/ 23 July 2003

Who will gain from oil rush?

Whoever named the landscape of northern São Tomé was an optimist.

Overlooking a collection of shacks is Mount Hope, from which Gold river flows to the Atlantic, where villagers in canoes seek turtles and prawns.

These days everyone is talking about the other wealth beneath the waves — oil. But Hipolito Lima is not optimistic that his six children will benefit.

“The oil is an opportunity, sure,” said the 53-year-old fisherman. “But whether we benefit depends on the conscience of the big guys.”

Fate has granted the United States government a potentially powerful instrument to better the continent: oil. Off West Africa’s coast lie vast deposits of high-quality crude suited to US refineries. Advances in deep drilling make the deposits viable just as the US seeks to reduce dependence on the Gulf.

A task force headed by the US Vice- President, Dick Cheney, linked African oil imports to national security, something pro-Israeli and neo-conservative strategists have advocated since September 11.

Some $200-billion in revenues is expected to flow to African governments over 10 years, dwarfing Western aid and providing a unique opportunity to alleviate poverty.

For President George W Bush, who visited five African states last week, it is a beautiful convergence: weaning the US off Saudi Arabia, an objective of the war on terror, while helping Africa and scoring points with black voters in the run-up to his re-election campaign.

But will the oil help the Africa of Hipolito Lima? For two decades Angola, Nigeria and Gabon have pumped billions of barrels while fuelling corruption and poverty, a phenomenon academics call “the paradox of plenty”.

Sub-Saharan Africa is on the cusp of a bigger oil rush that could launch a fresh cycle of conflict and misrule — or of development and prosperity.

A recent report by the US aid agency Catholic Relief Services said Western governments should urge the oil industry, international bodies like the International Monetary Fund and African rulers to be more transparent.

In few countries are the stakes as high as in São Tomé and Príncipe, two specks in the Gulf of Guinea with a population of 140 000. Seismic data suggest billions of barrels lie offshore, prompting comparisons to Brunei and Kuwait, and oil companies are expected to bid at least $300-million for exploration rights.

“It will be heaven or hell depending on the choices made by the political elite,” said Carlos Tiny, a former health minister.

The Oil Minister, Rafael Branco, promised to publish the bids in October. “We want maximum transparency, for the oil to help our democratic institutions.”

But many look beyond the rhetoric and see Washington playing by the old rules: dodgy deals, amoral alliances and military engagement.

“We are a spare tyre in case the Middle East gives the Americans a hard time. They don’t care as long as the oil is safe,” said Patrice Trovoada, a former foreign minister.

Already the signs are ominous. São Tomé astonished industry analysts by awarding hugely favourable terms to an obscure Texas oil firm, ERHC, since taken over by a Nigerian, with no drilling rigs.

President Fradique Bandeira Melo de Menezes later admitted receiving $100 000 from the company, but said it was a legitimate political donation. ERHC denied giving money.

Into this arena move giants like ExxonMobil and ChevronTexaco. They come for profit not patriotism, but the White House is smoothing the path, said Branco. “Oil exploration is risky and the political environment is crucial.”

Olegario Tiny, a leading oil lawyer, said the conglomerates were reassured. “For them it is always better to have a strong US presence.”

The Voice of America radio network has transmitters on São Tomé and General Carlton Fulford, the head of the US European command, visited the country last year, supposedly to discuss coastguards. Rumours of a military base are premature, said a US diplomat. But he revealed that the Pentagon has started funding English lessons for São Tomé’s 200-strong army. — Â