The Curious Bonds of Oil Diplomacy

from the 11-part series

Making a Killing

The Business of War

The Center for Public Integrity website

The tongues of yellow flames from flaring gas burn like candlesticks lined up in a cathedral, lighting the night sky of the port city of Malabo and sending black fumes billowing upwards. In the waters offshore, oil rigs and production platforms sit majestically, sucking hundred of thousands of barrels a day from the deep sea oil fields of Equatorial Guinea.

Until a few years ago, this nation of 486,000 ­ consisting of five islands and a square snip of coastal West Africa between Cameroon and Gabon ­ was a small and insignificant sideshow in the political drama of the African continent. But the beginning of large scale oil production in 1996, along with new concerns about the security of Mideast oil supplies, has thrust West African nations like Equatorial Guinea to the forefront of the global politics of oil.

Already, 15 percent of the United States' imported oil supply comes from sub-Saharan Africa. Oil experts predict that the amount of oil the United States receives from the prolific fields of Nigeria, Equatorial Guinea and Angola will double in the next five years.

"African oil is of strategic national interest to us and it will increase and become more important as we go forward," Walter Kansteiner, assistant U.S. secretary of state for African Affairs, said during a July 2002 visit to Nigeria ­ the largest oil producer in West Africa with an estimated 24 billion barrels in reserve.

U.S. Vice President Dick Cheney, a former oil company executive, predicted the same a year earlier, when, referring to the instability of Mideast oil, he said, "Along with Latin America, West Africa is expected to be one of the fastest-growing sources of oil and gas for the American market."

Today, U.S. oil firms dominate the Equatorial Guinea landscape. ExxonMobil, Amerada Hess, Chevron Texaco and Marathon Oil have the largest share of the country's oil production. Based on new discoveries, analysts expect their total collective investment of $3 billion to approach about $5 billion by the end of 2002.

Other countries also have interests in the region. The French, traditional rivals to the United States in West Africa, have long-standing ties to neighboring Gabon. The French oil giant TotalFinaElf, along with ExxonMobil, drills the Ekanga fields that straddle territory of both Equatorial Guinea and Nigeria. The Malaysian state oil company, Petronas, is the largest shareholder in the South African-listed company, Energy Africa, which is active in Equatorial Guinea.

ExxonMobil, the first oil multinational to launch commercial exploration in Equatorial Guinea's offshore waters in 1995, controls the Zafiro oil field. Stretching from 25 to 60 miles offshore, it is Equatorial Guinea's most productive field, with a potential yield of close to 200,000 barrels of oil per day. The company's oil vessel Zafiro Producer pulls out about 160,000 barrels per day, and the Magnolia stores the oil for refining until shipment across the Atlantic to markets in the United States.

The 23-year-old regime of President Teodoro Obiang Nguema Mbasogo has been criticized for allowing the oil companies to exploit Equatorial Guinea's oil riches with little obvious benefit to the people. The U.S. Energy Department notes that the government's share of oil revenues is relatively small by international standards. Obiang has announced plans to renegotiate contracts to increase the country's participation in oil licenses.

Meanwhile, the president and his family have been buying up multimillion-dollar homes in the United States. "The government gave the American oil companies carte blanche and threw its doors open," said Christanio, a Jehovah's Witness missionary from Canada who has spent nearly four years in the capital Malabo. "The Americans are slicing their way effortlessly through the oil blocks." Equatorial Guinea has an estimated 600 million barrels in crude oil reserves, and the quantity of oil being pumped daily from its waters is on the rise. A combined figure for all the oil companies is expected to surpass 300,000 barrels per day by the end of 2002. But, with the most modern oil drilling technology and oil exploration experts deployed to harness the country's deep sea reserves, supplies may dry up in as little as a decade, said Max Birley, vice president of Marathon Oil Equatorial Guinea.

"It depends on what production profile the government of the country wants, which is also determined by the security of the government," Birley said in an interview with ICIJ. "Thus, an insecure government will want the oil reserves exhausted as quickly as possible." 

The latest sign of insecurity ­ a March 2002 coup attempt that resulted in the arrest of 120 dissidents ­ has rattled the nerves of the multinational oil companies. Jose Luis Mbomio, community development manager of Hess Triton, told ICIJ that the oil companies compiled a report after the coup, assessing the security situation and detailing possible options if the country were to disintegrate into violence. The report looked at the risks to investment and possible security measures to put in place.

Of major concern is how to secure the country's three modest ports in Malabo, Luba and Bata. The bigger challenge will be the protection of offshore oil rigs and vessels.

Some U.S. oil companies already include former U.S. military men in their security departments in Equatorial Guinea in what appears to be a strategic move to inject a greater level of protection into operations. Ritchie, who asked that his last name not be used, is an Earth satellite engineer who spent 10 years in the U.S. Navy and a couple of years in Nigeria working on government contracts and for oil multinationals before joining Marathon in Malabo. Another American engineer at Marathon, who gave his name only as Curtis, spent four years in the U.S. Army. Neither thinks much of the government or its military. "The troops are undisciplined, unprofessional and illiterate," said Curtis. "They can also be very defiant."

Oil from troubled waters

Equatorial Guinea was a Spanish colony, unique in sub-Saharan Africa, and has had a checkered political history since independence in 1968. During Christmas celebrations in 1975, dictator Francisco Macias Nguema ordered his militia to kill 150 political opponents in the Malabo stadium as loudspeakers blared, "Those were the days my friend." By 1976, two-thirds of the elected assembly had disappeared and an estimated one-third of the population was either dead or in exile. In 1979, Nguema was tried and executed after his nephew, the current president Obiang, deposed him in a coup.

The country has been a nominal constitutional democracy since 1991, but the 1996 presidential and the 1999 legislative elections were marred by fraud and other irregularities.  Though no specific law prohibits public dissent, to speak against the president is widely regarded as a crime, and those who openly criticize the government often end up in jail. In April and May 2002, following the aborted coup, several key opposition figures were arrested for "breach of national security." Lawyer Fabian Nseu Nguema of the opposition People's Union, the country's second major opposition party, was arrested on April 29 for "insulting the head of state" and, according to his wife, Elodia Nchama, suffered "physical and psychological torture" while in custody. Most of those detained are kept at Black Beach prison, a notorious interrogation and detention center.

The U.S. State Department has routinely complained about the country's human rights record, and Washington closed its embassy there in 1995. In 1999, the International Monetary Fund pulled the plug on any economic assistance to Equatorial Guinea because of government corruption.

Oil money has exacerbated that corruption. The landscape in Malabo and Bata, the two major cities in Equatorial Guinea, is dotted with state-of-the-art buildings belonging to the president and senior members of his government that stand in stark contrast to the slums in which the majority of people live. In 2000, the president bought a house in the posh Washington, D.C., suburb of Potomac, Maryland, for $2.6 million and another one in nearby Rockville, Maryland, for $1.15 million. The president's son, Teodoro N. Obiang, purchased a house in the ritzy celebrity haven of Bel Air, Los Angeles, in March 2001, for $5.8 million. Actress Farrah Fawcett lives across the street. The younger Obiang, who is also his country's minister of Forests, Fishing and the Environment and is in the running to succeed his father as president, also owns a record label and publishing company in Los Angeles called TNO Entertainment, which specializes in rap records.

The average Equatorial Guinean, by contrast, has seen little of the country's oil wealth. A United Nations development report ranked the country's per capita gross domestic product of $4,676 as 79th out of 149 countries in the world in 2001, but even this is barely reflected on the ground. In 2000, the World Bank reported that the average income per capita was a little over $2 a day.

"After the oil is taken, the money will be taken away and shared," said Rosa, a local restaurant operator, who has no expectations of benefiting from the country's oil wealth. "This place is bad," added David, a bulky Canadian oil field worker, sitting at the seaside Shangri-la bar in Malabo ­ pubs being about the only thriving local businesses in Equatorial Guinea. "I am here only because of the oil," he added, asking that his last name not be used.

Chantal Kengueleoua, the deputy U.N. Development Program representative in Malabo, warned of the consequences of the government's failure to use its oil wealth to develop an economic infrastructure and provide for the education and well-being of its people. "The government and U.S. oil companies here must invest in the local economy or else we are creating the pre-conditions for conflict," she said in an interview.

Indeed, concern about political stability in West Africa, estimated to have about 30 billion barrels in oil reserves, has made Equatorial Guinea and its neighbors favored candidates for U.S. and European military assistance. Worries that another politically unstable government could be a terrorist breeding ground have added a note of urgency.

According to an African defense attaché in Malabo, about 10 weeks after the Sept. 11, 2001, terrorist attacks on the United States, a senior security officer working with one of the foreign embassies in Malabo alerted the U.S. ambassador in neighboring Cameroon that al Qaeda planned to attack U.S. oil installations in Equatorial Guinea and Nigeria.

George Staples, the U.S. ambassador in Cameroon who has diplomatic responsibility for Equatorial Guinea, convened a high-level meeting with defense attachés from the region and the general manager of ExxonMobil in Equatorial Guinea, Ben Haynes. A security alert was issued and remained in force until May 2002, as oil companies scurried to find ways to forestall attacks on their offshore rigs. 

The oil companies do not view Equatorial Guinea's military ­ a product of decades of brutal dictatorial rule ­ with much confidence. The army is believed to have only about 1,320 men under arms, the navy 120, and the air force 100. Seven of the army's nine generals are relatives of the president; the other two are from his tribe. There is no clear command structure, the level of discipline is low, and professionalism and training are almost non-existent, according to locals and foreign oil workers. Even the presidential guard ­ an indication of the lack of trust in the country's forces ­ is comprised of 350 Moroccan troops.

Oil companies are even less enamored of Sonavi, the private security company owned by Gen. Armengol Ondo Nguema, head of national security in Equatorial Guinea and the president's brother, with whom they must contract. Sonavi, headquartered in the wealthy neighborhood of Caracolas near the airport, was formed to service the oil industry with guards for the onshore properties and offshore rigs and platforms. But the Equatorial Guinea government and the American oil multinational companies are not prepared to leave security in the hands of Sonavi alone.  

"The EG government does not have enough capability to ensure the security of our operations," said Anacleto Olo Fernandez, who works for ExxonMobil and serves as an interpreter between the oil companies and the government.

But despite the sense of vulnerability many oil workers say they feel and the political instability of the authoritarian government, Equatorial Guinea's oil wealth makes it a country too attractive to pass up. So attention has focused on shoring it up.

Calling in reinforcements

In 1998, the government of Equatorial Guinea approached Military Professional Resources Incorporated, a private military company based in Virginia, for help in upgrading its armed forces. MPRI was founded in 1988 by retired senior Pentagon officers.  The company ­ whose biggest client is the U.S. government ­ has trained troops in the Balkans, Latin America and Africa and has boasted that it has "the greatest corporate assemblage of military expertise in the world."

The same year, the Clinton administration proposed creating the African Crisis Response Initiative to train the militaries of select African countries in an attempt to ensure that Rwandan-style genocide would never again occur and to deal with the numerous small wars blighting the continent. Since its inception, the program, which included the provision of military hardware, has trained over 8,600 soldiers from Senegal, Malawi, Benin, Mali and Kenya, according to the Pentagon.

The U.S. European Command coordinated the U.S. military training activities for the program, with specific ACRI training carried out by members of the Army Special Forces Command. Sub-contracting was also conducted through MPRI and Logicon, the information technology sector of Northrop Grumman.

While MPRI was busy with ACRI, it also secured a Pentagon contract to "professionalize" the military in Nigeria. The U.S. Defense Department, according to the details of the August 2000 contract, was to pay half of the estimated $8 million price tag, with the Nigerian government paying the other half.

According to MPRI spokesman Ed Soyster, a retired Army lieutenant general who was once director of the Pentagon's Defense Intelligence Agency, Nigerian President Olusegun Obasanjo wanted to create a professional army in which the officer corps would not be tempted to interfere in politics. There have been seven coups in Nigeria since its independence from Britain in 1960.

U.S. government interests lay in the fact that Nigeria, an OPEC member and the sixth largest producer in the world, is the fifth largest supplier to the United States, where U.S. refineries absorb close to half of Nigeria's 2 million barrels of oil produced each day.

But MPRI's presence in Nigeria prompted protests from senior members of the Nigerian military, the most outspoken of whom was Lt. Gen. Victor Leo Malu, the army chief of staff, who was later fired by Obasanjo. Malu told ICIJ that his sudden departure from office was largely because of his opposition to MPRI in Nigeria.

Malu questioned MPRI's plan to slash the size of the Nigerian military from 100,000 to 50,000 and its need to have access to sensitive military information. "How much intelligence about your country do you give to a foreign country?" Malu said he asked. He never got an answer and remains convinced that the goal of the company was to gather intelligence for the U.S. government ­ a contention Soyster dismissed. "From a military point of view, they weren't very effective," Soyster said of the Nigerians.

The controversy surrounding its work in Nigeria notwithstanding, it was Equatorial Guinea that proved to be the greater challenge for MPRI.

MPRI first applied for a license from the State Department, as required by U.S. law, to work in Equatorial Guinea in 1998. But the department's Bureau of African Affairs rejected the request because of Equatorial Guinea's history of human rights violations.

MPRI appealed that decision to the assistant secretary of state for African affairs, then Susan Rice.  "I pointed out to her that no one knows what's going on in the country, and the U.S. ambassador has supported our application," Soyster said.

This time, the private military company cleared the Africa bureau's concerns, only to hit another roadblock at the department's Bureau of Democracy, Human Rights and Labor.  Again, MPRI lobbied, this time in the U.S. Congress, and a contract to assess Equatorial Guinea's defense needs was approved. Between 2001 and 2002, MPRI made several trips to Malabo to meet with government officials and oil company executives. Bill Watson, vice president of Hess Triton in Equatorial Guinea, was one of those who met with MPRI, characterizing it as a "courtesy" visit. Also participating in some of the meetings was Staples, the U.S. ambassador to Cameroon, according to a military attaché who was present at the meetings.

MPRI then submitted a proposal to revamp the armed and police forces of Equatorial Guinea, but was granted a license by the State Department in May 2002 to train only the Coast Guard. U.S. Sen. Russell Feingold, a leading proponent of human rights in Africa, has been at the forefront of opposition to MPRI getting a contract for comprehensive military training in Equatorial Guinea for fear that U.S.-trained forces will be used against government opponents.

"Imagine the U.S. developing a Coast Guard without considering a Navy?" said Soyster. "You got to look at the whole thing. So we're licensed to do the Coast Guard, but it's entirely up to the president of Equatorial Guinea if he wants to continue with just the Coast Guard."

Soyster said he discussed Equatorial Guinea's human rights record with Obiang on at least five occasions and was told by the president that his country needed U.S. assistance to deal with its problems and become more democratic. According to Soyster, Obiang said he wanted "a disciplined force that I can send to various places to take care of whatever the problem is."

Soyster said he warned the U.S. government of competition from other countries, adding that "the big flags over there are China and North Korea." The French, Russians and Chinese are also active in companies that service the oil sector.

An area of vital interest

In April 2001, an MPRI representative met with the Pentagon's regional director for Central Africa to discuss the company's hopes of winning the contract to train Equatorial Guinea's forces.  "They may need our help or moral support," Lt. Col. Karen Kwiatkowski wrote in a memo on the meeting, obtained by ICIJ under the U.S. Freedom of Information Act. She quoted the MPRI representative as saying that Equatorial Guinea was "the Kuwait of the Gulf of Guinea" and, in a briefing paper three months later, advanced that characterization to "a possible 'Kuwait of Africa' with huge oil reserves" that was "US-friendly for both investment and security reasons."  Kwiatkowski also noted in her April memo that the highest-ranking U.S. official to meet with Obiang when he visited Washington early in 2001 was an assistant secretary of agriculture ­ that after French President Jacques Chirac had spared time to meet with him.

Despite concerns about Equatorial Guinea's human rights record, Obiang's currency rose dramatically after the Sept. 11 terrorist attacks. When he visited the United States as it marked the first anniversary of the attacks, Obiang was among 10 African leaders to meet with President George Bush for talks on the prospect of war with Iraq and peace and development on the African continent.

His visit was preceded by a report from the African Oil Policy Initiative Group ­ an ad-hoc coalition of Africa consultants, energy executives and staff from a U.S. congressional subcommittee on Africa. Titled "African Oil: A Priority for U.S. National Security and African Development," the report recommended that Congress and the White House declare the Gulf of Guinea an "area of vital interest" to the United States ­ a designation never before extended to any region of Africa ­ giving it strategic and military priority. The Africa Oil Policy Initiative Group is led by Robert Heiler and Paul Michael Wihbey of the Institute for Advanced Strategic and Political Studies, a conservative Jerusalem-based think tank which maintains that West African oil "can help stabilize the Middle East, end Muslim terror and secure a measure of energy security."

"For too long official Washington has been gripped by the perception that the United States has no vital interests in the sub-Saharan Africa. Nothing could be further from the truth," the June 2002 report said. "As the political and security conditions of the Persian Gulf deteriorate, the availability and appeal of reliable, alternative sources of oil for the American market grows. African oil is emerging as a clear direction U.S policy should take to provide a secure source of energy."

In July 2002, military officials from the United States, France and Britain met with representatives of the 15-member Economic Community of West African States, known as ECOWAS, for talks on expanding military cooperation with West African countries. The ECOWAS Monitoring Group, a regional peacekeeping force of member country battalions, has already received a $5.3 million early-warning satellite communication system, with financial and technical assistance from the United States and European Union, and says it plans to establish two military bases, including one in a coastal member state.

A senior African security operative based in Malabo told ICIJ in April 2002 that plans were afoot to establish a U.S. military base in the area to guard oil facilities in the Gulf of Guinea. Fradique de Menezes, the president of nearby Sao Tome and Principe, announced in late August 2002 that he had reached agreement with the United States to build a U.S. naval base on the island-nation as "a harbor for aircraft carriers patrol boats and for Marines stationed in the region," according to The Associated Press. The president's announcement followed a visit to Sao Tome in late July by U.S. Gen. Carlton Fulford, deputy commander of the U.S. European Command.

So far, the Pentagon has denied any plans to build a U.S. naval base in Sao Tome, but its interest in the region is clear.

Michael Westphal, deputy assistant defense secretary for African affairs, told reporters in Washington that the Pentagon planned to increase its military training to individual African nations through organizations such as ECOWAS. He acknowledged that the desire to create stability was linked to the war on terrorism. "Instability creates a vacuum, which can draw terrorists to it."

The African Crisis Response Initiative has also since been modified to meet new concerns about terrorism.  Critics in the early days of the Bush administration complained there was little to show for the $100 million spent on training over the five-year life of the program, but that attitude has changed. The administration in May 2002 decided to make the program a permanent fixture and, under the new acronym ACOTA (African Contingency Operations Training and Assistance), will increase the scope of military training, tailored to specific country needs. According to Pentagon officials, the new program will also coordinate with European security assistance efforts in Africa.

Equatorial Guinea's oil-producing neighbors offer other security threats. It has had several skirmishes between 1998 and 2001 with neighboring Nigeria and Cameroon over oil fields that fall within the maritime boundaries of the three countries. A dispute over the Bakassi Peninsular, an oil-rich territory bordering Nigerian's boundary with Cameroon, is still raging, and there are fears that could spill over into Equatorial Guinea and Gabon, both of which share a complex marine boundary.

But it's the rapid oil wealth in contrast to the abysmal living conditions for most Equatorial Guineans that poses the greatest threat to long-term stability, in-country observers say.

In Nigeria, oil companies increasingly face attacks by militant youths who sabotage their pipelines, take their staff hostage and disrupt operations. That has not yet happened in Equatorial Guinea, but "Equatorial Guinea will get to the resistance level of Nigerian oil communities with time," Kengueleoua, the U.N. Development Program representative in Malabo, told ICIJ. Guaranteed security can exist only when the government is accountable and democratic, she said, adding, "These conditions are non-existent in Equatorial Guinea ­ and the oil companies have not helped."

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