to Liberia in
December 2003, which occurred two months after
Liberia switched its diplomatic recognition from
Taiwan to China. China has also sent a
peacekeeping contingent to the Democratic Republic
of Congo, as well as providing uniforms to
Mozambique's army, helicopters to Mali and Angola,
and weapons to Namibia and Sierra Leone.
Many of China's diplomatic initiatives in
Africa are in direct conflict with US policy
toward the region. For example, Beijing supplied
$1 billion in arms to both Ethiopia and Eritrea
during their war from 1998 to 2000. Zimbabwe's
President Robert Mugabe, whose regime has been
isolated from the West due to its forced eviction
of slum dwellers, confiscation of white-owned
farms, and use of violence and intimidation
against political opposition, has also turned to
the Chinese regime for aid. Chinese investment in
Zimbabwe amounted to $600 million in 2004. China
has upgraded Zimbabwe's transport infrastructure,
provided roofing material for Mugabe's $9 million
palace, and provided the regime with Chinese-made
Karakoroum military trainer jets, MA60 passenger
planes, and radio-jamming equipment for a military
base outside Harare, which has been used to block
transmissions by opposition parties.
China
is also one of Sudan's leading arms suppliers.
Sudan is the largest recipient of Chinese overseas
investment, and up to 10,000 Chinese nationals
work in the country. The Sudanese government,
which has recently concluded a peace agreement
with the Sudan People's Liberation Movement/Army
(SPLM/A) in the south, is still engaged in a
conflict in the Darfur region of western Sudan
using proxy militias such as the Janjaweed. In
2004, the UN Security Council was forced to water
down a resolution condemning atrocities in the
Darfur region to avoid a Chinese veto. China
abstained in the vote over the final weaker
resolution. With Sudan and Iran together supplying
China with 20% of its oil imports, US attempts to
contain these regimes bring it into direct
confrontation with China's energy security
policies.
The United States and China are
not the only states vying for energy resources in
Africa. Recently, Korea National Oil Corporation
obtained 65% oil and gas production rights in two
Nigerian offshore blocks, while India's Oil and
Natural Gas Corporation Videsh obtained a 25%
stake. South Korea and India are the world's
fourth and sixth largest energy consumers
respectively. India and China both hold stakes in
the Greater Nile Oil Project in Sudan, with India
having invested $700 million in Sudan's oil
sector. China and India have also been engaged in
direct competition for African energy resources,
as seen in October 2004 when China outbid India to
buy an interest in an offshore block in Angola.
Conclusion Sino-US relations are
going through a cold spell as a result of disputes
over US quotas on Chinese-made textiles and
China's military expenditures, exchange rate
policy, intellectual property rights
infringements, human rights record, and relations
with dictatorial "rogue" or anti-US regimes
including Iran, Myanmar, Nepal, Uzbekistan, and
Venezuela. The recent postponement of the
much-anticipated meeting between Chinese President
Hu Jintao and US President George W Bush in
Washington as a result of the relief efforts for
Hurricane Katrina is seen as likely to add insult
to injury among some in Beijing.
While
there have been gestures of rapprochement in
Sino-US relations, such as the recently initiated
Sino-US Strategic Dialogue and the establishment
of an energy partnership called the Asia Pacific
Partnership on Clean Development, established by
the two states along with India, Australia, Japan
and South Korea, the competition to secure energy
resources on the world stage could add further
tension to their already shaky relationship.
The recent failed bid by Chinese energy
company China National Offshore Oil Corporation to
acquire US energy company Unocal is evidence of
this. Facing a plethora of internal crises ranging
from poverty to poor governance and civil war,
Africa is likely to emerge as a volatile stage of
Sino-US energy competition. African states have
been drawn to China by its non-interventionist,
non-ideological approach in conducting relations,
although China's attempts to secure energy
resources in conflict-ridden states by offering
aid or arms-for-oil could heighten instability in
the region.
Chietigj Bajpaee is
a researcher for Civic Exchange, a Hong Kong-based
public-policy think-tank. He has been a researcher
for the London-based International Institute for
Strategic Studies and a risk analyst for a New
York-based risk management company. Areas of
interest include energy security and political,
economic and security developments in the Asia
Pacific region. The views expressed here are his
own. He can be contacted at
c.bajpaee-alumni@lse.ac.uk.
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