A closer option

Jan. 31, 2002
Policy-makers told US oil companies at a Jan. 25 conference in Washington, DC, that within a generation Africa may supplant the Middle East as the US's most critically strategic energy supplier.

Policy-makers told US oil companies at a Jan. 25 conference in Washington, DC, that within a generation Africa may supplant the Middle East as the US's most critically strategic energy supplier.

"Our traditional sources of oil are not as secure as we thought they were," said Rep. Edward Royce (R-Calif.), chairman of the US House Subcommittee on Africa.

Royce and other officials spoke at the nonpartisan Institute for Advanced Strategic and Political Studies.

Citing President George W. Bush's energy blueprint released last May, US officials said expanding US oil and gas investment in Africa is a key national policy goal.

"West African oil is a hedging opportunity for US businesses," said James Dunlop, a special advisor to the Assistant Secretary of State for African Affairs.

Sub-Saharan Africa holds 7% of world oil reserves and accounts for 11% of world oil production, according to the US Energy Information Administration. Today about 15% of US import needs are met with African oil, but that figure could double within 10 years: West African oil is of high quality and is closer to US refining centers than similar crudes from Middle Eastern competitors.

Hearings expected

Royce's committee will hear testimony later this year from industry and other stakeholders on a pipeline that will ship oil from landlocked Chad to an ocean port in Cameroon. The $3.5 billion deal is the largest infrastructure project of its kind in Africa, with two US companies, ExxonMobil Corp. and ChevronTexaco Corp. holding sizable financial interests.

The hearing was originally scheduled for Sept. 11 but was abruptly cancelled following terrorist attacks in New York City and at the Pentagon.

After that fateful day, bolstering US energy ties with Africa holds even more urgency and should be treated as "a national priority," Royce said.

Administration officials are hopeful the World Bank's promise to take an aggressive role in tracking oil revenue from the pipeline will deter corruption and be a model for the region. The bank is planning a $200 million initial investment.

Budget and social concerns

While the business climate is better, challenges remain, US officials said. There are 27 border disputes across Africa, for example. But oil companies must continue encouraging "the rule of law" and driving out rampant corruption, policy-makers stressed.

"More oil does not necessarily mean more corruption," said Rep. William Jefferson (D-La.), cochairman of the Africa Trade and Investment Caucus. "It's not fate. There are choices."

Jefferson wants Congress to consider debt relief. Countries could spend more on roads and education if less oil revenue went toward repaying loans from the US and other developed countries, he said. But US officials say that may be a tough sell; the US's own budget is being squeezed to fund a war on terrorism. There may not be political interest to forgive loans even if a country's new leaders want to break free of the corruption cycle.