PETROANALYSIS || ARTICLE

9/11 in the US and China’s growth pushed interest in West African oil

Published on

September 24, 2019

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Article by

Stuart Wilkinson

The attack on the Twin Towers in New York in 2001 made energy security a key part in the design of US petroleum strategy and West Africa was important in this. China, too, would significantly increase its petroleum investments in that region to secure resources for its economic growth.

According to the 1995 report “United States Security Strategy for Sub-Saharan Africa” published by the Pentagon, the US had traditionally little strategic interest in Africa. However, by the early 2000s Africa and especially West Africa had become a growing source of imports for the country (1).

At the end of the 1990s, Art Green, the production manager of Mobil in Equatorial Guinea, had stated that “the geological evolution of this region has produced a fortuitous combination of all the ingredients required for large petroleum fields.” Furthermore, Jean-François Gavalda, analyst at Elf-Aquitaine, considered that “The potential there is enormous. There are new discoveries each two or three months, and for that reason all the oil companies want to be here.” (2)

An indicator of the serious relevance for West Africa’s petroleum reserves was shown when Madeleine Albright insisted on visiting Angola in December 1997, during her first visit to Africa as Secretary of State (3). For his part, James P. Rubin, spokesman for the White House, expressed the following: “Angola, in a short time, will supply 10% of American imports, which is considerably more than Kuwait contributed before the Gulf War (…) it simply does not make sense to visit Central Africa without visiting Angola.”(4)

Additionally, and to appreciate the optimism about West Africa’s oil future as it was seen in the first years of the 2000s, one should take into account the expectations with regard to the large offshore reserves that the small island country San Tomé y Principe could have, and where US companies were exploring.

In effect, petroleum reserves – including those offshore – were considered to be “sufficiently large to convert the region into an emerging economic giant” (5). In October 2002 the Portuguese News Agency noted that the US wished to give military support to the Western countries that operated in the Gulf of Guinea, protecting the ships operating in the region. The agency added that “In October of last year [2001] the former US Secretary of State for African Affairs, Walter Kansteiner, met with the San Tomé y Principe president, Fradique de Menezes, and the Prime Minister, María das Neves, in relation to the petroleum operations led by the US, and about the possibility of establishing an American naval presence in the two islands that made up the country (6).

At this point, it had become clear that the United States planned to increase the weight given to its imports of West African oil with respect to the Middle East. This corresponded to the criterion of “security of supply” which because of the attack on the Twin Towers in New York in 2001 became a key part in the design of US petroleum strategy, given the country’s dependence on petroleum imports to cover domestic demand.

Petroleum production in the US had exceeded discoveries since 1959 and reached a maximum in 1970. Before the Arab Oil Embargo in 1973, American dependence on imported oil was not in the public domain but the subject was discussed in both industry and academic circles (7). This situation of dependency led to a series of initiatives by American Presidents from Richard Nixon onwards: the first being Nixon’s 1974 “Plan Independence” and all aiming to confront the vulnerability of US energy security.

The following table illustrates the difficulty that the US was facing in the 70s: declining petroleum production, increasing imports, and the rising percentage of imports in domestic consumption.

With regard to China’s interest in West Africa, the “the giant of Asia” significantly increased its petroleum investments in West Africa with the objective of securing sustained access to the resources of that region in order to make up for the insufficiency of its own petroleum production. This shortfall could be seen from the first half of the 1990s, and for the year 2005 China’s petroleum imports stood at approximately 3 million barrels per day – a figure representing just 40% of what was needed for its economic growth.

China’s relations with Africa in general was not new. Since its foundation in 1949, the People’s Republic had considered economic and commercial relations with Africa highly relevant (8).From the end of the 1950s to the 1970s, through its leadership over the “Third World” and Non-Aligned Movements (9), China built up the bases for the commercial relations that would increase over the rest of the 20th Century. Furthermore, the implementation of the policy of reform and opening in the 1980s was notable for the push it gave to China-Africa commercial relations (10).

The table below shows the development of China’s production, consumption and imports of petroleum from 1990 to 2010. As can be seen, the country became a net importer in 1993, and consumption significantly outstripped production since that time. From 1993 until 2010 imports rose 2,030.3%. From 1999 to 2010 petroleum production increased just 26.7%; consumption rose 108.3%; and imports grew by 321%.

It should be noted that in 1998 more than 50% of China’s imports came from the Middle East. However, the instability of that region and the predominant perception that the United States dominated there pushed China to widen the geographical base of its petroleum supplies. This came within a framework of energy security that included, amongst other aspects, strong state control over the nation’s petroleum resources and a preference for the long-term consolidation of political ties with petroleum producers (11).

This resulted in, according to the 2006 BP Statistical Review, China’s imports from the Middle East falling to 38% of its international petroleum purchases. In contrast, China’s imports from Africa in general were rising: in 2003, 18% of its imports came from Africa – this figure increasing to nearly 25% in 2005. With regard to West African petroleum, China increased its imports from 76,000 barrels per day in 2001, to 551,000 barrels per day in 2004, and to 783,000 barrels per day in 2008 (12).

References:


1. US oil politics in the Kuwait of Africa. Ken Silversteen, The Nation, 4th April 2002.
2. Competition heats up for Africa’s oil wealth. Howard W. French, New York Times, 7th March, 1998.
3. In quietly courting Africa, US likes the dowry: oil. James Dao, September 2002.
4. Op. Cit.
5. Re-engaging Africa: The West’s new frontier. Charles Kwalonue Sunwabe Jr., The Perspective, 31st December 2003.
6. Op. Cit.
7. The new US energy policy. John Richter, The Rant, 24th January 2004.
8. Great achievements of Sino-African Economic and Trade Cooperation. China Facts and Figures 2002.
9. China’s Africa Policy. Business now, politics later. Michal Meidan, Asian Perspective, Number 4, 2006.
10. Great achievements of Sino-African Economic and Trade Cooperation. China Facts and Figures 2002.
11. China’s Africa Policy. Business now, politics later. Michal Meidan, Asian Perspective, Number 4, 2006.
12. BP Statistical Review 2005 and 2009.

 

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