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My Oil Well Is in Your Premises


By Toyin Akinosho

The just concluded court battle between Cross River and Akwa Ibom States rewrites the Eritrean war of independence in small letters.

Cross River was praying Nigeria’s highest court to confer on it the status of a littoral state. It wanted to be defined-even if not by geography-as a state bounded by the Atlantic Ocean to the south. The verbal court arguments, in a democratic jurisdiction, echoed the claims of angry roar of Ethiopian fighter jets pounding Eritrean territory for thirty years: “the coastline is ours!”

The Ethiopians lost the red sea in spite of their mighty army. The Cross Riverians lost the Atlantic in spite of their sparkling brand name.

For, like it or not, Cross River is a bigger brand than Akwa Ibom.

Cross River State used to encompass what are now both Cross River and Akwa Ibom states.

Calabar, the state capital, is a niche town which, as far back as the 16th Century, has been a recognized international sea port, shipping out goods such as palm oil. Today it hosts one of the largest street carnivals on the continent. On the contrary, Uyo, the  capital of oil rich Akwa Ibom State, stubbornly remains a small, sleepy town, while Calabar is its more boisterous neighbour across the river.

The trickster god of Geology probably helped in deceiving Cross River into believing it was entitled to some chunk of the proceeds that its neighbour was getting. The sediments that created the reservoirs in which the oil pools of Akwa Ibom State are trapped were deposited by the Cross River, for which the resource-poor state is named. The Cross River system is responsible for perhaps the most prolific segment of the Niger Delta basin; four companies, namely ExxonMobil, TOTAL, NPDC and Addax, produce over 1Million barrels of Oil per day in the south east offshore corner of the Niger Delta which is, really, roughly one tenth of the basin. That same south east corner, we must acknowledge, is where the main oil production in Equatorial Guinea and Cameroon comes from. The same petroleum system spawned what has so far been discovered in the Joint Development Zone (JDZ)between Nigeria and Sao Tome et Principe(STP).

But Geology is not a respecter of political boundaries. That is why countries which share boundaries with hydrocarbon rich countries are, quite often, resource poor themselves and they are always complaining they have been cheated.

Somali and Kenya never had a public spat over boundaries until recently, when Kenya became a magnet for exploration companies and encountered its first commercial pool of oil. Now the two sides are bickering.

The Somali government, ordinarily concerned with keeping terrorists at bay in its war weary cities, now has a new cause to fight. It accuses Kenya of awarding offshore oil and gas blocks illegally to TOTAL and ENI, French and Italian oil majors respectively, claiming that the blocks lie in Somali waters. Just a few days before the Supreme Court in Nigeria ruled that Cross River was not a littoral state, Somali deputy energy minister Abdullahi Dool claimed that L21, 22, 23, and 24, the four deepwater blocks awarded to TOTAL and Eni, were invalid and that his country would take the matter to the United Nations.

Kenya has so far rejected the Somali claims to the area. Although the two countries signed a memorandum of understanding in 2009, which stated that the border should run east along the line of latitude, Somalia rejected the agreement. The contention between Kenya and Somalia is about acreages in the Lamu Basin, right in the Indian Ocean, the vast seaway which bounds the African continent in the east. In these same waters, International Oil Companies have, within two years discovered-by their own submission-over 100Trillion Cubic feet of gas, more than half of Nigeria’s gas reserves, off Mozambique and Tanzania.

And, this is the point about “the trickster god of geology” again: the discoveries in Tanzania have been a fraction of the finds in Mozambique, even though the assets in question lie in the same Ruvuma Basin and the acreages are quite close to one another.

Tanzania has vowed to get as lucky as Mozambique and is planning a bid round to award acreages which has “similar geologic features to the richly endowed tracts of Mozambique”.

Democratic Republic of Congo is battling two oil rich neighbours to the east and west. Some of the most prospective, but undrilled structures in the DRC lie along the same trend in the Albertine basin as the reservoirs where Tullow Oil has reported estimates of a billion barrels of oil in several fields in Uganda. Congolese and Ugandan troops have clashed several times in this area. In Uganda’s Hoima district, Heritage, the London listed operator, constructed a school in memory of Carl Nedft, the British geologist who was slain in a pre-dawn raid on workers by Congolese troops in August 2007.

To the west, DRC has long accused Angola of “stealing” oil from offshore wells near its coast–thought to be a reference to operations in the Cabinda enclave, which is surrounded by DRCongo and Congo Brazaville. “In early 2010, Angola’s National Assembly agreed to open talks with the DRCongo on the extension of its border out to 350 nautical miles, rather than 200 miles, as a prelude to an application to the UN for recognition of that boundary. Relations between the countries deteriorated sharply in 2011 after a series of disputes” says the World Markets Research report. A report in a July 2012 edition of Journal De Angola notes that the Angolan Cabinet in Luanda “analysed a number of treaties between Angola and Congo on joint exploration of oil in the Lianzi development area concerning the share of revenues, customs and migratory matters”. It may be a way of saying that the issues were finally getting to resolution.

The clash between Sudan and South Sudan has shown that the more battle hardened the neighbours are, however, the more difficult it is to reach a solution around boundaries. In January 2012, Salva Kiir, the president of South Sudan, took the decision to shut down oil producing facilities and thus cut off revenue to both Sudan and his own government. It’s an unusual course of action for an African head of state. When South Sudan became independent of Sudan in July 2011, it inherited over 90% of the crude oil reserves and production which were, until 2005, entirely under the control of Khartoum. Even though most of the fields are located in South Sudan, the processing, storage and evacuation facilities are sited in Sudan and  revenues from these resources had been shared equally in the seven years since the signing of the Comprehensive Peace Agreement that granted autonomy to the South. Now that South Sudan “owned” most of the oil, the major revenue accruable to Sudan was transport tariff charges. Sudan was demanding tariff as high as $35 per barrel, which South Sudan was unprepared to pay. Sudan was also making claim to some boundary areas that the South insists were part of its territory. In April 2012, Kirr sent forces to one such border town named Panthou(by the Dinkas of South Sudan) and Heglig(by Arab Sudanese).

Cote D’Ivoire had been producing more oil than Ghana had ever hoped to produce since the early 90s. But the discovery of the600Million barrel Jubilee field off Ghana in 2007, has sparked renewed exploration interest in the so-called “transform margin” of the Gulf Of Guinea, where offshore Ghana and Cote d’Ivoire are located. In 2011, the Ivorian authorities–at the time still under the helm of former president Laurent Gbagbo–published a map with a new border, taking in several Ghanaian oil blocks. The situation caused a stir in Ghana, as the proposed border came dangerously close to the Jubilee oilfield and recent oil and gas discoveries such as Tullow’s Tweneboa and Enyenra complex. However, the governments have enjoyed cordial relations for a long time and are keen to solve the matter peacefully.

The one African leader who has dealt upfront with the issue of hydrocarbon prone maritime boundaries has been Olusegun Obasanjo, former president of Nigeria. He “settled” disputes, which had long lingered before his tenure, with Equatorial Guinea, Sao Tome et Principe and Cameroon. And his solutions were such that Nigeria, playing the big brother, gave out more territory to these less endowed neighbours. In coming to a resolution with Equatorial Guinea, Nigeria surrendered a chunk of the Zafiro field, which currently produces 140,000Barrels of Oil Per Day.  And it was in the process of giving up the Bakassi Peninsula that Cross River lost “its coastline”. But in going to court to get an alternative to its probable loss of oil revenue accruing from Bakassi, Cross River could have asked itself: how much oil, really is in that peninsula? The answer, really, is, not much, if any. Cameroon itself, in total, is producing just 60,000BOPD. And if indeed, there was some commercial pool of hydrocarbon in Bakassi, it would most likely have made Cross River the least endowed of the fringe Niger Delta states, like Edo, Ondo Imo and Abia.

This piece was originally published in the March 2012 edition Africa Oil+Gas Report. No, it has not been updated



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