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Sino-U.S.
Energy Competition in Africa
Chietigj Bajpaee
With
oil prices hitting record levels of US$70 per barrel in
recent weeks, major energy consuming countries are engaging
in an increasingly heated competition for energy resources
on the world stage. Nowhere is this more evident than between
the United States and China, the world's first and second
largest energy consuming countries respectively. In the
contest for energy resources, numerous "stages"
of competition are emerging, including the Middle East,
Central Asia, Latin America, and the East and South China
Seas. However, Africa is fast emerging as one of the most
volatile stages of Sino-U.S. energy competition, given its
vast reserves of energy resources and concentration of internal
security crises.
Africa owns about eight percent of the world's known oil
reserves with Nigeria, Libya and Equatorial Guinea as the
region's leading oil producers. Seventy percent of Africa's
oil production is concentrated in West Africa's Gulf of
Guinea, which stretches from the Ivory Coast to Angola.
The low sulphur content of West African crude makes it of
further strategic importance.
However, the region is also vulnerable to instabilities
ranging from piracy to terrorism, interstate and tribal
conflict, AIDS and political uncertainties. Given the weak
governments and significant Muslim populations of the region,
the African continent may also emerge as a hub for al-Qaeda-linked
terrorist groups.
Finally, oil-rich countries in Africa have been unable to
escape the "curse of oil," which has fueled corruption,
conflict, and environmental degradation across the region.
For instance, while Nigeria has earned US$300 billion in
oil revenues over the last 25 years, per capita income remains
below US$1 per day. Nigeria is also subject to ethnic violence,
oil strikes and sporadic attacks on oil infrastructure by
the Niger Delta People's Volunteer Force. Adding Sino-U.S.
energy competition to this volatile mix could further destabilize
the region.
U.S.-Africa
Energy Relations
The U.S. currently derives 15 percent of its oil supplies
from Africa as compared to 22 percent from the Persian Gulf.
Within the next ten years, the U.S. could be depending on
Africa for a quarter of its oil supplies according to the
U.S. National Intelligence Council. Nigeria alone is the
fifth biggest source of U.S. oil imports with the United
States accounting for half of Nigeria's oil exports. Washington
has also re-established diplomatic and energy relations
with Libya following the removal of economic sanctions in
September 2003 after Libya abandoned its nuclear weapons
program.
In addition to securing energy supplies in the region, the
U.S. has a burgeoning economic relationship with the region
and has been increasingly concerned with Africa's security
situation, political freedoms and human rights record. U.S.-Africa
trade stood at US$44.5 billion in 2004 with oil-rich Nigeria
being the second-largest source of U.S. investment after
South Africa. Since the September 11 attacks, the U.S. has
also stepped up security cooperation with African states.
The U.S. Coast Guard has increased patrols of the region
as well as engaged in training, intelligence sharing and
public relations exercises with numerous states including
Sao Tome and Principe, Cape Verde, Ghana, Benin, and Equatorial
Guinea.
Meanwhile, the U.S. State Department's Trans-Sahara Counter
Terrorist Initiative has trained troops in Niger, Mauritania,
Mali and Chad. The U.S. also maintains a military base in
Djibouti from where it coordinates anti-terrorism operations
on the continent.
Nevertheless, with military assets tied up in Afghanistan,
Iraq and the Persian Gulf, the U.S. has not been able to
devote the necessary attention to Africa, which in turn
has allowed other countries such as China to make further
inroads.
Sino-Africa
Energy Relations
China
currently derives a quarter of its oil imports from Africa,
with oil interests in Algeria, Angola, Chad and Sudan and
increasing stakes in Equatorial Guinea, Gabon, and Nigeria.
China's energy interests in Chad are of particular interest
given that Chad still maintains diplomatic relations with
Taiwan.
China's
growing energy partnership with Sudan represents one of
a number of areas where Sino-U.S. energy interests diverge
in Africa. China National Petroleum Corporation established
oil exploration rights in Sudan in 1995. Two years later
when Washington cut ties with Sudan, China filled the vacuum
making Sudan China's largest overseas production base. More
than half of Sudan's oil exports go to China, accounting
for five percent of China's total oil imports. C.N.P.C.
owns a 40 percent stake in the Greater Nile Petroleum Operating
Company and pumps over 300,000 barrels per day in Sudan.
Another Chinese firm, Sinopec, is constructing a 1500 kilometer
(932 miles) pipeline to Port Sudan on the Red Sea, where
China's Petroleum Engineering Construction Group is building
a tanker terminal.
As
in the case of U.S. relations with Africa, China's relations
with Africa are multidimensional. However, in recent years
China's political, economic and military relations with
Africa have been subordinated to its quest to secure energy
resources in the African continent as energy resources are
being secured in exchange for aid, arms or infrastructure
investment. China's goodwill with African states can be
traced back to its support for anti-colonial struggles in
the 1960s. However, China's relations with Africa have shifted
from holding a strong ideological bias in support of communist
regimes and Marxist insurgencies to being led by market
and resource considerations.
Today
the only ideological component to Sino-African relations
is the One China principle, although there are even exceptions
to this as seen in the case of growing Chinese energy interests
in Chad, which still has diplomatic relations with Taiwan.
At present, only seven African states hold diplomatic relations
with Taiwan. African states are also drawn to China by its
non-ideological, non-interventionist approach, which contrasts
with the Western approach that places an emphasis on democracy,
governance, human rights and humanitarian intervention.
China
has also appealed to Africa through numerous goodwill gestures.
For example, the Chinese foreign minister has maintained
a policy of making his first official overseas trip to the
African continent every year. For decades, China has also
supported numerous infrastructure projects across Africa,
as well as sending doctors and nurses to the region, establishing
scholarships for African students to study in Chinese universities,
providing training to African businessmen and trade officials,
and supplying funds to encourage Chinese businesses to invest
in Africa.
China
also maintains dialogue with Africa through several bilateral
and multilateral forums such as the Asia-Africa Summit and
the China-Africa Business Council, which was jointly established
with the United Nations Development Programme in November
2004 to support China's private sector investment in Cameroon,
Ghana, Mozambique, Nigeria, South Africa and Tanzania. In
2000, China also initiated the China-Africa Cooperation
Forum comprising 46 of the 53 African countries. Among its
accomplishments is canceling US$1.2 billion in debt for
31 African countries. China is also engaged in negotiations
to create a free trade area with the Southern African Customs
Union, as well as coordinating with African states in international
organizations such as the World Trade Organization and United
Nations.
On
the economic front, Sino-Africa trade increased by 50 percent
between 2002 and 2003 to US$18.5 billion, which is expected
to grow to US$30 billion by 2006. At present, 700 Chinese
companies operate in 49 African countries and eight African
countries have been granted the status of "officially
approved travel destinations" by China. China has also
expanded its military presence in the region as seen with
its deployment of peacekeepers to Liberia in December 2003,
which occurred two months after Liberia switched its diplomatic
recognition from Taiwan to China. China has also sent a
peacekeeping contingent to the Democratic Republic of Congo,
as well as providing uniforms to Mozambique's army, helicopters
to Mali and Angola, and weapons to Namibia and Sierra Leone.
Many
of China's diplomatic initiatives in Africa are in direct
conflict with U.S. policy toward the region. For example,
Beijing supplied US$1 billion in arms to both Ethiopia and
Eritrea during their war from 1998 to 2000. Zimbabwe's President
Robert Mugabe, whose regime has been isolated from the West
due to its forced eviction of slum dwellers and white farmers,
has also turned to China for aid. Chinese investment in
Zimbabwe amounted to US$600 million in 2004. China has upgraded
Zimbabwe's transport infrastructure, provided roofing material
for Mugabe's US$9 million palace, and provided the regime
with Chinese-made Karakoroum military trainer jets, MA60
passenger planes, and radio-jamming equipment for a military
base outside Harare, which has been used to block transmissions
by opposition parties.
China
is also one of Sudan's leading arms suppliers. Sudan is
the largest recipient of Chinese overseas investment and
up to 10,000 Chinese nationals work in the country. The
Sudanese government, which has recently concluded a peace
agreement with the Sudan People's Liberation Movement/Army
(S.P.L.M./A.) in the south, is still engaged in a conflict
in the Darfur region of western Sudan using proxy militias
such as the Janjaweed. In 2004, the U.N. Security Council
was forced to water down a resolution condemning atrocities
in the Darfur region to avoid a Chinese veto. China abstained
in the vote over the final weaker resolution. With Sudan
and Iran together supplying China with 20 percent of its
oil imports, U.S. attempts to contain these regimes bring
it into direct conforntation with China's energy security
policies.
The
United States and China are not the only states vying for
energy resources in Africa. Recently, Korea National Oil
Corporation obtained 65 percent oil and gas production rights
in two Nigerian offshore blocks, while India's Oil and Natural
Gas Corporation Videsh obtained a 25 percent stake. South
Korea and India are the world's fourth and sixth largest
energy consumers respectively. India and China both hold
stakes in the Greater Nile Oil Project in Sudan with India
having invested US$700 million in Sudan's oil sector. China
and India have also been engaged in direct competition for
African energy resources, as seen in October 2004 when China
outbid India to buy an interest in an offshore block in
Angola.
Conclusion
Sino-U.S.
relations are going through a cold spell as a result of
disputes over U.S. quotas on Chinese-made textiles and China's
military expenditures, exchange rate policy, intellectual
property rights infringements, human rights record, and
relations with dictatorial "rogue" or anti-U.S.
regimes including Iran, Myanmar, Nepal, Uzbekistan, and
Venezuela. The recent postponement of the much-anticipated
meeting between Chinese President Hu Jintao and U.S. President
George W. Bush in Washington as a result of the relief efforts
for Hurricane Katrina is likely to add insult to injury
among some in Beijing.
While
there have been gestures of rapprochement in Sino-U.S. relations
such as the recently initiated Sino-U.S. Strategic Dialogue
and both states along with India, Australia, Japan and South
Korea establishing an energy partnership known as the Asia
Pacific Partnership on Clean Development, the competition
to secure energy resources on the world stage could fuel
their already shaky relationship.
The
recent failed bid by Chinese energy company China National
Offshore Oil Corporation to acquire U.S. energy company
Unocal is evidence of this. Facing a plethora of internal
crises ranging from poverty to poor governance and civil
war, Africa is likely to emerge as a volatile stage of Sino-U.S.
energy competition. African states have been drawn to China
by its non-interventionist, non-ideological approach in
conducting relations, although China's attempts to secure
energy resources in conflict-ridden states by offering aid
or arms-for-oil could heighten instability in the region.
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