#66 Vietnam Positions Herself as a Global Oil Player

As does any other rapid growth country not blessed (or cursed; depends on who you ask) with oil, Vietnam needs to find her black gold elsewhere. While China and India have been roaming the world - particularly Africa - for oil contracts for a while now, it is now Vietnam's time to follow suit. Vietnam Oil and Gas Corp., or PetroVietnam, pledged to expand its overseas oil exploration venture with two contracts this year, one in Cuba and the other in Nigeria. Oil agreements in Libya and Sudan are also on the cards, but rank lower in priority due to difficulties encountered such as lack of regulatory structure.

During a recent visit to Cuba by Vietnamese Communist Party chief Nong Duc Manh, the first of the two promises has now been honoured. Cuban and Vietnamese officials signed an agreement last Friday, 1 June, between state oil companies Cuba Petroleos and Petrovietnam calling for a partnership for exploration and drilling both in the Gulf of Mexico and on shore (photo courtesy of AP). PetroVietnam follows in the footsteps of other international oil companies such as Spain’s Repsol YPF S.A., Norway’s Norsk Hydro ASA and India’s Oil & Natural Gas Corp. Cuba divided its offshore area into 59 exploration blocks in 2000, of which just over 20 blocks have been leased to international companies.

The drilling in Cuba is not without financial risk, as it is not certain that they will find anything near the amount they might have access to in their other target partner country, Nigeria. Cuba currently produces about 80,000 barrels of crude oil a day, compared to Nigeria's whopping 2.2 million barrels per day in 2001. Nevertheless, oil exploration in Cuba is bound to be a safer bet for Vietnam, given that just 1 day after the agreement signed in Cuba, the umpteenth abduction occurred overnight at the U.S.-based oil-services firm Schlumberger Ltd. in Port Harcourt, Nigeria. One Dutch, one British and one Pakistani citizen, as well as another captive were taken hostage according to Rivers State Police Commissioner Felix Ogbaudu.

In other news, for the first time in ten months (when emergency surgery forced him to hand over power to his brother Raul Castro), Cuban leader Fidel Castro was shown standing and talking in video footage that aired on state-run Cuban TV. Castro was seen on Sunday, 3 June in a meeting with Vietnamese Communist Party chief Nong Duc Manh (picture on the right courtesy of Cuba's Juventud Rebelde newspaper).

#21 News from the Delta & Unkosher Oil

No sooner was it known that four members of a notorious militant gang in the Niger Delta, alleged to have been responsible for last year's attack on Mobil Producing Nigeria (a subsidiary of Exxon), have been arrested by men of the State Security Service (SSS), news broke that gunmen in Nigeria's oil region have attacked and killed 12 people including at least four local chiefs.

It appears the attack might in fact not have targeted the oil companies at all this time, but rather is the result of a long-standing chieftaincy vendetta. The chiefs who were killed had been in control in Kula over the past two years, whereas the faction that launched the boat attack are alleged to have been driven out of Kula two years ago. The dispute arose in 2004 when members of the faction challenged the authority of the local chiefs in deciding how to share the money and benefits given by the oil companies. In an apparent bid to re-enter the community, the assailants felt it necessary to dispose of the evil chiefs. As with most things in the Niger Delta, the attacks are directly related to the "blessing" that is oil, which once again highlights the difficulty of instilling anything remotely resembling stability.

Despite the attack not targeting the oil companies, Royal Dutch Shell decided to evacuate staff from two oil installations, leaving "only a skeleton crew" at the two evacuated pipeline hubs, according to Bisi Ojediran, a spokesman for Shell PLC. Production at the sites (approximately 60,000 barrels per day) has not been affected by the attack, however. Nevertheless, the fear that violence will only increase in the run-up to the Nigerian elections in April seems to be manifesting itself.

Besides the many cases of violence and murder, a new report highlights the lack of transparency and corruption that exist in the Nigerian oil sector. A report compiled by the Hart Group - a United Kingdom based audit firm for the Nigerian Extractive Industry Transparency Initiative (NEITI) - found that about 65 million barrels of crude oil could not be accounted for by the Nigerian National Petroleum Corporation (NNPC) between 1999 and 2004. 65 million barrels of crude oil translates into the kind of money that should normally be able to pay off rebels for long enough to create a viable solution to the region's problems.

Whether it be corruption, mafia style tactics, forced nationalization, extremism, or acts of terror, one thing appears to be certain: the terms kosher and oil rarely go hand in hand. Venezuela, Iran, Iraq, Nigeria, Russia, Libya, Angola, and Algeria are prime examples. Ironically, the poorest regions in all of these countries happen to be the ones where the bulk of the oil is situated. Countries like Saudi Arabia, the United Arab Emirates, and Kuwait are exceptions in this respect, but then again I doubt they would want to be associated with a term like "kosher" anyway. Let's just say that although clearly not in the same league as the aforementioned countries, they still aren't exactly Halal. True exceptions are countries like Norway, the USA, and Canada, but of these three only Norway is a significant net exporter (Canada and the USA consume most of their own production). Perhaps Central Asian countries like Kazakhstan and hermit-state Turkmenistan could become shinning examples of kosher oil producers/exporters when they increase production, though this isn't too likely.

It will be interesting to see whether gunmen will attack ethanol producing farms in Brazil any time soon, or whether the end of oil will mean the end of such shenanigans. Sadly, I think we all know that there is no end sabotage, greed, violence, or exploitation.

#18 Spotlight on the Niger Delta

Nigeria is Africa's largest oil producer and the world's sixth largest exporter, but, apart from an oil boom in the 1970s and once again benefiting from high prices on the world market today, any real progress has been undermined by corruption and mismanagement. Nigeria appears to be one of the many countries for which the blessing of natural resources is not so saintly. The main problems stem from the heart of the Nigerian oil industry in the Niger Delta region, where violence, kidnapping, bombings, and oil siphoning are part of every day life.

Besides the many casualties, the effect of the troubles in the region has now been translated into a tangible figure. At the recent Ministerial Budget Briefing, Nigerian Finance Minister, Mrs. Nenadi Usman, announced that in 2006, the nation lost an estimated 570 billion naira (approximately 4.4bn US dollars and 3.5bn euros) in revenue as a direct result of the protracted crisis in the Niger Delta region. Usman also stated that "the result was that crude oil sale fell by 3.2 percent below our projected target while petroleum profit tax fell by 10.9 percent. Since oil accounts for more than 95 percent of the foreign exchange earnings of Nigeria, any disruption is of major concern.

Concern is justified, given the recent warning by a spokesman for the Movement for the Emancipation of the Niger Delta (MEND) in an email message to AFP that "we are resuming with our attacks this month and may even take more hostages." This announcement comes at a time when MEND is holding one Lebanese and three Italian oil workers kidnapped on December 7 in the oil-rich southern Bayelsa State. MEND might have already been true to their word, as news just broke that militants took nine South Korean oil workers hostage at a Daewoo oil facility, also in Bayelsa. Five Chinese telecom workers have also been abducted in Rivers State, but MEND denies any involvement in their seizure. Perhaps China's increased involvement in the continent and the region has made the rebels unsure about what their policy should be toward the Chinese for now. Hopefully this is a sign that the Chinese might be able to play a role in bringing some form normalcy to the Nigerian oil business.

What MEND is seeking is a larger share for southern Nigerians in oil revenues, along with compensation for communities affected by oil pollution. More recent demands are that the Nigerian authorities release former Bayelsa State governor Diepreye Alamieyeseigha, jailed on corruption charges, as well as separatist leader Mujahid Dokubo-Asari (he used to be president of the influential Ijaw Youth Council - the ethnic group which makes up the bulk of the Delta's population) and other detainees from the region. MEND is a relatively new organization (emerging late 2005) of which little is known, but their calls for a larger share of oil wealth and environmental improvement echo the demands made by other groups such as Asari's Niger Delta People's Volunteer Force (NDPVF), the Niger Delta Vigilante (NDV), the Ijaw Youth Movement (IYM) and the Ogoni Movement for the Survival of the Ogoni People (MOSOP). The difference lies in the sophistication shown by MEND and the ease with which they are able to sabotage oil facilities and make good on threats.

Despite the creation in 2000 of the Niger Delta Development Commission, which has the sole mandate of developing the Niger Delta region, poverty and crime remain rife in the area. In 2005, Shell spent around $80m on projects and scholarships aimed at benefiting the local population, but these aid projects have failed for the most part. For some reason or other, the Delta boasts an unfinished hospital building, a fish processing factory that never went into production, and an abandoned artesian well which now flows with contaminated water. This would seem to insinuate that the majority of the militant movements aren't really seeking improved conditions for their people, but are rather criminal organizations active in oil and weapons trade on the black market. Oil is regularly siphoned illegally (though it is often claimed by the militants that they are merely taking what is rightfully theirs) from the pipelines, while kidnappings are becoming increasingly frequent as a means to attain capital.

While these problems have plagued the Delta for years, they intensified in 2006 and, with the Nigerian elections coming up in April, they seem likely to intensify. The wave of attacks on the oil industry in February 2006 led to the shutting down over 600,000 barrels per day in output, highlighting the immense power rebel groups such as MEND have on oil production. On a human scale, the more than 60 foreign oil workers that have been abducted over the past year and the 37 Nigerian troops and dozens of Nigerian workers (and one Briton) that have been killed tell the story. Besides all this, the local population has very valid grievances, as there is no doubting the deterioration in environmental living conditions and the lack of shared wealth. All in all, another pernicious example of a blessing gone sour.