Africa: the Pearl of the U.S. Energy Strategy
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Today the African region is being targeted through the policy of economic statecraft from both the West and the East, i.e. by the USA and European member states as well as China, respectively. Chinese neo-colonial strategy is mainly driven by profit-maximization principle, while the US wants to promote regional stability in order to foster economic cooperation with newly established political allies.
Going South?
While Russia and the Middle East have remained champions in gas and oil production for decades, the USA is looking for new greenfield projects and partnerships with countries not facing existing political constraints: it is the African market that lies within closer geographical proximity to American consumers what makes imports from that region less costly and time-consuming. It is also important to note that both Russia and the Middle East have marginal trade relations with the USA and their adherence to monopoly practices with regard to upstream production makes American penetration to their markets less viable. Political tensions (especially with Russia under current sanctions) make cooperation in energy sector not only unlikely but virtually impossible. Thus, the USA in a way counters Russian pivot to Asia by expanding its sphere of interests to Africa whose incredibly fast urbanization rate already accounts for a greater proportion of middle class than in India or China [1], opening up wide opportunities for America-African strategic cooperation in energy field.
Today the African region is being targeted through the policy of economic statecraft from both the West and the East, i.e. by the USA and European member states as well as China, respectively. Chinese neo-colonial strategy is mainly driven by profit-maximization principle: there is already about a billion of potential consumers ready to accept Chinese goods as a default choice, while the US wants to promote regional stability in order to foster economic cooperation with newly established political allies. Camp Lemonnier, the permanent American base in Djibouti serves as a regional watchdog and helps provide prompt aid in case of crisis such as terrorist attacks by Islamic extremist groups of Boko Haram. However, despite noble USAID’s goals and humanitarian concerns for security in Sub-Saharan Africa, it is clear that ‘the US military belt’ was conceived not only as a means to enable joint training but to deepen politico-economic ties with prospective partner-countries. At the same time, soft power also seems to be a relevant tool with regard to promoting American strategic interests. As such, $34bln-worth Power Africa program executed by Mr. Obama will help ensure that foreign technology and expertise reach 23 African countries in order to provide them with 30 gigawatts of clean power generation.
“Fake it till you make it”
The current plummeted oil price presents a window of opportunity for the USA to build an extensive National Energy Strategy previously elaborated by the Bush administration and engage African producers in governance reforms in order to help them avoid reliance on lending from developed countries that in turn curbs their expenditures. For this reason, expansion of bi-literal energy dialog such as the one with Nigeria is essential in terms of ensuring the overall stability of the oil market. By aiding regional security, the USA will decrease its own risk of falling at the mercy of supply shocks such as the one of 2008 when Nigeria ceased production due to “attacks on its offshore facilities [2]” followed by “kidnappings and murder of hydrocarbon sector personnel [3]. ” The US needs to address resource nationalism of Nigeria, Angola and Algeria whose increased rent on oil production exposes them to risk of falling FDI and, as a result, supply shortages of both LNG and oil that would affect global market. At the same time, it is important not to overestimate the ability of financial leverage on African energy producers. As is clear from the example of failed Chad-Cameroon pipeline and World Bank’s departure from the project in 2006, not all resourceful countries are ready to make political commitments and manage risks despite being aided by foreign loans. Thus, the US needs to re-assess its policy towards Chad and Angola where the American oil giant Exxon as well as other 20 smaller companies are actively operating. At the same time, it is important to sustain both diplomatic and trade relations even with countries where “the government’s human rights record remained poor [4]. ” Otherwise, the US risks loosening its grip on its “good friends”, i.e. the major suppliers such as Equatorial Guinea who was also referred to as China’s “best friend” by the Chinese Foreign Minister during his visit in 2007.
Despite its attempt to secure national interest, for now the US’ presence in the region is very limited for several reasons. Firstly, “current U.S. government policy on the procurement of African oil based on the National Energy Policy of 17 May 2001” has become outdated with the recent emergence of new gas producers such as Tanzania and Mozambique. In 2001, Africa was not yet a “pillar of global energy security [5]”, whereas today it is expected to increase its oil production by 91% from 2001’s level by 2025 [6]. At the turn of the millennia the American government was mostly preoccupied with the war on terror and HIV/AIDS that hijacked the attention from the issues of environment, transparency and good governance that became a low key priority. With the expiration of partnership between the US-Africa Energy Ministries, American dialog with Angola and Nigeria virtually came to an end. The US also lost the leverage over Angola who joined OPEC and became an active exporter to the Atlantic market. Also, given that “Mozambique, Nigeria, Angola and Tanzania, Sub-Saharan Africa (possessing “30% of global oil discoveries [7]”) will produce about 175bcm/y of natural gas by 2040 [8]”, it is of great importance for the US to find a systematic policy approach. Similar to what it did in Equatorial Guinea, the US needs to continue opening its embassies in Africa, energizing civil society by encouraging respect for human rights and adaptation of suitable fiscal systems. Then, high quality sulfur-low oil as well as “gas resources not only can provide energy and revenues for local use, but also can help stabilize oil and gas prices by diversifying and enhancing available supplies for regional and global markets [9].”
Hopeful future
By accompanying current crisis/risk-management approach with that of a stakeholder engagement, the US will be able to foster cognitive revolution and domestic R&D in Africa, embedding it in the system of global trade and governance. The difficulty of the current administration is, thus, to resolve the problems related to corruption, resolve military conflicts in the Niger Delta, secure its share in E&P agreements through funneling investment into offshore areas with relatively low competition, and to develop strategic and diplomatic tools to address these challenges on site. The ultimate goal that would indirectly increase American energy security is to establish a free laissez-faire hydrocarbon market through supporting economically viable projects not only in ‘resource cursed’ countries but in Libya, Nigeria and Algeria which are open to FDI. By directing African oil and gas into ‘the veins’ of the global trade system, the US will not only expand its political influence but will address energy-related challenges which have become so acute due to raising global demand in the framework of the upcoming climate change.
1. Estimated at 350mln people by Ncube, Mthuli, C. L. Lufumpa, and D. Vencatachellum. “The Middle of the Pyramid: Dynamics of the Middle Class in Africa.” African Development Bank, Tunis, 2011
2. Profit from the Peak: The End of Oil and the Greatest Investment, Brian Hicks, Chris Nelder
3. Profit from the Peak: The End of Oil and the Greatest Investment,Brian Hicks, Chris Nelder
4. Country Reports on Human Rights Practices for 2007, House (U S ) Committee on Foreign Affair, Senate Committee on Foreign Relations
5. Overview of global energy security issues, United States. Congress. Senate. Committee on Foreign Relations. Subcommittee on International Economic Policy, Export and Trade Promotion
6. The US Department of Energy
7. IEA: Sub-Saharan Africa will produce more gas than Russia, 30 October 2014
8. IEA: Sub-Saharan Africa will produce more gas than Russia, 30 October 2014
9. IEA: Sub-Saharan Africa will produce more gas than Russia, 30 October 2014
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