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Gulf of Guinea of increasing importance
West African Nations Critical to US Energy Security
United States Department of State (Washington, DC)
July 22, 2004
Posted to the web July 23, 2004
Charles W. Corey
Washington, DC
Gulf of Guinea provides 14 percent of U.S. oil supply
The West African nations of the Gulf of Guinea are critical to U.S. energy security and could one day provide the United States with up to 20 percent of its energy needs, says energy expert David L. Goldwyn.
In testimony July 15 before the Senate Foreign Relations Committee's Subcommittee on International Economic Policy, Export and Trade Promotion, Goldwyn, a former U.S. assistant secretary of energy for international affairs, said the nations of the Gulf of Guinea -- Nigeria, Chad, Equatorial Guinea, Gabon, and Sao Tome and Principe (along with Angola) -- are key contributors to the U.S. energy sector and to the diversity of the global oil supply.
"Today, oil exports from the countries in the Gulf of Guinea provide us with 13-14 percent of the oil we import. While OPEC countries cut production, countries from the Gulf of Guinea provided one out of every four barrels of new oil that came on the market last year," he told the lawmakers.
Goldwyn, currently president of the international business-consulting firm Goldwyn International Strategies, was called to brief senators on the state of U.S.-Africa energy relations. He reminded the lawmakers that the Gulf of Guinea is geographically much closer to U.S. refineries than the Middle East. As an added benefit, he said, the United States enjoys "good relations with all of the exporting countries" in that region.
"In the future," Goldwyn predicted, "if the investment and security climate remains stable, the U.S. could draw 20 percent of its imports from this region." The region's share of global oil supply, he speculated, will rise from 4 percent this year to nearly 6 percent by 2007.
Increased exports from the Gulf of Guinea, he said, are allowing the United States to reduce its dependence on Middle East crude. Furthermore, he explained, the non-OPEC nations in this area -- all of them except Nigeria -- provide a counterweight to OPEC's monopoly power.
Besides producing thousands of barrels of crude oil, the Gulf of Guinea region is also a rising gas power as well, he said.
"If current projects under development are brought to fruition, Nigeria, Angola and Equatorial Guinea will increase their liquefaction capacity from 9 million tons (M/T) per year to nearly 40 M/T per year," he said.
These nations, he added, are rapidly growing as suppliers because they have opened their economies to Western investment.
Even though most of the world's oil reserves are closed to international oil companies, the Gulf of Guinea has offered nearly 15 percent returns on investment and is expected to attract $30-$40 billion in investment this decade.
But "the very openness of these nations to Western investment can make them a potential target for terrorism," Goldwyn warned.
He identified Nigeria and Angola as the region's most important energy suppliers. Nigeria produces 2.12 million barrels per day (b/d) and exports 1.85 million b/d. It provides 8.25 percent of U.S. imports and it is planning to expand to 4 million barrels per day by 2009, he said.
Angola produces 900,000 b/d and exports 866,000 b/d, providing 4.6 percent of U.S. imports, and is planning to reach 2 million barrels per day by 2009. He identified Angola as the ninth largest supplier to the United States and the third largest non-OPEC supplier outside of the Western Hemisphere.
The other countries in the Gulf are significant as well, Goldwyn said. He cited estimates that in 2003 Cameroon, Chad, Equatorial Guinea and Gabon exported approximately 500,000 b/d in aggregate, with 221,000 b/d going to the United States.
"Chad is beginning oil production this year. Equatorial Guinea will grow as a supplier of gas and light sweet crude for U.S. markets. Gabon and Cameroon are on the decline," he said.
From a geological and investment perspective, the region's prospects are "quite bright," he said.
"New technologies, competitive investment frameworks and the availability of reserves for exploration by international oil companies have produced outstanding results, and much of this oil is the kind of low-sulphur crude oil that U.S. refiners need to produce gasoline that meets our environmental requirements," he explained.
By 2010, he forecasted, these nations could add 2 to 3 million barrels of oil per day to global oil supply, an increase from 3.4 million barrels per day to 7.4 million.
(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov.)
Gulf of Guinea of increasing importance to U.S., expert says
There is an urgent need for a coherent U.S. strategic energy policy -- and the countries in West Africa that are washed by the Gulf of Guinea should be an element in such planning, according to J. Stephen Morrison, director of the Africa Program at the Center for Strategic and International Studies (CSIS).
In testimony July 15 before the U.S. Senate Foreign Relations Committee's Subcommittee on International Economic Policy, Export and Trade Promotion, Morrison said, as oil-producing nations in the Gulf of Guinea become more important, the United States needs to develop an effective energy policy that takes these countries into account.
Such a policy, he said, should contain certain key elements: "It must be long-term, it must be built upon sustained partnerships with African counterparts, and [it] must feature a two-pronged, regionally coordinated approach."
It also needs to address "serious deficiencies in the internal governance of key African oil-producing states at the same time that it systematically addresses the shared, external security threats these states face," he told the lawmakers.
Transparency, accountability, improved human rights, and greater democracy within the African oil-producing nations are also essential to ensure that oil revenues are tied to sustained and equitable economic growth in those countries, he said.
Morrison also summarized major elements laid out in a recently published CSIS report, "Promoting Transparency in the African Oil Sector: A Report of the CSIS Task Force on Rising U.S. Energy Stakes in Africa," issued in March 2004, which he co-authored.
First, he said, the United States should pursue sustained, high-level engagement, bilaterally and multilaterally, to promote transparency and reform in the Gulf of Guinea's oil-producing nations. The United States, he added, "should explicitly enshrine this goal as a top priority of U.S. Africa policy."
U.S. engagement, he explained, should include establishing clear and transparent benchmarks for regional behavior, complementary to the standards of the Millennium Challenge Account.
"The touchstone," he stressed, "should be a public commitment to transparency in public finance, with benefits contingent on verifiable, sustained, and public disclosure of government revenues and expenditures and adoption of open public finance practices."
Second, to pursue this goal, Morrison said, the report recommends that a special adviser to the president and secretary of state for African energy diplomacy (S/AED), with ambassadorial rank, be designated to lead interagency policy.
A special adviser with ambassadorial rank would be housed at the State Department, he explained, but endowed with authority by the president and the National Security Council to lead interagency policy. "The appointment, an unprecedented act of commitment in this area," he noted, "would powerfully signal U.S. leadership on this issue.
"The special adviser would be mandated to develop relationships with senior African leaders, coordinate political, economic, military, and governance policy for the U.S. government, interact with the G8 process and other multilateral fora, liaise with like-minded nations, and brief the Congress on U.S. policy."
Third, the United States, the report says, should introduce a set of reinforcing bilateral policies with special application to the Gulf of Guinea.
"The United States," Morrison said, "should declare publicly its benchmarks for regional behavior, in close parallel with those benchmarks set out for the Millennium Challenge Account." Any leader who makes such a commitment would meet with the secretary of state and be eligible for regional support programs, he added.
The level of support for a nation could be calibrated as needed, he said. The United States, he added, should continue to utilize African Growth and Opportunity Act (AGOA) eligibility as a means of leverage for good governance.
Regional programs that committed nations would be eligible for would include an African Energy Producer Summit, which, he said, could be appended to the G8 meeting or the annual AGOA summit.
Morrison said the report also mentioned other areas for improvement, such as the need to "dramatically increase" peacekeeping training and International Military Education and Training (IMET), the establishment of Maritime Security Programs to train an African regionally coordinated maritime force to protect offshore oil rigs, and continued strong support for civil society programs.
A fourth recommendation of the report, Morrison told the lawmakers, calls on the United States to integrate the World Bank and the International Monetary Fund (IMF) into its Gulf of Guinea strategy and devise new, innovative collaborations.
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