International Focus
Dev George
Houston
Democracy and tribalism in Africa
Much has been made of the fact that this year some 18 African countries will hold national elections and that half that many more will do so next year - that western-style democracy has finally arrived in Africa and a new day is dawning.
The international petroleum industry learned almost at its inception that democracy as practiced in Europe and the USA is not necessarily an important component of a reliable operating venue. And it doesn't reduce risk in and of itself.
Africa is an excellent example. Despite the cheerleading from the western sidelines, it is likely half the elections being hooplaed will be canceled or postponed or, at best, will be overthrown after a few months. Considering that the countries of Africa were cobbled together by 19th century imperialist powers of Europe to suit their purposes, not those of the colonized Africans, is it any wonder alien forms of democracy have generally been failures in Africa? After all, incorporating all the antagonistic tribes that inhabit an area into an artificial state is a certain formula for civil war. Formalizing that process by forming multiple political parties simply provides a party structure for the tribal rivalries that invariably are at the core of Africa's seemingly endless wars, coups, and regional rebellions.
Democracy hasn't arrived in Africa, nor should it be expected any time soon. Several East African states have elected strongmen to power, whose enlightened approach to governing has produced stability and economic strength. South Africa, too, has elected an enlightened leader who shares power with his opposition. West Africa, on the other hand, has had few democratic elections that portend permanence, instead, most West African nations continue to be ruled by unelected leaders.
But simply because they came to power outside the electoral process does not mean they don't govern effectively; some do and produce dramatic advances in their countries (President Jerry Rawlings of Ghana) and some don't (General Abacha of Nigeria). The underlying truth is that tribalism still obtains throughout the continent, and with it reliance on a strongman, chief, or monarch.
A new day is, however, dawning in Africa, but it is economic rather than political. Enlightened African leaders are demanding that their countries be more than producers of raw materials for western industry, that petroleum producers, for example, begin to add value to the products they are taking from the countries, that LNG, LPG, petrochemicals, plastics, fertilizers, and other oil and gas end products be manufactured in Africa to provide industry, jobs, and sustainable development.
Next year, under the auspices of the United Nations Economic Commission for Africa, African petroleum ministers will join heads of state, operators, and other mineral and energy officials in Durban, South Africa to establish ways of "Strengthening Cooperation Among Development Actors in the Sustainable Development and Utilization of Mineral and Energy Resources in Africa." Political pontificators take notice.
OPEC survival in question
Saudi Arabia's Shaikh Zaki Yamani, ex-oil minister and current petroleum consultant, told an April London conference sponsored by the Center for Global Energy Studies, that he doubts OPEC can survive the challenges confronting the organization today.
Yamani enumerated four factors that he feels may lead to the demise of OPEC as it is now constituted, and compared these 1996 threats to those of 1986, when, he intimated, political pressure from US President Reagan forced Saudi Arabia to break with other OPEC members and increase its oil prices.
Today, he said, OPEC faces the prospect of a dwindling market share being lost to the ever-growing non-OPEC producers. It is plagued by oil prices that appear to have stabilized at relatively low levels, and it is up against the return to the world market of some 2 million bbl a day from Iraq and an increasing share of the market going to natural gas.
Unlike in 1986, however, Yamani maintains that this year's threat is far greater, because, as a consequence of the Gulf War, OPEC doesn't have the cash reserves to wage a price war against the non-OPEC oil producers. Current prices of about US$21/bbl are a seasonal result of a cold winter and supply difficulties, and won't last, he said. Furthermore, with the current surplus capacity of 3.5 million b/d and projected additional 3.5 million b/d capacity by decade's end, Yamani says even without Iraq's oil input, he can see no way for the price to increase. With Iraq's return to the world market, even present prices and record level stocks will not compensate for the dislocation.
"Severe problems are foreseeable," he said, "for I don't know how much longer Saudi Arabia and Kuwait will carry the burden of price support..." through output restraint. The only possible solution, he suggested, would be if "OPEC countries that have not already invited oil companies back into their upstream oil sectors do so." By doing this, he said, investments would be kept in OPEC countries rather than non-OPEC, and it would be in the interest of oil companies to keep production here."
Russian revisions
There has been a draft law in the communist- and nationalist-dominated Russian Duma (parliament) since last November calling for the re-natinalization of strategic state enterprises, including oil companies. The communists have been highly critical of the Yeltsin government's privatization programs, maintaining that they violate the constitution and civil code. Furthermore, several key ministers have advocated partial nationalization of such reasonably successful companies as Lukoil, Yukos, and Gazprom.
This month's presidential election, which will probably bring Gennadiy Zyuganov and the Communist Party to power, could, perhaps, affect some of these changes, but the prospect is unlikely. Zyuganov has said that there are no plans to confiscate private property, and the government simply doesn't have the wherewithal to buy back private interests in the strategic enterprises, as the draft calls for.
Changes will undoubtedly be made, but the probability is the draft and the posturing against private ownership can most likely be chalked up to pre-election politics. At most, with Russia needing all the investment it can get, only prevention of foreign ownership of majority interests will be prevented.
BRIEFS. . .
Africa:
Elf has had another discovery, this time on Angola's Block 17. The Girassol well, said to have found good quality oil at a depth of 1,345 meters, tested 2,800 b/d. Further appraisal work is scheduled to determine potential commercial status.
Soekor, the South African state oil company, has signed with Phillips Petroleum for its exclusive rights to evaluate oil and gas prospects in Blocks 17 and 18, in the Indian Ocean off eastern South Africa.
Sudan's Red Sea Arakis Energy concession has discovered oil in two zones, 207 ft of pay in the Upper Bentiu Unit I sandstone and 115 ft of pay in the Bentiu II sandstone. A small third pay zone, Zarqa, was also encountered. The well, known as Toma South 02/9b, was plugged with announced flow rates.
Mideast:
Occidental will probably go ahead with the huge, $10 billion project to develop Azerbaijan's Babek and Umud Fields in the southern Caspian shelf region, despite difficult geological conditions. Some four rigs are required to drill 24 wells, and a pipeline will have to be built. Socar is uping incentives, however, making the deal sweeter.
The international development consortium for Azerbaijan's Azeri-Chiraq-Guneshli Fields is taking on a different look. McDermott sold Itochu Exploration its 2.45% participation in March, now Pennzoil has transferred almost 5% to Itochu, keeping the remaining 4.82% for itself. Itochu paid Pennzoil US$132 million.
Another consortium is likely in the making to develop Azerbaijan's Lenkoran Deniz Fields, a group of known oil-bearing reservoirs near the Iranian frontier. So far, Elf Aquitaine is the only negotiator with Socar for this project.
Asia:
India's much flaunted award of an E&P license in the Bombay High's marginal D-1 and D-18 Fields to a consortium of Enterprise Oil and Indian Oil Corp. is being held up by a protest by Oil & Natural Gas Corp. (ONGC) of India, about the way the award was granted without competitive bid. Enterprise is even questioning whether there is a consortium.
Total has discovered another gasfield northwest of its Yadana Field, in Myanmar's Moattama permit area. The Badamyar-1 flowed at 32 MMcf/d. This was the second successful well for Total in Blocks M5 and M6.
China's Lufeng 22-1 is to be developed by Statoil in cooperation with China Offshore Oil Nanhai East Corp. and CNOOC, the China National Offshore Oil Corp. It lies 250 km east of Hong Kong.
Malaysia's Petronas has signed a production sharing contract with Shell for a deepwater block off Miri, eastern Sarawak. This makes Malaysia's deepwater divided so far between Shell with two tracks and Mobil with four tracks.
Conoco vs. Crestone may be the outcome of a China vs. Vietnam situation in a sector of the South China Sea called Blocks 133 and 134 by Vietnam, Wan'An Bei 21 by China. PetroVietnam's deal with Conoco grants it 70% interest in the two blocks and operatorship. Crestone, which was looking for a development partner for its WAB21, might consider Conoco.
Europe:
Spain's Rodaballo 1 Field, in the Mediterranean Angula concession some 45 km from Tarragona, drilled last year, will be brought onstream this month by Repsol. The field is expected to produce 5,000 b/d oil. It will be connected by pipeline to the nearby Casablanca platform.
The UK is set for a record production year again, with 15 new oil fields to go onstream in 1996, production will probably rise to a high of 2,710,000 b/d, according to Wood Mackenzie, a Scottish analyst. Total North Sea production from UK, Norwegian, Danish, and Dutch sectors is forecast at 6 million b/d for 1996, a 9% increase over 1995.
Russia's North Caspian Sea is presently undergoing an extensive, 4,500 line km 2D seismic survey by Geoteam. Line spacing of 10 by 20 km in water depths of 20-100 meters characterize the study. Several large structures have been identified in the area.
Americas:
Greenland has received five applications for an exploration license in the Fylla area off its western coast, where drift ice and depths of 1,500 meters make the prospect difficult. Despite this, Elf, Phillips, Danop, Total, and Statoil are seeking rights.
Trinidad's LNG project is set to go. The Trinidad & Tobago government has signed with Atlantic LNG, an Amoco-led consortium, to build and operate a $1.4 billion LNG plant in Point Fortin, Trinidad. The plant will produce 4 billion cm/yr of LNG for export. It is expected to be operating by mid-1999.
The US ban on developing leases off the state of North Carolina is illegal, according to a US Court of Federal Claims. Regardless of the outcome of any possible appeal, a congressionally imposed moratorium still prevents development, but oil companies holding leases could at least collect damages from the US government.
Undaunted by governmental restrictions, Shell has added yet two more deepwater projects to its growing list of Gulf of Mexico plungers. The first, Cardamon, will be produced from the Auger platform, while the second, Guernsey, a JV with BP and Marathon, will be drilled next year.
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