NEW YORK — Two new pipeline projects in West Africa represent both the hopes and trepidation of doing business in a part of the world where oil exploration often has been synonymous with corruption, repression, kidnapping and environmental degradation.
One pipeline would feed Nigerian natural gas - which has been flared for lack of commercial markets - to power plants in neighboring Ghana, Togo and Benin. The other would bring petroleum out of Chad through Cameroon, where it would be exported by sea. Oil revenues from Chad conceivably would go towards development projects, but critics are skeptical, pointing to problems associated with oil exploration in Nigeria. Environmental groups, non-governmental organizations and human rights workers say there is huge potential for exploitation and corruption, despite involvement of the World Bank to oversee how the oil money is spent.
The natural gas project isn't subject to such intense scrutiny because development has to happen -- namely the construction of power plants -- for the endeavor to succeed.
The international consortium directing the Nigerian venture views it "as a catalyst for tremendous growth in that region," according to Jan Golon, spokeswoman for Chevron, the project manager and one of the largest oil producers in Nigeria. "Once the power gets there it will generate more commerce, it will stimulate their entire economies in that it will enhance commerce and it will enhance industry. It's just a win-win situation for everybody."
That isn't necessarily the case in Chad and Cameroon.. Schools and hospitals aren't needed for the pipeline to be completed. The project's critics contend that local communities could suffer from the fallout of environmental degradation, be forced off their land and possibly pushed into conflicts with their neighbors over oil revenues if the governments don't make good on their pledge to build up local infrastructure and alleviate poverty.
Over the past decade Cameroon has received several million dollars in World Bank loans for development projects and programs to reduce poverty, to little positive effect, critics say. "There is nothing in the country positive that would give you any indication that anything has been done," said Korinna Horta, an environmental economist with the Environmental Defense Fund in Washington, D.C. who has long experience in Cameroon. "It's like putting money in a sinkhole --and you want to put trust in this government to distributing equally the royalties it would get from this oil?"
"Look at the region," she added. "There are no good examples: Congo, Gabon, Equatorial Guinea and Nigeria. What you see in place after place is where oil income is creating rentier economies."
This is another area where the natural gas project is unique. The $400- million endeavor is projected to bring $1.8 billion in investment to the West African region and create up to 20,000 direct new jobs and possibly 60,000 secondary jobs, according to a feasibility study by the Dames & Moore Group for project manager Chevron. Under the West African Gas Pipeline (WAGP) joint venture agreement that was signed last month, a consortium of six energy resource companies would complete pipeline development by 2002 to initially ship about 120 million cubic feet of natural gas a day. Consortium participants, in addition to Chevron Nigeria, are Ghana National Petroleum Corporation, Nigerian National Petroleum Corporation, the Shell Production Development Company of Nigeria; Societe Beninoise de Gaz S.A.; and Societe Togolaise de Gaz S.A.
Chevron officials say the project is an opportunity for West Africa to prove that it can be competitive against other parts of the world in attracting private capital. Another projected benefit is saving native forests that are being burned for fuel, and ending gas flaring in Nigeria to help cut emissions of greenhouse gasses. A 78-million-ton reduction is projected over a 20-year period; an additional 22 million tons would be eliminated in Ghana, Togo and Benin as gas replaces crude oil in power plants there, according to the feasibility study. The goal is to have zero flaring in Nigeria by 2007.
Providing gas will allow people to depend less on wood burning as their principal source of fuel, which means less clear-cutting of valuable native forests. This translates into less soil erosion, improved water quality and greater protection of wildlife, the study said.
Environmental concerns in Nigeria's Delta region have led to severe problems in the past. The government of former military ruler Sani Abacha executed nine minority rights activists from the region in 1995. Hostage taking of local and foreign oil workers by militant youths is routine. The ongoing unrest has led to frequent partial shut-downs of oil production. The military regimes which preceded the civilian government that was elected in May siphoned off much of the revenues that were to go to community development. Foreign oil companies have often stepped in to fill the gap -- if only to avoid sabotage of their installations, extortion and kidnapping. Last month, Punch newspaper reported that Ijaw youths have given Shell the go-ahead to re-open its seven flow stations in the Northern Swamp Field, which were shut by the rampaging youngsters last October.
In an effort to avoid similar problems in Chad, Exxon, Elf and Shell are looking in part to World Bank involvement. The bank has imposed several prerequisites for approving $115 million in loans requested by Chad and Cameroon for their pipeline. There has to be a credible oil revenue management program and participation of opposition parties and the private sector in decisions concerning the use of oil revenues. There also has to be government commitment to spending a sufficient amount on education, health and infrastructure, as well as resettlement of people displaced by the project.
"It's intriguing what concessions have been made by the oil companies and by the government: the acknowledgement by the oil companies of a need for consultation, for taking human rights into account, for working with local populations closely," said Peter Rosenblum, associate director of Harvard Law School's human rights program. "To me those are important breakthroughs at a conceptual level but it's going to be very hard to make sure that there's pressure to make these things actually happen."
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Hundreds of national and international non-governmental organizations have petitioned the World Bank to put a hold on the project for two years, citing the need to inform and educate the local population, minimize threats to the environment and address human rights issues. Libya has reportedly offered financing if none other is available.
A World Bank spokesman, Eric Chinje, said a full reassessment is to be completed by mid-September. The concerns of the NGOs and others are to be addressed, he said. "Basically what they're saying is that oil projects and allegedly corrupt governments have never led to poverty alleviation," said Chinje. "We feel that technically the project has been designed to address all the environmental and social concerns that have been raised by NGOs and the other groups."
Rosenblum said oil companies initially were "handing out wads" of currency for compensation of the land they were moving onto for exploration in Chad before any real consultation took place. Now there is a public relations video produced by one oil company that shows its employees sitting down for talks with local chiefs and village leaders. Local community activists have kept in close consultation with their counterparts from oil communities in Nigeria and abroad for advice on how to direct and keep up the pressure.
"I think that it's a good example of how international and domestic pressure from civil society can stand up to some of the evils of globalization," Rosenblum said. "That a globalized civil society can compete with globalized business. That's the ideal."
