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more articles:
THird one down relates to yesterdays article and my posts today:
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Probe into KBR role in Nigeria bribe case
By Michael Peel in London
Published: August 7 2006 22:06 | Last updated: August 7 2006 22:06
A subsidiary of Halliburton is under investigation by the UK’s Serious Fraud Office over the US oil service company’s part in an alleged plot to pay more than $170m (£89m) of bribes to win billions of dollars of work at a giant Nigerian gas plant.
The SFO said it had carried out searches at business and residential premises as part of the probe into KBR, whose work on the project was underwritten partly by British government money.
The SFO’s action opens a fresh front in a high-profile case being investigated in the US, France and Nigeria. For part of the period under investigation, Halliburton was headed by Dick Cheney, the US vice-president.
The SFO gave few details about its probe, which it said opened in March. The searches were carried out on July 20 at three residential addresses and one company office in London, and at a house in Somerset.
Halliburton said it continued to co-operate and was “committed to getting resolution”. It declined further comment.
The Nigerian bribery allegations erupted three years ago, when a former executive of the consortium working on the gas plant told a French judge it had operated an offshore slush fund to win contracts since the mid-1990s. The consortium is quarter-owned by KBR, through its 55 per cent-controlled British joint venture, MW Kellogg.
More than $12bn has so far been invested in the gas plant, which supercools natural gas into liquid form so it can be shipped. Royal Dutch/Shell is the project’s biggest private shareholder, partnered by Total of France, Italy’s Eni and the Nigerian government.
In 2004, Halliburton severed links with two former employees including Jack Stanley, the former KBR chairman, for having taken “improper personal benefits” in connection with the project. Lee Kaplan, Mr Stanley’s lawyer, declined to comment.
■The bribery allegations centre on the construction of the Nigeria LNG natural gas liquefaction plant. The plant is 49 per cent owned by the Nigerian government, 25.6 per cent by Royal Dutch/Shell, 15 per cent by Total of France and 10.4 per cent by Italy’s Eni
What the SFO is investigating
■The SFO investigation comes after the launch of invest-
igations by a French magistrate, the US Department of Justice and Nigeria’s Economic and Financial Crimes Commission
■Investigators are looking into allegations that TSKJ, the plant’s main construction consortium for the past decade, agreed between 1994 and 2003 to pay more than $170m in bribes to win billions of dollars of building work.
■One of the consortium members is MW Kellogg, a British joint venture in which Halliburton’s KBR subsidiary has a 55 per cent stake. The other companies involved are JGC of Japan, Technip of France and Italy’s Snamprogetti
■The payments in question were made by the consortium to an offshore company controlled by Jeffrey Tesler, a London-
based lawyer, who has declined to comment. His lawyer has denied the money was used for bribes.
■The contracts are for services such as promoting the consor-
tium, advising on contractors and helping to maintain good relations with the client, government authorities and business representatives. They include a no-bribery clause
■Halliburton has severed ties with two former employees including Jack Stanley, a former KBR chairman, for allegedly receiving ‘improper personal benefit’
■Halliburton has said minutes of internal meetings show the consortium had ‘considered payments to Nigerian officials’
Copyright The Financial Times Limited 2006
__________________________________________
Group claims it abducted German oil worker
7 August 2006
ABUJA - A group calling itself the Movement of the Niger Delta People has claimed responsibility for Thursday's abduction of a German oil service company worker in Port Harcourt.
The German was taken in the early hours of Thursday when the abductors forced him and his driver out of his vehicle and took him away in a speedboat.
The group said in a statement that it abducted the German because it wanted his employer, Bilfinger Berger, to desist from its "nefarious regime of dubious compensation and miserly provision of infrastructural amenities" to its host communities.
"We are totally unhappy with BB, especially because the company has
failed to address the welfare needs of the people. We want an immediate change of this policy and demand more jobs for our youths," the group's spokesman, Preye Amazo, said in the statement.
He added that the German had been taken deep into the creeks of the Niger Delta and that any attempt to rescue him would fail.
"We are aware that as an expatriate, he will require all the courtesies possible. We assure that he has been treated with the utmost respect and has been given all the possible liberties he deserved under the circumstances," Amazo added.
"We emphasize that we are not after ransom money for this action. We only desire that our demands are met with dispatch.
The group also demanded the immediate release of two ethnic Ijaw leaders, Diepreye Alamieyeseigha and Mujahideen Asari Dokubo.
Alamieyeseigha is currently facing a 40-count charge of graft for money he allegedly embezzled while he was governor. He was impeached by his state's parliament last December upon his return from the United Kingdom where he was detained for money laundering.
Dokubo is also facing treason charges in court for waging a separatist war on Nigeria in 2004 when he claimed the country lacked legitimacy and had been stealing oil belonging to the Niger Delta people.
Twenty-four hours after the abduction of the German, three Filipinos working for Overseas Trading Services were abducted by militiamen, also in Port Harcourt.
The Filipinos were on their way to work at the Nigeria Liquefied Natural Gas project in Bonny Island, in the Niger Delta, when they were abducted.
No group has claimed responsibility for the kidnap of the Filipinos.
DPA
_____________________________________________________
Analysts: Reforms in Nigeria Threatened
By KATHARINE HOURELD Associated Press Writer
© 2006 The Associated Press
LAGOS, Nigeria — The shock resignation of Nigeria's former economics chief could jeopardize anti-corruption efforts in Africa's largest oil producer, despite promises by her successor to continue reforms, international analysts said Monday.
Ngozi Okonjo-Iweala stepped down as foreign minister Thursday after weeks of having her responsibility stripped away. She was replaced as finance minister just over a month ago and moved to the foreign ministry, then on Wednesday was relieved of her position as head of a high-level government economics team.
Iweala was known abroad as a corruption buster and seen as a key figure in helping secure the cancellation of US$30 billion of Nigeria's debt, Africa's biggest-ever.
"As far as the international community was concerned, Ngozi was the face of reform in Nigeria," said Antony Goldman, a London-based market analyst. "International banks, creditors and finance ministries all looked to her."
Nigeria's new finance minister, Nenadi Usman, promised to continue to implement reforms on Monday but was careful to emphasize her personal loyalty to President Olusegun Obasanjo.
"It is the president's reforms and I work for him. So naturally I must do what he wants," Usman said as she left a meeting on pensions in the commercial capital of Lagos.
But Jibrin Ibrahim, head of the Center for Democracy and Development, a group dedicated to good governance, said Iweala's resignation "dents the government's credibility on economic reform. She (Iweala) is personally so central to the whole process."
He said that the removal of the former World Bank executive _ Iweala was a vice president _ to the Foreign Ministry, an area that was not her specialty, was a sign of a power struggle within the ruling party. He noted that the presidency publicly rebuked Iweala when she spoke of possible corruption in her new ministry last month.
Many Nigerians had seen Iweala as a possible presidential or vice presidential candidate in next year's elections.
"It was a proposal that could easily gain ground internationally and it would be more difficult to stop it then," said Ibrahim, saying that many foreign donors backed her economic reforms.
Obasanjo is barred from running by term limits and has not indicated whom he would support in the race.
As finance minister, Iweala had used the windfall from high oil prices to pay US$12 billion owing to Nigeria's foreign creditors. Nigeria was relieved of the other US$18 billion, the largest such deal in Africa.
Working with Usman, Iweala also built up reserves of foreign exchange, facing stiff opposition from officials who wanted immediate access to the money.
Charles Doukubo, a Lagos-based political analyst, said few believed Iweala left for undisclosed family reasons as stated in her resignation letter.
"She had a family before she took this job and her children are all grown up," he said. "She is a career woman."
He suggested that her removal from the finance ministry and eventual resignation was engineered by members of the ruling party eager to gain easier access to the treasury ahead of next year's elections. Usman, although seen as a capable economist, does not have such a heavyweight reputation as a corruption-buster among the international community.
Oil-rich Nigeria, tied for sixth place as most corrupt country in the world in an annual ranking by watchdog Transparency International, recorded revenue of US$45 billion last year and is due to hold elections in April.
_______________________________________________________
The fact that oil-rich countries perform, on average, worse than other countries has been puzzling economists. The Dutch Disease, it is found by many economists, is relatively easy to avert. The political ‘resource curse’, however, is more difficult to address, and pertains to questions of governance, corruption, and ill-accounted windfalls from the sale of hydrocarbon resources.
The last years have brought international donors, civil society organisations and governments closer together in thinking about how to account those profits in a more transparent way. Kazakhstan is no exception and, like Azerbaijan, Astana has joined several initiatives.
This post is going to shed some light at the most high-profile of these intiatives, the EITI.
In 2005, Kazakhstan joined the Extractive Industries Transparency Initiative (EITI), and a first report is expected to be published in 2006. The EITI, an initiative announced by UK Prime Minister Tony Blair at the World Summit on Sustainable Development in Johannesburg in 2002, aims to ensure that the revenues from extractive industries contribute to sustainable development and poverty reduction.
The EITI is a multi-stakeholder initiative with partners from the government, international financial organisations, the corporative sphere, NGOs and investors. The EITI operates by comparing government revenue from oil and gas related projects to the payments that foreign and local companies declare that they have paid to the government. In case these numbers do not add up, an independent auditor would investigate or mention these inconsistencies in annual reports available to the public.
While the Kazakh government’s commitment to implement stringent EITI standards into their national natural resource accounting is to be commended, several difficulties remain to be addressed. First, most subsurface agreements between the government and international corporations contain confidentiality clauses that prohibit the companies from disclosing information about PSAs. The Kazakh government has yet to agree that such information is being made available to the public and the contractual terms of the PSA are being modified accordingly.
Moreover, as of February 2006, only 38 companies have joined the EITI, while 212 other subsurface companies have not yet agreed to disclose their financial accounts. Among those that have signed up for the initiative are, however, those international corporations whose tax payments provide for the largest chunks of annual windfalls, including ExxonMobil, ChevronTexaco, CPNC, and Lukoil.
The audit company responsible for developing reporting mechanisms, KPMG, has recently been criticised by a coalition of Kazakh NGOs:
Reporting forms of subsoil users developed by international audit firm KPMG were strongly criticized. The participants noted that such reports should contain data on development, sale and income statements and taxation of mining companies.
All in all, however, Kazakhstan’s implementation of the EITI statutes in the accounting for oil windfalls is encouraging. If wholeheartedly pursued, these arrangements could ensure that significantly less high-level corruption around the negotiation of new PSAs takes place. Kazakhstan’s problem with corruption, however, is far too multi-layered for it to be completely eliminated by such high-profile initiatives, helpful though they might be.
First of all, in answer to amj who said:
"This article has nothing whatsoever to do with ERHC. You just took it upon yourself to post more bull. When you get concrete evidence of any wrongdoing, why don't you post that, that is the way it works. they have to prove something wrong was done, so you do the same. You must have a lot of time on your hands to come up with this one."
- WRONG, amj, it has everything to do with ERHE. Take the time to read it. Evidence of wrongdoing? That is what DOJ is doing right now, investigating. There are alleged improprieties, hence an investigation into the matter. HOPEFULLY, nothing will come of it. In the meantime, though, the stock is less than half its yearly high, and the 60% drop in share price coincided with the investigation. Additionally, I have seen many posts and articles of people that will stay out of owning ERHE until there is clarification. So it has everything to do with ERHE. I am actually amazed that your opinion is the opposite.
Now, in answer to rheddle:
I agree with most of what you state, rheddle. IMO, bribery was more than likely to have taken place, but it is less than likely to be proved. Whether it is proved or not, though, it still has had a negative effect on the stock price, and as the investigation is kept open, it will continue to do so. I agree that it is highly unlikely that they would have evidence of bribery in the Houston office, but I have seen stranger things. Let's just say that if they do have evidence of such in their offices, ERHE is being led by some really stupid people.
I don't think this is just about whether they find anything or prove anything. It can and has had a negative impact regardless. And the point of the article is that debt forgiveness and support from other countries is hurt by alleged corruption and it will cause harm to investment to the territory.
In direct answer to "does not bode well for ERHE", that is in direct relation to the current investigation, as well as public perception. Do outside investors (buyers of stock) want to buy into a company under investigation for bribery in Africa? The answer, IMO, is no. It is a negative. Perception carries a lot of weight, and it is not good for ERHE. If there was no worry from the investigation, the stock price would not have dropped like it did, and I stand by that statement.
Best of luck to you,
From an article yesterday:
"But the resignation of such a prominent African reformist is likely to be greeted with dismay by Western donor countries which had placed great faith in her capacity to deliver.
As Finance Minister since 2004, when she was head-hunted from the World Bank, Mrs Okonjo-Iweala persuaded Western donors that Nigeria was not an oil-rich nation and should qualify for debt relief. She increased civil servants' pay, while slashing their perks, and brought in reforms in banking, insurance, pensions, income tax and foreign exchange.
But her anti-corruption campaign, which saw the Nigerian police chief jailed and a number of judges and senior customs officials sacked, brought her into conflict with the most powerful interests in the land.
Just over a month ago, President Obasanjo took a crucial decision to move Mrs Okonjo-Iweala from the finance ministry to head the foreign ministry, with no reason given."
- Seems to me if you read this article, the President is getting rid of this lady because she is anti-corruption. Could she be getting too close to direct corruption involving the President? ERHE is just one of the many charges against Nigerian Govt corruption in the recent years. Getting rid of the person who is trying to crack down on this type of behavior is not the way to gain support from outside nations.
"Speculation has been rife in Nigeria about an ongoing rift between the President and Mrs Okonjo-Iweala. One Nigerian newspaper reported that their dispute escalated this week when Mr Obasanjo learnt that the Foreign Minister was planning to lead Nigeria's delegation to the forthcoming Singapore meeting of the World Bank and International Monetary Fund. As he ordered Mrs Usman to be confirmed as leader of the economic panel, he also reportedly asked Mrs Okonjo-Iweala to confine herself to Non-Aligned Movement issues. This is said to have been the last straw for the high-flying economist. However the most likely explanation is that Mrs Okonjo-Iweala's anti-corruption drive was causing too many waves in the Obasanjo administration, which in 2003 won the doubtful accolade as the most corrupt place on earth, according to Transparency International."
- Ranked as one of the most corrupt places on earth ! !
Even Nigerian officials know this is true: "The governor of Abia state, Orji Kalu, told reporters in Lagos that he was not surprised by the resignation. "I knew Mrs Okonjo-Iweala would go because the government is trying to take all the money now and side-track her. Mrs Okonjo-Iweala has done the right thing and I congratulate her for resigning from a government that is not workable; from a government that is very corrupt, and I have told everybody that this government is very corrupt."
More on the oil corruption: "But the oil industry remains mired in corruption. According to one telling anecdote, when she presented President Obasanjo with a report on the Extractive Industries Transparency Initiative, under which oil and other companies agree to publish what they pay and governments open their accounts to scrutiny, the Nigerian leader sealed it. He was apparently afraid that it would reveal discrepancies between government revenues and the budget.
"Obasanjo didn't want to hear about missing oil revenues, because people would assume that he stole them," one source said. "
- The point is writing this is to give the other side against those that claim ERHE did nothing wrong simply because Nigeria claims there was no corruption. Of course they are not going to claim there was bribery! They are totally corrupt, have been ranked as such each year by International standards, and have been caught in many instances.
I am very interested in knowing why various posters on this board stand by their claim that ERHE did nothing wrong when they have no support for that claim, and no direct knowledge of that claim. If you do have evidence that ERHE did nothing wrong, please post it. A claim by the Nigerian government is not sufficient, it is expected.
Things like this do not bode well for ERHE. It further supports our appearance as a shell company existing on bribery. Hopefully that will not be proved the case. But there are credible reasons supporting ERHE stock price is negatively affected by corruption charges, and credible evidence that some sort of punishment will be levied. If that were not possible, IMO, the stock price would not suffer and there would be no investigation.
In the same fashion, many economic development programs require you to advertise locally before hiring. Additionally, many companies like to do such for publicity sake. Don't know why ERHE would fit either of these, though.
The basic point I see in this is that ERHE is a shell and pretty much remains a shell until oil drilling times are nearer. This whole employee (or lack of) issue makes the company look very bad.
Maybe they should hire somebody from the SEC to help cripple any blow from the investigations. LOL.
Heroine of Nigeria's anti-corruption camp quits to West's dismay
By Anne Penketh, Diplomatic Editor
Published: 05 August 2006
Nigeria was in shock yesterday after the woman credited with masterminding the cancellation of the country's $18bn debt resigned as Foreign Minister, after the President abruptly withdrew her remaining responsibilities for economic reform.
A government statement announced that Ngozi Okonjo-Iweala had stepped down because of "a compelling need to take care of pressing family issues".
Mrs Okonjo-Iweala, a former World Bank vice-president, was in London negotiating a new debt relief package when she heard the news of President Olusegun Obasanjo's decision to demote her.
She left London without comment on Thursday, to return home to a statement of regret from the President that she had decided "to leave at this stage of our reform programme" which he said was beginning to yield "positive results".
Speaking on Nigerian television, she thanked the President, who had been "gracious enough to allow me to leave", so that she could take care of her family, who have remained in Washington.
But the resignation of such a prominent African reformist is likely to be greeted with dismay by Western donor countries which had placed great faith in her capacity to deliver.
As Finance Minister since 2004, when she was head-hunted from the World Bank, Mrs Okonjo-Iweala persuaded Western donors that Nigeria was not an oil-rich nation and should qualify for debt relief. She increased civil servants' pay, while slashing their perks, and brought in reforms in banking, insurance, pensions, income tax and foreign exchange.
But her anti-corruption campaign, which saw the Nigerian police chief jailed and a number of judges and senior customs officials sacked, brought her into conflict with the most powerful interests in the land.
Just over a month ago, President Obasanjo took a crucial decision to move Mrs Okonjo-Iweala from the finance ministry to head the foreign ministry, with no reason given.
Mrs Okonjo-Iweala, a diplomatic novice given her previous 20 years' experience as a World Bank economist in Washington, offered to resign, but was mollified by being allowed to remain as chairperson of the economic panel.
Mrs Okonjo-Iweala's successor as Finance Minister, Esther Nenadi Usman, has repeatedly said she would continue the crusade. Mrs Usman has now been promoted to head of the economic team, reuniting the main economic portfolios inside a single ministry.
Speculation has been rife in Nigeria about an ongoing rift between the President and Mrs Okonjo-Iweala. One Nigerian newspaper reported that their dispute escalated this week when Mr Obasanjo learnt that the Foreign Minister was planning to lead Nigeria's delegation to the forthcoming Singapore meeting of the World Bank and International Monetary Fund. As he ordered Mrs Usman to be confirmed as leader of the economic panel, he also reportedly asked Mrs Okonjo-Iweala to confine herself to Non-Aligned Movement issues. This is said to have been the last straw for the high-flying economist. However the most likely explanation is that Mrs Okonjo-Iweala's anti-corruption drive was causing too many waves in the Obasanjo administration, which in 2003 won the doubtful accolade as the most corrupt place on earth, according to Transparency International.
The governor of Abia state, Orji Kalu, told reporters in Lagos that he was not surprised by the resignation. "I knew Mrs Okonjo-Iweala would go because the government is trying to take all the money now and side-track her. Mrs Okonjo-Iweala has done the right thing and I congratulate her for resigning from a government that is not workable; from a government that is very corrupt, and I have told everybody that this government is very corrupt."
Under Mrs Okonjo-Iweala's stewardship, Nigeria became the first African country to be freed of its debt to the Paris club of rich nations last April, under a debt-relief deal that was supposed to clear the way for billions of dollars to be spent on reducing poverty.
She won over the donor countries by arguing that Nigeria is in fact a poor nation where most of the 130 million population live on less than 60p per day - and one in five children does not reach the age of five.
Because of its oil wealth, Nigeria was excluded from last year's landmark deal before the G8 summit in Gleneagles in which rich countries wrote off the debts of 19 of Africa's poorest countries. But Mrs Okonjo-Iweala promised that if the donor countries wrote off 60 per cent of Nigeria's debt, she would pay off the remaining $12bn with money saved by budget reforms. Her plan won the backing of Gordon Brown, the Chancellor of the Exchequer, who pushed for the deal agreed in June last year with the Paris Club.
But the oil industry remains mired in corruption. According to one telling anecdote, when she presented President Obasanjo with a report on the Extractive Industries Transparency Initiative, under which oil and other companies agree to publish what they pay and governments open their accounts to scrutiny, the Nigerian leader sealed it. He was apparently afraid that it would reveal discrepancies between government revenues and the budget.
"Obasanjo didn't want to hear about missing oil revenues, because people would assume that he stole them," one source said.
Nigeria was in shock yesterday after the woman credited with masterminding the cancellation of the country's $18bn debt resigned as Foreign Minister, after the President abruptly withdrew her remaining responsibilities for economic reform.
A government statement announced that Ngozi Okonjo-Iweala had stepped down because of "a compelling need to take care of pressing family issues".
Mrs Okonjo-Iweala, a former World Bank vice-president, was in London negotiating a new debt relief package when she heard the news of President Olusegun Obasanjo's decision to demote her.
She left London without comment on Thursday, to return home to a statement of regret from the President that she had decided "to leave at this stage of our reform programme" which he said was beginning to yield "positive results".
Speaking on Nigerian television, she thanked the President, who had been "gracious enough to allow me to leave", so that she could take care of her family, who have remained in Washington.
But the resignation of such a prominent African reformist is likely to be greeted with dismay by Western donor countries which had placed great faith in her capacity to deliver.
As Finance Minister since 2004, when she was head-hunted from the World Bank, Mrs Okonjo-Iweala persuaded Western donors that Nigeria was not an oil-rich nation and should qualify for debt relief. She increased civil servants' pay, while slashing their perks, and brought in reforms in banking, insurance, pensions, income tax and foreign exchange.
But her anti-corruption campaign, which saw the Nigerian police chief jailed and a number of judges and senior customs officials sacked, brought her into conflict with the most powerful interests in the land.
Just over a month ago, President Obasanjo took a crucial decision to move Mrs Okonjo-Iweala from the finance ministry to head the foreign ministry, with no reason given.
Mrs Okonjo-Iweala, a diplomatic novice given her previous 20 years' experience as a World Bank economist in Washington, offered to resign, but was mollified by being allowed to remain as chairperson of the economic panel.
Mrs Okonjo-Iweala's successor as Finance Minister, Esther Nenadi Usman, has repeatedly said she would continue the crusade. Mrs Usman has now been promoted to head of the economic team, reuniting the main economic portfolios inside a single ministry.
Speculation has been rife in Nigeria about an ongoing rift between the President and Mrs Okonjo-Iweala. One Nigerian newspaper reported that their dispute escalated this week when Mr Obasanjo learnt that the Foreign Minister was planning to lead Nigeria's delegation to the forthcoming Singapore meeting of the World Bank and International Monetary Fund. As he ordered Mrs Usman to be confirmed as leader of the economic panel, he also reportedly asked Mrs Okonjo-Iweala to confine herself to Non-Aligned Movement issues. This is said to have been the last straw for the high-flying economist. However the most likely explanation is that Mrs Okonjo-Iweala's anti-corruption drive was causing too many waves in the Obasanjo administration, which in 2003 won the doubtful accolade as the most corrupt place on earth, according to Transparency International.
The governor of Abia state, Orji Kalu, told reporters in Lagos that he was not surprised by the resignation. "I knew Mrs Okonjo-Iweala would go because the government is trying to take all the money now and side-track her. Mrs Okonjo-Iweala has done the right thing and I congratulate her for resigning from a government that is not workable; from a government that is very corrupt, and I have told everybody that this government is very corrupt."
Under Mrs Okonjo-Iweala's stewardship, Nigeria became the first African country to be freed of its debt to the Paris club of rich nations last April, under a debt-relief deal that was supposed to clear the way for billions of dollars to be spent on reducing poverty.
She won over the donor countries by arguing that Nigeria is in fact a poor nation where most of the 130 million population live on less than 60p per day - and one in five children does not reach the age of five.
Because of its oil wealth, Nigeria was excluded from last year's landmark deal before the G8 summit in Gleneagles in which rich countries wrote off the debts of 19 of Africa's poorest countries. But Mrs Okonjo-Iweala promised that if the donor countries wrote off 60 per cent of Nigeria's debt, she would pay off the remaining $12bn with money saved by budget reforms. Her plan won the backing of Gordon Brown, the Chancellor of the Exchequer, who pushed for the deal agreed in June last year with the Paris Club.
But the oil industry remains mired in corruption. According to one telling anecdote, when she presented President Obasanjo with a report on the Extractive Industries Transparency Initiative, under which oil and other companies agree to publish what they pay and governments open their accounts to scrutiny, the Nigerian leader sealed it. He was apparently afraid that it would reveal discrepancies between government revenues and the budget.
"Obasanjo didn't want to hear about missing oil revenues, because people would assume that he stole them," one source said.
______________________________________________
another article..................
Niger Delta Human Development Report: Grinding Poverty & Deprivation in N-Delta
Posted to the Web: Monday, August 07, 2006
But these livelihoods have also become unattractive because of weak earnings relative to the oil sector.
There is a need not only to revive the traditional forms of work, given the transient nature of the oil industry, but also to give a wider spectrum of people opportunities for survival through a more diverse economy.
Poverty is a cross-cutting issue with numerous dimensions. While it may be measured in terms of the income or resources of an individual, many of the conditions that perpetuate or alleviate poverty are at the communal or societal level. Poverty in the Niger Delta region encompasses the issues of discrimination, neglect and the lack of a voice. Another dimension is that the people of this region have been excluded from tapping into modern infrastructure, even as the resources for transforming other parts of the country have poured out of the Niger Delta.
While poverty may seem to cause deprivation and hinder individual development, it is also the consequence of a number of social and national factors, such as poor governance and the exclusion of particular social groups, including minority ethnic groups, women and youth, from participation in decision-making on matters relating to their welfare. Other issues include poor environmental quality and high levels of pollution, conflict and lack of security, threats to health and well-being including HIV/AIDS, and unsustainable livelihoods and unemployment.
THE REVENUE BASE OF HUMAN DEVELOPMENT
Poverty in the Niger Delta region encompasses the issues of discrimination, neglect and the lack of a voice.
Oil wealth enriches Nigeria as a country, but it has not alleviated the grinding poverty, neglect and deprivation in the region that produces it.
Oil wealth derived from the Niger Delta region sustains the Nigerian Federation. Oil revenues, in the form of crude oil and gas exports, petroleum profits taxes and royalties, and domestic crude oil sales accounted for an average of 79.52 per cent of the total revenues of the Federation from 2000 to 2004. During the same period, the contribution of oil to total export earnings was 79.53 per cent (computed from Central Bank of Nigeria 2004). Tables 2.2a and 2.2b show huge increases in revenues accruing to the Federal and Niger Delta state governments between 1999 and 2003. Statutory allocations from the Federation Account constitute a substantial part of the total (see column 4 in table 2.2b).
The role of oil revenues in the statutory allocations cannot be overemphasized. Yet the problem of grinding poverty, neglect and deprivation in the region that produces the nation’s oil wealth has remained a daunting reality. The tables show that capital expenditures to provide a basis for rapid progress on human development are low compared to recurrent expenditures on personnel and overheads. While total expenditures increased sharply between 1999 and 2003, the quality of such spending was invariably low, considering the already low level of human development. Bad governance and corruption perpetuated these patterns.
Bad governance and corruption have played essential roles in perpetuating low levels of human development.Table 2.2 (a): Revenues and Expenditures of the Federal Government and States in the Niger DeltaRegion, 1999 Revenues Expenditures Fed Govt./ Total Statutory Share of statutory Total Recurrent Capital Share of states revenues allocation allocation in expenditures expenditures expenditures capital ex- (N’mn) (N’mn) total revenues (%) (N’mn) (N’mn) (N’mn) penditures in total (%)
Federal Govt. 662,585.3 218,874.5 33.0 947,690.0 449,662.4 498,027.6 52.5
Abia 3,458.3 2,268.5 65.5 3,544.9 2,245.2 1,299.7 36.6
Akwa Ibom 5,389.6 3,161.1 58.6 5,389.6 3,377.3 1,889.3 35.0
Bayelsa 3,938.8 2,666.4 67.6 3,923.5 2,708.4 1,215.1 30.9
Cross River 3,824.9 2,786.4 72.8 3,948.6 2,302.4 1,546.2 39.1
Delta 6,690.1 3,382.8 50.5 7,145.5 4,431.2 2,714.3 37.9
Edo 5,127.2 2,644.2 51.5 5,027.7 3,179.8 1,847.9 36.7
Imo 3,540.5 2,526.5 71.3 3,474.2 2,071.9 1,402.3 40.3
Ondo 4,049.6 2,621.1 64.7 3,941.8 2,681.3 1,260.5 31.9
Rivers 8,379.4 3,196.5 38.1 7,579.2 4,002.6 3,576.6 47.1
Source: Central Bank of Nigeria 1999.
Table 2.2 (b): Revenues and Expenditures of the Federal Government, States and the NDDC in the
Niger Delta Region, 2003 Revenues Expenditure
Fed Govt./ Total Statutory Share of statutory Total Recurrent Capital Share of states/NDDC revenues allocation allocation in total expenditures expenditures expenditures capital ex-(N’mn) (N’mn) revenues (%) (N’mn) (N’mn) (N’mn) penditures in total
Fed Go vt. 1,023,241.2 889,197.8 86.9 1,225,965.9 984,277.6 241,688.3 19.7
Abia 17,496.0 12,846.8 73.5 17,022.4 8,562.8 5,588.9 32.8
Akwa Ibom 39,906.5 30,655.5 76.8 56,737.0 34,000.0 20,633.0 36.4
Bayelsa 38,716.0 34,741.9 89.7 27,982.2 13,853.1 10,250.9 36.6
Cross River 17,466.9 12,436.8 71.2 14,542.6 8,225.8 3,300.0 22.7
Delta 65,057.0 51,191.8 78.7 67,148.6 40,858.6 25,410.2 37.8
Edo 17,242.0 11,891.5 69.0 17,292.0 12,564.4 2,169.7 12.5
Imo 18,337.9 13,889.3 75.7 35,175.1 20,922.2 7,277.1 20.7
Ondo 30,528.0 15,114.5 49.5 38,834.4 16,252.3 21,719.0 55.9
Rivers 73,415.0 41,984.1 57.2 70,233.6 36,699.0 28,779.5 41.0
NDDC* n.a. 9,044.5 n.a. n.a. n.a.
Note: *The revenue of the NDDC for the years 2000, 2001 and 2003 was N19,988.9 million.
Source: Central Bank of Nigeria 2003.
GOVERNANCE AND POVERTY
Given the abject poverty in the Niger Delta, there is a strong basis for people’s demands for a greater share of the region’s vast oil revenues, particularly as they bear the full burden of environmental degradation caused by the oil industry.Agitation to achieve this goal has spawned various youth groups determined to use violence to claim a share of the wealth they believe to be theirs by right. As shown in chapter one, the revenue allocation system has been contentious, with the oil-producing states shortchanged since the beginning of military rule.
Successive governments progressively reduced the derivation percentage from 50 per cent until it was zero during the military era.
The agitation for the control of resources has achieved much in drawing government attention to poverty in the Niger Delta and in ensuring that more revenues are assigned to the area. The derivation percentage was raised from three per cent to 13 per cent in 1999, although this still does not satisfy local demands. The National Political Reform Conference held in 2005 was willing to recommend an increase to 17 per cent, but this was not enough for regional delegates. Delegates from other regions, however, could not accommodate the demand for an immediate increase to 25 per cent and a programmed increase to 50 per cent in the medium term.
The stalemate brought the Conference to an abrupt end and resulted in heightened tension. Militant youths stepped up activities such as hostage-taking and the disruption of oil prospecting and production activities to pressure “Poverty is caused by poor management and governance. If government manages our resources very well . . . to build hospitals, schools, good roads, poverty will be reduced. When children go to good schools, and there are cheaper drugs in our hospitals, everyone will cater for his health and thus reduce the impact of poverty. So our government is causing poverty on the people because they have refused to
A low level of physical development points to the fact that the region suffers from poor governance, authorities to make further concessions. The subsequent arrest and detention of some leaders from the core Niger Delta states appeared to be exacerbating the feeling of political marginalization.
While the Niger Delta region deserves much greater attention and revenues to deal with poverty and infrastructure needs, it is also important to acknowledge that, even though the percentage allocated to the delta from the Federation Account appears small, in real terms it amounts to substantial sums of money, enough to significantly improve the well-being of citizens through better service delivery and access to utilities. The fact that the level of physical development in the region has not improved underscores that it also suffers from poor governance. That the Federal Government has had to intervene from time to time to create regional bodies like the OMPADEC and the NDDC to plan for and implement development projects in the region is itself evidence of the failure of state and local governments to carry out their responsibilities to the people. The absence of government in many communities is behind the provision of socioeconomic infrastructures by some oil companies.
As in other parts of Nigeria, the Niger Delta region has been split into more states in order to create more centres of growth and administration, and to spread development more evenly across the region. But the benefits of this state creation exercise are not obvious—the states simply have failed to perform. In the core Niger Delta states of Delta, Rivers and Bayelsa, infrastructural development, social amenities and facilities are unduly concentrated in a few cities, notably the state capitals and older administrative headquarters, without much regard for development in other parts of these states.
In a region that produces so much fuel, for example, the electricity supply is very sporadic—Bayelsa State is not even linked to the national electric power grid.
The delta could be served with thermal power stations strategically located to serve the needs of every part of the region. But this is not the case.Similarly, the delta has a dense network of freshwater distributaries and vast reserves of groundwater, but no part of the region can boast of a regular supply of potable water. And while the watery terrain across the region greatly increases the cost of road building and construction of all types.
Continues tomorrow
Dane,
Look Dane, I just posted articles that are very relevant. NOWHERE, I REPEAT NOWHERE, have I said I want to sell or recommended anyone else to sell. On the other hand, I have said I am in this for a big gain, and I think there is a very good chance it will happen, or I would not have invested and I would not waste time reading relevant articles.
My last post of the day, so no need to reply. But the fact is, terrorism has drastically affected oil production in the territory and it has the potential to either get better or get worse. It is a valid factor that all oil companies, including ERHE, must consider and will have an effect on their bottom line. It really is that simple.
Good luck, and yes, I do hope the price goes up.
Four articles below:
HOMEPORT- saw your email yesterday, coudn't respond, only three posts allowed. I don't post a lot of articles I read, but I research and read as much or more than anyone on this board. I have many great sources, and I conduct my due diligence. Your comment that I spend too much time on one negative subject (it was something like that) is taken. However, there are 100 posts on this board of useless hype to one posts of factual information I give, whether other posters consider it a threat or not. There is not doubt that a majority of the posts on this board are simply opinion with no factual basis. My comments focus on facts and articles. This is some of the very little information we are getting, and if the news is focusing on terrorism in the area, than I will read what it entails. I consider this a very important issue for several reasons: 1) it shows a lack of order in the area 2) it hurts potential development 3) it creates unrest amongst residents of the coutry, and infighting is extremely harmful to economic development. I consider all of these major issues that can severely harm investment in the local economy, and that is something that is necessary for things to develop within Nigeria. So I do think it deserves proper focus, and with only three posts per day, I am surprised anyone can say I post too much on the subject, especially if one or more of my posts are typically deleted.
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Nigeria militants seize German hostage in oil-rich southeast
By Associated Press
Thursday, August 3, 2006 - Updated: 02:29 PM EST
PORT HARCOURT, Nigeria - Militants disguised as soldiers took a German oil industry worker hostage Thursday in Nigeria’s oil-rich delta region, spiriting him away on a boat, police said.
Ten attackers in camouflage uniforms abducted the man after stopping his jeep as he traveled to work in the oil-producing hub of Port Harcourt, police spokeswoman Ireju Barasua said.
The man works for construction company Bilfinger Berger Gas and Oil Services Ltd., an affiliate of German construction giant Julius Berger, Barasua said. Company officials could not be reached for comment.
“We are combing the place to locate the victim,” Barasua said, adding that the Nigerian navy and armed forces were searching for witnesses. She said the hostage would be difficult to find in the delta, a Scotland-sized labyrinth of creeks and mangrove swamps dotted with small villages.
Attacks on oil pipelines and kidnappings in the country’s southern Niger Delta have cut oil production by more than 20 percent this year. Nigeria, Africa’s biggest oil producer, normally produces about 2.5 million barrels per day.
More than 30 foreign oil workers have been seized this year, three from Port Harcourt.
Militants generally kidnap workers to bargain for a greater share of the country’s oil wealth. The militants argue that residents have remained deeply impoverished while government officials and oil companies grow rich.
Most of the kidnappings have ended peacefully, though an American oil worker was shot and killed in Port Harcourt in April.
In a report Thursday, the International Crisis Group urged Nigeria’s government to try to defuse the militancy in the region by more than doubling the amount of oil revenue provided to its 36 states.
The Brussels, Belgium-based think tank also said the government should open “a credible, sustained dialogue” with community leaders, militants and activists and work to implement greater transparency on government budgets, skills training and a disarmament program.
© Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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The Swamps of Insurgency: Nigeria’s Delta Unrest
03 Aug 2006 16:45:23 GMT
Source: Crisis Group
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Dakar/Brussels, 3 August 2006: The Nigerian government and international oil corporations must change direction if they are to reduce the risk of violent meltdown in the Niger Delta.
The Swamps of Insurgency: Nigeria’s Delta Unrest,* the new report from the International Crisis Group, examines the potent cocktail of poverty, crime and corruption fuelling a militant threat to the stability of the region and to the country’s reliability as a major oil producer. Several steps are required to reverse the situation. The government needs to forge far-reaching reforms to administration and its approach to revenue sharing. Oil companies should involve credible, community-based organisations in their development efforts. And Western governments must pay immediate attention to improving their own development aid.
“Attempts to secure energy production have too often been heavy handed, alienating large segments of the population and boosting support for militants”, says Mike McGovern, Crisis Group’s outgoing West Africa Project Director. “There have been some laudable attempts to initiate development, but many have been poorly executed or hijacked by outsiders and local elites”.
Over the past quarter century, unrest in the Niger Delta has slowly graduated into a guerrilla-style conflict that leaves hundreds dead each year. The battle lines are drawn over the region’s crude oil and gas that make Nigeria the number one oil producer in Africa and the world’s tenth largest crude oil producer. Since January, fighters from a new group, the Movement for the Emancipation of the Niger Delta (MEND), demand the government withdraw troops, release imprisoned local leaders and grant oil revenue concessions to Delta groups.
The Nigerian Federal Government should initiate a credible, sustained dialogue on control of resources with Niger Delta civil society groups, including militants, activist leaders, women and youth drawn from nominees submitted by councils of regional ethnic groups. The state governments ought to engage more fully with professional non-governmental organisations that demonstrate a capability and willingness to assist communities to take responsibility for their own development.
Energy companies should improve measures to ensure transparency of contracts and other community payments, including for surveillance, development projects and compensation for land use and pollution.
The international community should press the Nigerian government to institute resource-control reforms and negotiate in good faith with Niger Delta groups, and encourage oil companies headquartered in their countries to be transparent about revenue and payments.
“Immediate action on these issues is crucial if open conflict is to be averted”, says Suliman Baldo, Director of Crisis Group’s Africa Program.
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Contacts: Andrew Stroehlein (Brussels) +32 (0) 2 541 1635
Kimberly Abbott (Washington) +1 202 785 1601
To contact Crisis Group media please click here
*Read the full Crisis Group report on our website: http://www.crisisgroup.org
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EXECUTIVE SUMMARY AND RECOMMENDATIONS
A potent cocktail of poverty, crime and corruption is fuelling a militant threat to Nigeria’s reliability as a major oil producer. Since January 2006, fighters from a new group, the Movement for the Emancipation of the Niger Delta (MEND), have fought with government forces, sabotaged oil installations, taken foreign oil workers hostage and carried out two lethal car bombings. MEND demands the government withdraw troops, release imprisoned ethnic leaders and grant oil revenue concessions to Delta groups. The Nigerian government needs to forge far-reaching reforms to administration and its approach to revenue sharing, the oil companies to involve credible, community-based organisations in their development efforts and Western governments to pay immediate attention to improving their own development aid.
The root causes of the Delta insurgency are well known. Violence, underdevelopment, environmental damage and failure to establish credible state and local government institutions have contributed to mounting public frustration at the slow pace of change under the country’s nascent democracy, which is dogged by endemic corruption and misadministration inherited from its military predecessors. Nigeria had estimated oil export revenues of $45 billion in 2005 but the slow pace of systemic reforms and the lack of jobs, electricity, water, schools and clinics in large parts of the Delta have boosted support to insurgents such as MEND. Militants appeal to the kind of public disaffection that prompted ethnic Ogoni leader Ken Saro-Wiwa to protest the military-led government and Royal Dutch/Shell before his execution in November 1995.
A decade later, the potential consequences of this conflict have escalated in both human and economic terms across a swathe of territory 30 times the size of Ogoniland. Nigerian and international military experts have recognised that the crisis requires a negotiated political resolution. Any attempt at a military solution would be disastrous for residents and risky for the oil industry. Most facilities are in the maze of creeks and rivers that are particularly vulnerable to raids by well-armed militants with intimate knowledge of the terrain. But inaction risks escalating and entrenching the conflict at a time when tensions are already rising in advance of the 2007 national elections.
MEND increasingly serves as an umbrella organisation for a loose affiliation of rebel groups in the Delta. It has not revealed the identity of its leaders or the source of its funds but its actions demonstrate that it is better armed and organised than previous militant groups. Observers warn that a worst-case scenario could lead to a one to two-year shutdown of the oil industry in the Delta, where most of Nigeria’s 2.3 million daily barrels of crude oil originate.
Illegal oil “bunkering” – theft – has accelerated the conflict and provided militant and criminal groups with funds to purchase arms. Another source of funding are the discreet payments oil companies make to militant leaders in return for “surveillance” and protection of pipelines and other infrastructure. This practice, frequently cloaked as community development, has fueled conflict through competition for contracts and by providing income to groups with violent agendas. Oil companies also pay allowances, perks – and sometimes salaries – to “supernumerary police”, as well as regular duty police and soldiers deployed to protect oil installations. Security forces consider these plum postings and are alleged to use excessive force to protect company facilities and their jobs.
President Olusegun Obasanjo’s government has begun important reforms but these must be deepened if peace is to succeed. Yet, his government has downplayed the seriousness of the insurgency. Senior officials have dismissed the militants as “mere” criminals and defended security crackdowns that have embittered locals, making it easier for armed groups such as MEND to gain new recruits. In an effort to deflect growing public impatience, government officials have demanded oil companies spend ever larger amounts on community projects. Oil industry officials counter that, after taxes and royalties, the federal government collects the vast majority of earnings on a sliding scale – 90 per cent of industry profits when oil prices are above $60. The companies rightly place the primary responsibility for political solutions to the crisis – including increased development – on the government but they also chafe at the suggestion that their own development strategies have failed.
Transparent and participatory development schemes can foster hope and accountability in Delta communities. Development efforts led by the European Commission and Pro-Natura International provide models for an approach that could reverse the cycle of poverty and violence – but only if their scale is significantly broadened to include a wide range of groups in oil producing areas. Government must also tackle corruption by making development initiatives more transparent. Otherwise, even dramatic increases in spending will be wasted.
RECOMMENDATIONS
To Nigeria’s Federal Government:
1. Initiate a credible, sustained dialogue on control of resources with Niger Delta civil society groups, including militants, activist leaders, religious leaders, women and youth drawn from nominees submitted by councils of ethnic groups in the Niger Delta states.
2. Institute while this dialogue is proceeding a derivation formula of between 25 and 50 per cent of mineral resources, including oil and gas, to all Nigerian states, and phase this in over five years in order to avoid budgetary shock to non-oil producing states and to encourage exploration and production of other mineral resources throughout Nigeria.
3. Amend or repeal the 1978 Land Use Act to expand the opportunity for communities to seek compensation for land through legal means and to allow a more transparent adjudication process of potential land seizures.
4. Seek in parallel with the dialogue on control of resources an agreement with militants that includes a phased withdrawal of troops from Delta towns, concurrent with a weapons-return amnesty program that pays militants and gang members market rates for guns and enrols them in skills and job training and that pays attention as well to the needs of girls and women who may not carry guns but have roles within those bodies (such as forced wives or cooks).
5. Bring the increasing number of quasi-independent local government institutions formally into federal structures as part of an effort to rationalise local governments in Niger Delta states, particularly in areas where these are unworkably large or combine substantively distinct ethnicities or communities.
6. Ensure that security force personnel are paid on time and in full in order to help prevent dependency on oil company payments and illicit and corrupt practices; increase enforcement of penalties for corruption and consider raising salaries; clarify the chain of command; and change the uniform of the “supernumerary police” that provide security services for the energy companies.
7. Refashion the government/transnational oil company joint ventures that control production to offer residents a substantial ownership stake along the lines of what corporate majors including Royal/Dutch Shell, ExxonMobil and Conoco have done in Canada’s Arctic.
To the State Governments:
8. Engage more fully with professional, non-governmental organisations that demonstrate a capability and willingness to assist communities to take responsibility for their own development.
9. Accelerate steps to implement poverty reduction strategies outlined in State Economic Empowerment and Development Strategies (SEEDS) that have been developed in conjunction with Nigeria’s national umbrella anti-poverty strategy, NEEDS.
10. Make budget details publicly available and respond to queries about specific spending patterns and projects.
To the Energy Companies:
11. Improve measures to ensure transparency of contracts and other community payments, including for surveillance, development projects and compensation for land use and pollution, and in particular:
(a) honour company commitments and ensure that payments are made in full, by bank transfer – not in cash – to the intended recipients;
(b) conclude agreements wherever possible that provide for individuals and local communities to be compensated for land use and pollution; and
(c) seek independent mediation or arbitration when agreements are in dispute.
12. Prioritise long-term ability to operate in Nigeria over short-term production goals and seek community assent before proceeding with production-related projects.
13. Develop partnerships with non-governmental, community-based bodies with a demonstrated ability to provide skills training and capacity building for development projects, including women’s and religious groups that have played significant roles in mediating among various ethnic groups and actors in the past decade.
To the U.S., the EU and EU Member States with major oil interests in Nigeria (the UK, France and Italy):
14. Press the Nigerian government to institute resource-control reforms and negotiate in good faith with Niger Delta groups, and encourage oil companies headquartered in their countries to be transparent about revenue and payments.
15. Condition assistance to the government upon greater transparency in federal and state budgets, particularly with regard to energy revenues.
16. Lobby China and India to sign the Extractive Industries Transparency Initiative.
To the United Nations and the wider International Community:
17. Offer the good offices of a neutral country without oil interests in Nigeria to mediate between the federal government and Delta groups, an idea already accepted in principle by MEND.
18. Consider delaying or postponing cooperation with state governments that have a poor record for delivering public services or controlling graft, and do not work with government or party officials who provide weapons or funding to armed groups for political purposes.
Dakar/Brussels, 3 August 2006
Read full report
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Iran, Venezuela in oil deal
Iran’s state-owned Petropars oil and gas company agreed to invest around $4 billion in the exploration and development of two oil fields in Venezuela.
The Wall Street Journal reported Petropars, affiliated to the National Iranian Oil Co. and which started in 1998, is currently involved in a number of oil and gas projects in Iran. It is also intent on expanding its operations outside Iran.
Petropars had previously said its first foreign investment venture involved the development of a heavy oil field in the Gulf of Venezuela. The company will develop bloc 7 of the 540 square-kilometer oil field for $2 billion.
The field has an estimated 18 billion barrels of in-place oil. The world uses about 80 million barrels a day.
Petropars also has studied a gas field in the Gulf of Venezuela and one in the northern Falcon gas field.
In the petrochemical field, Iran and Venezuela have agreed on two joint ventures, adding the general outline on the establishment of a petrochemical company to follow up on the agreements is not yet final.
Iran also has asked Venezuela to become a partner in a planned refinery in Indonesia.
Iran and Venezuela also agreed, along with Indonesia, to build a refinery in Venezuela.
Separately, an Iranian auto industry official said Iran will begin assembling its “Samand” sedan automobile in Venezuela in October. Iran expects to sell about 5,000 of the cars annually in the South American country.
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Madagascar: Watchdog Calls for Transparency As Oil Boom Takes Off
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UN Integrated Regional Information Networks
August 3, 2006
Posted to the web August 3, 2006
Johannesburg
Madagascar is becoming the next staging post of Africa's energy boom as oil conglomerates descend on the poverty stricken island to contend for a share of the recent discovery, but a global watchdog cautions that the windfall could challenge the island's fledgling democracy.
At current prices, industry estimates were that the oil could translate into annual revenue of one billion dollars for the Indian Ocean island. Energy analysts are predicting an oil price of US$100 in the short term, caused by a combination of geopolitical tensions, diminishing world reserves and high demand that has sent oil prices soaring.
Gavin Hayman, spokesperson for the anti-corruption watchdog Global Witness, warned that oil revenue did not automatically lead to poverty alleviation.
"President Marc Ravalomanana has taken a strong public stand against corruption, but the problem remains with members of the government. Our fear is that oil revenues will be squandered easily unless the international community steps in to guarantee transparency and accountability of oil revenues."
The threat of a privileged elite benefiting from huge oil wealth, while the majority remained excluded has been played out in other oil-producing nations. Oil revenue in Angola, the continent's second largest producer, has not benefited the poor. Britain's Department for International Development noted that "although growing revenues from oil and diamonds have boosted the country's economy, extreme poverty is still a daily reality for 68 percent of Angolans".
Hayman said some of the smaller oil companies rushing to secure concessions in Madagascar had been "soiled by corruption and bribery in Africa and Asia in the past. Government officials in Madagascar may be tempted into murky deals that may never benefit the millions of poor people."
Among the global oil giants scrambling for a share of Madagascar's oil resources are US-based Exxon-Mobil and Chevron Texaco; British-based Madagascar Oil and British Petroleum; Total, a French company; Royal Dutch Shell, Stat-Oil of Norway, China's National Offshore Oil Corporation and South Korea's SK Corporation.
Initial projections were that Madagascar could produce 60,000 barrels per day in three to four years, which would quickly make the oil industry the main contributor to the country's gross domestic product (GDP). In 2003 Madagascar's GDP was $5.5 billion dollars, or $240 per person annually.
Hayman said it was imperative that Madagascar join the international Extractive Industries Transparency Initiative, a forum of oil producers and consumers seeking to promote accountability in oil revenues.
Under the transparency initiative, governments, civil society and oil producers are required to make public details of financial deals, exploration rights and profits.
"Such open records enable civil society organisations to play their watchdog roles in judging if state revenue is indeed spent according to developmental needs. Madagascar needs to put such accountability measures in place before it can begin full production," said Hayman.
The promise of billions of petrodollars for a country the World Bank ranks at 146 out of the world's 177 poorest countries could place immense pressure on the fragile democracy.
In 2001 Madagascar was on the cusp of a civil war after the former president Didier Ratsiraka refused to accept Ravalomanana's presidential victory. The island was cut in half, with two capitals, two governments and a divided army. It was not until the following year that the crisis was defused, after Ratsiraka fled to France.
The next presidential polls are scheduled for December this year. Among the 10 declared candidates so far is Phillipe Tsiranana, son of the country's first post-colonial president. Talks between Ravalomanana and opposition parties to defuse rising political tensions ahead of the December elections fizzled out in June, and Ravalomanana has yet to announce whether he will contest the poll.
The government has already begun auctioning oil-drilling rights. Hugues Rajaoson, head of the energy ministry, told the media recently that "the potential for production is very, very high. The sector could contribute up to 15 percent of GDP within five years." Official estimates put offshore reserves as high as five billion barrels of oil, but the exact size remains unknown.
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Madagascar
According to the World Food Programme (WFP), 70 percent of the population live on less than a dollar a day and the country has to contend with regular occurrences of natural disasters such as drought, cyclones and floods. WFP information officer Patricia Lucas said 300,000 people could need food aid before the end of the year because of a drought.
This week, the International Monetary Fund injected more than $80 million into the country's Poverty Reduction and Growth Facility, the fund's concessional facility for debt support to low-income countries. Under the facility, beneficiaries can repay the loan over 10 years at an interest rate of 0.5 percent.
[ This report does not necessarily reflect the views of the United Nations ]
You will also find that if you post anything even remotely negative, even while making it clear that you are invested in the stock and hopeful for big gains, it will be deleted and you will only be able to post 3 times per day if not kicked out altogether. I only tell you this as a warning, not to cause trouble. So be careful if you want to continue posting. No disrespect intended.
And I agree with you intergate. It is very difficult to get to know a penny stock when you can only speak about the positives. It is a penny stock for a reason, and without knowing those reasons, an investor remains exposed to numerous pitfalls without knowledge. ERHE has incredible promise, but the reason it is not at 5 dollars is for specific reasons. Obviously the investigation, lack of knowledge about whether oil is down there (at least where it is economically worth getting out), terrorist acts in the area, bribery allegations, one employee and a cubicle, and many more reasons we probably don't even know because they are surpressed and not able to be talked about.
My wish is that every poster would want to discuss the negatives so they could weigh all of the factors. The one thing everyone here has in common is that WE WANT THE STOCK PRICE TO GO UP ! ! We are all on the same side.
DOn't worry everyone, this is the last post I am allowed for the day.
Tryoty,
You are far more level headed than other posters on this board.
In response to the investigation- just because ERHE is being investigated does not mean it is because there is tons of oil down there. It is because they are alleged to have done something wrong, likely bribery. Companies and people alike get investigated for this reason and it has nothing to do with whether they stand to make a lot of money.
IF that reasoning were true, it would also support the notion that an investigation could take those rights away. That is something that is often refuted by this board. But IMO, that is a possibility. But you can't have it both ways- you can't say they are only looking at us because they know we are worth so much, then state there is nothing they can do about it. That is ludicrous IMO.
The stock is at 40 cents due to the investigation. It was up near a buck beforehand. The price has been factored. The stock price now sure seems to be fair, because it hasn't moved a lot in quite a while. If it were worth more, it would be bought up on the cheap right now.
I am long on this stock. I am hoping for the best. I think there is a good chance we could be at 3 bucks in two years. But I do not stick my head in the sand and ignore the facts, and I do not take only hypster positions with no basis. I am realistic.
Good luck to all, JMO....
Nigeria: Niger Delta Human Development Report - Amazing Paradoxes
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Vanguard (Lagos)
ANALYSIS
August 1, 2006
Posted to the web August 1, 2006
Some amazing paradoxes have come from the development of the Niger Delta region.
Ordinarily, the Niger Delta should be a gigantic economic reservoir of national and international importance. Its rich endowments of oil and gas resources feed methodically into the international economic system, in exchange for massive revenues that carry the promise of rapid socio-economic transformation within the delta itself. In reality, the Niger Delta is a region suffering from administrative neglect, crumbling social infrastructure and services, high unemployment, social deprivation, abject poverty, filth and squalor, and endemic conflict.
Enormous possibilities for industrial development abound in terms of the abundance of raw materials in the region, but these remain unrealized. Beyond vast oil and gas deposits, the delta is blessed with good agricultural land, extensive forests, excellent fisheries, and a large labour force. But juxtaposed against the potential for economic growth and sustainable development are deteriorating economic and social conditions that have been largely ignored by contemporary policies and actions (Jonathan 2004: 20- 21). With local inhabitants subjected to abject poverty and suffering in the midst of plenty, some view the oil and gas endowments as a curse and a double-edged sword
The Niger Delta is a region suffering from administrative neglect, crumbling social infrastructure and services, high unemployment, social deprivation, abject poverty, filth and squalor, and endemic conflict.
Social and economic deterioration, ignored by policy makers, undercuts enormous possibilities for development. In the Niger Delta, with a view to fostering a people-centred development agenda that can unleash the region's enormous natural and human capacities.
CONCEPTUAL FRAMEWORK
In recent years, development programming has been focused on the overriding issues of equity and equality in the distribution of the gains from development efforts. A lot of concern has been expressed about the predicament of the rural poor and the imperatives of several baseline requirements for human development. These include access to land and water resources; agricultural inputs and services, including extension and research facilities; and participatory development strategies to tackle rural poverty, with social equity and civil participation viewed as essential to well-rounded socio-economic development.
If management of oil-related revenues could be based on transparency, accountability and fairness, oil revenues will become a source of substantial benefit for the populations of these countries (Gary and Karl 2003).
Negative development trends are similarly associated with oil and mineral production in general. There tends to be an inverse relationship between economic growth and natural resource abundance, and sustained poor performance on such social indicators as education and health. These outcomes have been dubbed the oil resource curse.
Development that ventures beyond the calculus of economic growth enlarges human choices across all economic, social, cultural and political dimensions.
This relatively new orientation has produced concepts such as 'people-centred development', 'participatory development' and 'sustainable human development'. The concept of people-centred development states that meaningful development must be people-based or human-centred, since development entails the full utilization of a nation's human and material resources for the satisfaction of various (human) needs. In more specific terms, a development programme that is people-centred is expected to achieve the following objectives (Chinsman 1995):
l enable people to realize their potential, build self-confidence and lead lives of dignity and fulfilment;
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lfree people from poverty, ignorance, filth, squalor, deprivation and exploitation, recognizing that underdevelopment has wider social consequences; and
l correct for existing economic, social or political injustices and oppression. The notion of 'participatory development' bridges the interrelated goals of development and the empowerment of people. Development has to be designed to capture what the people themselves perceive to be their interests and needs. Participatory development, sometimes interchangeably called popular participation, is "a process by which people take an active and influential part in shaping decisions that affect their lives" (OECD 1995: 8).
People or communities that enjoy active participation in decision-making over issues that concern their livelihood and interests should be able to realize their human potential, build self-confidence, and lead lives of dignity and fulfilment. Participatory development builds civil society and the economy by empowering social groups, communities and organizations to influence public policy and demand accountability. The process links democratic institutions with human development motivations (OECD 1995; Bass 1972: 212-216).More recently, the United Nations has popularized the multidimensional term 'sustainable human development'. This is defined as:
Development that not only generates economic growth but distributes its benefits equitably; that regenerates the environment rather than destroys it; that empowers people rather than marginalizing them. It gives priority to the poor, enlarging their choices and opportunities, and provides for their participation in decisions affecting them" (James Speth, former UNDP Administrator). Speth says further that "sustainable human development is development that is pro-poor, pro-nature, pro-jobs, and pro-women. It stresses growth, but growth with employment, growth with environmental friendliness, growth with empowerment, and growth with equity." Development has to be designed to capture what the people themselves perceive to be their interests and needs. "Sustainable human development is development that is pro-poor, pro-nature, pro-jobs, and pro-women."
This report takes a human development approach to the situation in the Niger Delta. This approach questions the presumption of an automatic link between expanding income and expanding human choices, and places people at the centre of development.
A people-oriented approach correspondingly shifts the emphasis, for example, from how much a nation or region is producing, economically and in the aggregate, to how its peoples are faring in terms of quality of life and general social well-being. This means venturing beyond the calculus of economic growth and considering how to enlarge human choices across all economic, social, cultural and political dimensions.
RATIONALE
Since 1996, UNDP has produced four national human development reports on Nigeria (in 1996, 1998, 2000/2001 and 2004). This report is the first on one of Nigeria's six subnational geopolitical regions, the Niger Delta. The attention to the delta should be explained. One of the main conclusions of the Nigerian Human Development Report 1996 (UNDP 1996) was that "wide regional disparities are Nigeria's Achille's heel--the primary source of its perennial conflict, political instability and social unrest." Since 1996, with the degeneration in the Niger Delta, it is obvious that the regional disparities remain. It is also evident that in spite of ongoing reform programmes, inequities in the allocation of resources from oil and gas and the degradation of the Niger Delta environment by oil.
The Tenets of Human Development Indeed, defining people's well-being as the end of development and treating economic growth as a means have been central messages of the annual Human Development Reports published since 1990.
Top-down development plans have made little impact on the real lives of people in the delta--or on their perception that development planning is little more than an imposition by the Federal Government.
Inequities fan increasingly intense and frequent conflicts that threaten Nigeria as a whole, and Africa at large. spills and gas flares continue to adversely affect human development conditions.
The inequities fan increasingly intense and frequent conflicts.The potentially adverse impacts of the Niger Delta crisis on Nigeria, and on Africa as a whole, make the focus of this report on the delta imperative and timely. The report serves as an instrument to review the multidimensional nature of the problem and its history, as well as the consequences on the income, education and life expectancy of the people who live in the delta, and on environmental sustainability.
Early concerns about the plight of the Niger Delta region referred to the part now sometimes called the 'core' Niger Delta, comprising Bayelsa, southern Delta and Rivers states. The present definition and composition of the Niger Delta region is a pragmatic one that brings together all oil-producing states in the Nigerian Federation, because they have common ecological and socio-economic problems.
The following sub-section briefly reviews some of the causal factors behind the poor state of human development in the delta, including the pitfalls of traditional development planning, revenue allocation problems and the failure of governance. Pitfalls of Traditional Development Planning Development planning in Nigeria, in the modern sense, dates back to the formative 10- year national development plan for 1946-1955 prepared by the colonial administration.
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After political independence in 1960, successive post-colonial governments initially prepared mostly medium-term development plans, namely 1962-1968, 1970-1974, 1975- 1980 and 1981-1985. A series of two-year rolling plans followed between 1990 and 1998. These efforts were often associated with the income-centred development paradigm.
Short term and based on official convictions, they lacked essential civil society and grass-roots inputs or participation. They failed to be sufficiently far-reaching, longitudinal or symmetrical enough in scope and coverage to pursue the inclusive goals of human development. In most cases, traditional planning efforts amounted to ends in themselves. They ended up either not being implemented or, at best, being largely unimplemented.
Since the colonial era, some policies and programmes within national development plans have been formulated to address the minority status, agitations and perceived marginalization of the people of the delta. But the recurring feeling in the region is that it is often pushed aside within the Nigerian Federation. This is particularly true for minority ethnic groups. The first major attempt to address these grievances was in 1957, when the colonial administration set up the Willink's Commission of Inquiry to investigate the fears of minorities and how to allay them. The Commission reported in 1958 that "the needs of those who live in the creeks and swamps of the Niger Delta are Inequities in the allocation of resources from oil and gas and the degradation of the Niger Delta environment by oil spills and gas flares continue to adversely affect human development conditions very different from those of the interior."
The Commission also noted that "it is not easy for a government or legislature operating from the inland to concern itself or even fully understand the problems of a territory where communications are so difficult, building so expensive and education so scanty in a country which is unlikely ever to be developed." Perhaps more importantly, the Commission concluded that "a feeling of neglect and a lack of understanding was widespread...a case has been made out for special treatment of this area. This is a matter that requires special effort because (the area) is poor, backward and neglected." That conclusion is as true in the Niger Delta today as it was in 1957. Be that as it may, the immediate post-independence Government eventually responded to the Willink's Report by setting up the Niger Delta Development Board (NDDB) in 1961. The NDDB could not solve the problems of the Niger Delta enunciated in the Willink's
Report. Subsequent bodies included the Niger Delta Basin Development Authority (NDBDA) set up in 1976, and the Oil Mineral Producing Areas Development Commission (OMPADEC) set up in 1992. But they also failed woefully. In the case of the NDBDA, organizational problems bedevilled it from inception. None of the board members appointed by the Federal Government to run the Authority came from the Niger Delta. During the civilian administration of Shehu Shagari, 11 river basin development authorities were created; several now have jurisdiction in the delta, including the Niger River Basin Development Authority, the Anambra-Imo River Basin Development Authority, the Benin-Owena River Basin Development Authority, the
Niger Delta Basin Development Authority and the Cross River Basin Development Authority. But these authorities also have had very little impact. For one thing, their boards often comprise politicians who have regarded their tenures as opportunities to reap the 'dividends of democracy'. They have often been viewed as drains on the nation's finances. OMPADEC was established in July 1992 and given the statutory responsibility to receive and administer, in accordance with the confirmed ratio of oil production in each state, the monthly allocation of the Federation Account. This is set aside for the rehabilitation and development of the mineral producing areas and for tackling ecological problems that have arisen from the exploration of oil minerals. Between 1993 and 1997, OMPADEC collected about N17.42 billion, a little over US $135 million. At first, OMPADEC was allocated three per cent of the Federation Account, but this was raised to 6 per cent in 1995. The Commission did not make any meaningful impact on the lives and environment of the Niger Delta people. It was noted for its profligacy and extravagance. Contracts were awarded in anticipation of funds, with the result that contracts worth billions of naira were awarded that were not eventually backed with cash. At the time it folded, the The needs of those who live in the creeks and swamps of the Niger Delta are very different from those of the interior.
Commission owed its contractors billions of naira and left the Niger Delta with numerous abandoned projects. The Chief Executive of OMPADEC had identified three pressing problems at the Commission. There were no available data for planning purposes, such as the crude oil production quota by state. The Commission had no means to cope with the volume of demands given decades of physical neglect and deprivation. And funding was inadequate. While the decree establishing OMPADEC stipulated that it should receive three per cent of the Federation Account, the Commission claimed that what it actually got was three per cent of net revenues from the Federation Account.
When the present federal administration came into power in 1999, it constituted a new body, the Niger Delta Development Commission (NDDC) to take over from OMPADEC. At the inauguration of its pioneer board, in December 2000, the President of the Federal Republic of Nigeria noted that the NDDC has the potential to offer a lasting solution to the socio-economic difficulties of the Niger Delta, which successive governments have grappled with even before independence. To achieve its mandate, the NDDC board identified areas of focus including:
l development of social and physical infrastructure
l technology
l economic/environmental remediation and stability
l human development
l pursuit of a peaceful environment that allows tourism to thrive and supports a buoyant culture
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As a development agency, the NDDC quickly identified the need for a master plan as part of its overall strategy, which has now been completed. In the interim, the NDDC board elaborated a plan involving the construction of roads, shoreline protection, rural and urban water supply schemes, and the rehabilitation of schools and health centres.
This is in addition to human capacity development in new centres that help people acquire skills and build sustainable livelihoods.
By November 2002, the board had reported awarding contracts for more than 650 projects worth over N35 billion or US $271.3 million in the nine states of the delta region.
The NDDC funding structure includes contributions from the Federal Government, the oil companies operating in the region, the Ecological Fund and member states in the delta. The Federal Government accounted for 78.03 per cent of the N44 billion or US $341.1 million that was disbursed to the Commission between 2001 and 2004. Annual federation allocations to the NDDC from 2000 to 2004 are, respectively, N0.944 billion (US $7.3 million), N10.0 billion (US $77.5 million), N13.9 billion (US $107.8 million), N9.0 There were no available data for planning purposes, such as the crude oil production quota by state. OMPADEC had no means to cope with the volume of demands given decades of physical neglect and deprivation. And funding was inadequate. Member states have yet to contribute directly to the commission, and there is continued wrangling over the contributions from oil companies. In spite of the provisions of the NDDC Act on financing (see box 1.3), the NDDC is facing some of th e same problems with funding that plagued OMPADEC.
Financial Provisions in the NDDC Act, 2000
(1) The Commission shall establish and maintain a fund from which shall be defrayed all expenditure incurred by the Commission.
(2) There shall be paid and credited to the fund established pursuant to subsection (1) of this section--
a. From the Federal Government, the equivalent of 15 per cent of the total monthly statutory allocations due to member States of the Commission from the Federation Account; this being the contribution of the Federal Government to the Commission;
b. 3 per cent of the total annual budget of any oil-producing company
operating, on shore and off shore, in the Niger-Delta area; including gasprocessing companies;
c. 50 per cent of monies due to member States of the Commission from the Ecological Fund;
d. Such monies as may, from time to time, be granted or lent to or deposited with the Commission by the Federal or a State Government, any other body or institution whether local or foreign;
e. All moneys raised for the purposes of the Commission by way of gifts, loans, grants-in-aid, testamentary disposition or otherwise; and
f. Proceeds from all other assets that may, from time to time, accrue to the Commission.
(3) The fund shall be managed in accordance with the rules made by the Board, and without prejudice to the generality of the power to make rules under this subsection, the rules shall in particular contain provisions--
a. Specifying the manner in which the assets or the funds of the Commission are to be held, and regulating the making of payments into and out of the fund; and
b. Requiring the keeping of proper accounts and records for the purpose of the fund in such form as may be specified in the rules.
It is probably premature to assess the achievements of either the NDDC or similar state initiatives. With the production of a Regional Master Plan for the Niger Delta, however, the NDDC is at least poised for positive action on its founding objectives. Earlier bodies had never managed or bothered to produce a plan, whether at regional or sectoral levels. But the NDDC does not seem to have made any positive impression on the peoples of the Niger Delta.
Comments by participants at focus group discussions and stakeholders' meetings indicate that people still see the NDDC as an imposition from the Federal Government, and a top-down approach to development planning and implementation. The local people had no say in determining its composition; it primarily comprises appointees of the Federal Government. As far as ordinary people are concerned, the loyalty of the NDDC is not to the Niger Delta but to the Federal Government and the oil companies that provide the bulk of its budget.
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Nigeria
Revenue Allocation The politics and dynamics of revenue allocation have also manifested in attempts to address the peculiar development challenges of the Niger Delta as an oil-producing region. At the root of the amalgamation of the Southern and Northern Protectorates by Lord Lugard in 1914 was the issue of cross-subsidization--the richer South would subsidize development endeavours in the poorer North. The level of cross-subsidization was not clearly specified. The first attempt to write down the basis and levels of sharing revenues among the component units (or regions, as they were then called) of the Nigerian Federation was in 1946, when the Phillipson Fiscal Commission, set up by the Colonial Administration, proposed the derivation principle as a basis for fiscal federalism. The idea was that revenue should be shared, among other things, in proportion to the contribution each region made to the common purse or central government. Derivation became the only criterion used to allocate revenues among the regions in the 1948-1949 and 1951-1952 fiscal years.
In the period shortly before independence in 1960, the disparity in allocation largely reflected the degrees of enterprise and levels of production in the regions. This meant that, by merely looking at the levels of allocations, one could easily discern the regions with high levels of economic activities in areas such as cash crop production (e.g., cocoa, rubber, palm oil, cotton, hides and skins, groundnuts, etc), earnings from export and excise duties, etc. The incentives embedded in the revenue allocation inevitably encouraged competition among the regions, with each striving to contribute more in.
People still see the NDDC as an imposition from the Federal Government, and a topdown approach to development planning and implementation. The local people had no say in determining its composition; it primarily comprises appointees of the Federal Government. The central control of petroleum resources has denied local people the right to benefit from the land on which they live order to get more from the centrally allocated revenues.
Total Outpumps Exxon Mobil in Africa, New Frontier in Oil Race
Aug. 2 (Bloomberg) -- In a patch of peacock-blue, shark- filled Atlantic Ocean 93 miles off Angola, Total SA technicians turn truck-tire-size valves on a floating storage platform six stories high. The 120-person crew is preparing for a shutdown that will enable the world's fourth-largest oil company to bring a new field on line 2,500 meters below, adding four more years of 250,000-barrel-a-day production.
Behind fire doors, Jacques Saint-Jean monitors a TV screen in the control room for the Girassol field. A robotic arm is changing a chokehold on a pump 1,312 meters (4,304 feet) down, as deep as four Eiffel Towers are tall, as the light from a remote- controlled minisub illuminates the blackness. To get to oil may mean drilling another 1,200 meters through the seabed.
``I remember when we did this 30 years ago at 60 meters and we thought that was deep,'' Saint-Jean says. ``We are still at the beginning of this kind of technology. It's like the astronauts at the beginning of space travel.''
Africa is the petroleum industry's new frontier as prices top $78 a barrel and oil grows tougher to find and pump out. Companies plan to spend $20 billion in the next five years exploring off Africa, the poorest continent on the planet -- double what they spent from 2000 through 2005.
Declining Production
They have to: Output is declining in 33 of the 48 biggest- producing countries, the U.S. and U.K. among them; Iran and Russia are curbing Western access to the world's largest reserves; Venezuela is raising taxes as high as 50 percent for Western producers; and Bolivia is taking control of its gas fields and threatening to boot out foreigners.
All of that makes Angola, where 70 percent of the 12 million people live on less than $1 a day, a prime alternative even as the International Monetary Fund seeks greater disclosure of where the $10 billion in oil revenue the country took in last year is going.
Angola's deep waters are vital to a world short on energy. As much as 10 percent of the planet's petroleum reserves, or about 100 billion barrels, lies in depths exceeding 500 meters. That's enough oil to power the U.S. for the next 12 years.
``West Africa is strategically important to global oil markets and to the U.S.,'' says former U.S. Assistant Secretary of Energy David Goldwyn, who now heads his own political consulting firm in Washington.
In the past two years, 50 percent of discoveries by Irving, Texas-based Exxon Mobil Corp., the world's biggest oil company, have been in Africa. ``There is a lot of oil in this area,'' says Bill Cummings, Exxon's spokesman for Angola.
Earnings Report
Paris-based Total, which reports second-quarter earnings tomorrow, is a top contender in the global oil hunt. Created by the French government after World War I, Total gained deep-water technology from experience in the North Sea. That has made Total a leader in Africa, allowing it to beat Exxon Mobil by two years in offshore Angola. Total is the biggest oil and gas producer on the continent, with 751,000 barrels a day last year, ahead of 660,000 for Exxon.
``They're the most technologically advanced company out there,'' says Gerard Kreeft, managing director at Arnhem, Netherlands-based oil consulting firm Energywise, who was in Luanda, Angola's capital, in February for a conference on offshore oil exploration.
``Normally, when you're trying a new technology like they did in Girassol, you try it at 60 meters, where it's comfortable,'' Kreeft adds. ``They did it in 1,000 meters-plus; that's what's gutsy about them.''
Double Merger
Seven years ago, Total was a medium-size oil company, second largest on its own soil after Paris-based Elf Aquitaine SA. Total had a market value of $30 billion and produced 840,000 barrels of oil and gas a day. Exxon Corp. pumped triple that -- 2.7 million barrels -- even before its 1999 combination with Mobil Corp.
Beginning in 1998, Thierry Desmarest, 60, who had become Total's chief executive officer three years earlier, engineered a double merger. First, he spent $12.8 billion to buy Belgium's Petrofina SA. Six months later, he went after Elf. Total won its rival after raising its bid to $54 billion in Europe's biggest hostile takeover. The combinations made Total the largest refiner in Europe and added lucrative production fields in Africa and the Middle East.
``Total didn't have good acreage,'' says Jason Kenney, an analyst at ING Financial Markets, a unit of Amsterdam-based ING Groep NV. ``That's what Elf brought.''
Courting Iran
Desmarest has courted governments that his rivals have avoided. In 1995, just months after taking the CEO post, he flew to Tehran. There, he signed the first major oil contract with Iran by a Western company since the 1979 Islamic Revolution removed Shah Mohammed Reza Pahlavi and installed an anti-U.S. theocratic government.
Also in 1995, Total started work on a natural gas pipeline in Myanmar, formerly called Burma, which was under a military dictatorship. In an April 2006 report, the U.S. State Department accused the regime of repressing ethnic minority groups and of jailing political dissidents.
In 1997, Desmarest approved a deal to develop a $2.2 billion natural gas field in the Persian Gulf off Iran, risking U.S. economic sanctions. In 2003, Total handed over the completed project to Iran.
``We were not breaking French laws,'' says Desmarest, who adds he didn't regard himself as bound by U.S. laws.
Saddam Talks
From the early 1990s until the U.S. invasion of Iraq in 2003, Total negotiated with dictator Saddam Hussein for exclusive rights to develop the Majnoon and Bin Umar oil fields. The areas may hold 20 billion barrels, as much as a quarter of Iraq's reserves. Total never signed the contracts because the Iraqis demanded that drilling work begin immediately, which would have violated a United Nations embargo.
``They focused on areas where others wouldn't go: Iran, Burma, South Africa under apartheid,'' says Paris-based Natexis Banques Populaires economist Thierry LeFrancois, who has covered Total for more than 10 years. ``It wasn't politically correct, but it was effective.''
Today, Total's market capitalization is $164 billion -- bigger than 25 of the 30 companies in the Dow Jones Industrial Average -- compared with $412 billion for Exxon Mobil. Total has stakes in 27 refineries and produces about 2.5 million barrels of oil and gas a day; Exxon produces 4.2 million. In 2005, Total made a record profit of 12 billion euros ($15.4 billion) on 124 billion euros in sales.
Shares Rise
Since its merger with Elf, Total has consistently achieved the highest cash return on capital employed among the majors in the industry, exceeding Exxon Mobil, London-based BP Plc and the Hague-based Royal Dutch Shell Plc -- the top three oil companies -- says Lucas Herrmann, an analyst at Frankfurt-based Deutsche Bank AG.
Total reported a return on equity of 35 percent last year, beating Exxon's 34 percent. Total shares gained 41 percent from Jan. 4, 2005, to July 31, outperforming the company's bigger rivals. On Aug. 1, Total shares traded at 52.65 euros.
``We are now earning every 15 days what we made in one year,'' says Desmarest, comparing last year's earnings with pre- merger days during an interview in his corner office on the 44th floor of Total headquarters in Paris's La Defense business district. The suite is spotless, the only distraction an abstract painting by Algerian artist Abdallah Benanteur.
Low Cost
Desmarest says his benchmark to determine the profitability of new projects is figuring the price of oil at $25 a barrel. For heavy oil, which can have the consistency of molasses and typically contains impurities, or liquefied natural gas, Total may lift that to $30 or $35.
``We keep a relatively conservative oil price scenario for deciding developments,'' he says.
Total's cost of finding and removing oil was about $3.07 a barrel at the end of 2005, less than half of Exxon Mobil's $7.95, according to data compiled by Bloomberg. With depreciation, depletion and amortization costs, Total's technical costs are about $8.50 a barrel.
``We had the lowest technical costs per barrel among the majors last year,'' Desmarest says.
Exploration and production chief Christophe de Margerie will inherit the job of keeping Total's costs down and its shares and profits rising when he takes over as CEO in January. Russia and Latin America will demand his immediate attention.
Russian Woes
For the past decade, Desmarest has tried to persuade the Russian government to let Total develop a massive offshore Arctic gas field known as Shtokman. The $20 billion project would pump gas from beneath the icy Barents Sea, chill it to liquefied form and ship it to the U.S. State-controlled OAO Gazprom still hasn't decided on partners from a final list of five companies that includes Total.
In 2005, Total lost out on a $1 billion agreement for a 25 percent stake in OAO Novatek, Russia's second-biggest natural gas producer. Total had begun investigating the company two years earlier and debated whether to pursue a joint venture or try to buy an equity stake.
When Total decided on taking a stake, Russia's Federal Antimonopoly Service delayed the deal's approval for a year. Then, in a snub, Novatek sold shares on the London Stock Exchange, forcing Total to lower its growth estimates. The episode taught the French company the risk of moving too slowly, says de Margerie, 55, a grandson of champagne maker Pierre Tattinger.
`Go Quickly'
``We learned that if you have a good idea, go quickly,'' he says. ``If we had done it in two to three months, the government would not have changed its mind.''
De Margerie will also have to deal with growing nationalism in Latin America, which contributes 6 percent of Total's output. In April 2005, the government of Venezuelan President Hugo Chavez said Total owed as much as $1 billion in back taxes and delayed a second phase of Total's Sincor project.
``We were caught by surprise,'' de Margerie says. ``We heard through the newspapers. We had no chance to understand what changed and why.''
De Margerie denies owing back taxes, though he says Total has paid $100 million since the government action. ``It's possible to pay under protest,'' he says.
Venezuela's move threatened the 200,000 barrels of oil a day that Total had been pumping from its Sincor joint venture with Norway's Statoil ASA and Petroleos de Venezuela SA, the state- owned oil company. Then, in March, Venezuela introduced new rules to make PDVSA the majority shareholder in all joint ventures with Western companies.
Hot Under the Collar
Exxon Mobil, Total and Rome-based Eni SpA, Europe's fourth- biggest oil company, refused to sign. In retaliation, Venezuela took over two oil fields operated by Total and Eni. In May, Venezuela's congress raised royalties that foreign oil companies pay to 33.3 percent from 16.7 percent.
In another blow, on May 1, the government of Bolivian President Evo Morales took over that country's natural gas industry and threatened to evict foreign employees. Total lost its 15 percent stake in two production fields.
De Margerie is still hot under the collar two days after the nationalization decree when he greets visitors at Total headquarters. He questions how the military can operate the fields if foreign companies are expelled. He shows a newspaper picture of Morales flanked by armed soldiers at the San Alberto natural gas field.
`Are Those Slide Rules?'
``Are these men engineers?'' he asks sarcastically, pointing to the automatic weapon-carrying soldiers. ``Are those slide rules they're holding?''
Compared with Desmarest's orderly executive suite, every available space in de Margerie's large office is brimming over. Files are bursting with reports, charts and diagrams. A Russian military hat and a carved ivory tusk from Sudan are on display. A 2-foot-high stack bound by an industrial-strength rubber band is labeled simply Afrique.
Given the setbacks in Russia and Latin America, Africa is becoming even more important for Total. By the end of the decade, the continent will supply more than 40 percent of the company's oil and gas, predicts Stewart Williams, senior analyst at Edinburgh, Scotland-based Wood Mackenzie Ltd., an oil industry consulting firm.
Angola's government is helping with generous contracts. Portugal colonized Angola in the 16th century and held control until independence movements sprang up in the 1950s. With the Portuguese departure, Angola formally declared independence in 1975.
Civil war broke out the same year. The Popular Movement for the Liberation of Angola, or MPLA, fought the National Union for the Total Independence of Angola, or Unita, for 27 years, until the death of Unita leader Jonas Savimbi in 2002.
International Investment
During the war, the MPLA welcomed foreign investment in Angola's oil fields to help fund its military campaign. Unlike the Middle East or Mexico, Angola under the MPLA allowed Western companies to take equity interests in the oil fields they discovered. When the war ended with the MPLA in control, Total had a head start.
``Growth in Africa has been extraordinary for Total,'' Williams says. ``Total had the foresight to get in early.''
Tremendous challenges remain. Africa is vulnerable to poverty and disease, with 64 percent of the estimated 38.6 million people who have contracted AIDS living in sub-Saharan Africa, according to United Nations statistics. Corruption is rampant, former U.S. energy official Goldwyn says.
Open Sewers, Dirt Roads
In Nigeria, the top producer in sub-Saharan Africa, Eni and Shell have cut more than 500,000 barrels a day from their production since February. They scaled back after militant groups that wanted a greater share of the oil revenue kidnapped foreign workers from Britain, Egypt, Thailand and the U.S. and blew up pipelines in the Niger Delta.
On the streets of Luanda, far removed from the French pastries and cheeses that workers enjoy on the Girassol platform, women sell bananas, dried fish and clothing from baskets that they carry balanced on their heads.
Open sewers aid a cholera epidemic that had killed 2,000 people in the country this year as of July 4. Disease has been a factor in Angola's average life expectancy of 38.6 years, the fourth lowest in the world and less than half the average life expectancy of 79.7 years for people in France.
Traveling more than about five blocks in Luanda, which the Portuguese National Ultramarine Bank proclaimed as the ``Paris of Africa'' in 1872 for its villas and wide boulevards, is impossible without traversing dirt roads and encountering reeking garbage. Refugees from the civil war built a maze of tin-roofed and plastic-sheet-covered homes in shantytowns that now stretch for miles.
$2 Billion From China
When the war ended, Angola agreed to an International Monetary Fund reform program with the aim of obtaining IMF and World Bank funds. In 2005, it broke off negotiations for an IMF loan, which required greater accountability in how oil revenue is used to alleviate poverty. Instead, it borrowed $2 billion from China, which had no such requirements.
In March, the IMF issued a formal report describing its preliminary findings. It recommended that the Angolan government be more transparent in how it spends its $10 billion in oil revenue, which accounted for more than 90 percent of the country's export earnings last year.
Global Witness, a London-based organization that monitors corruption, especially in areas with diamonds, timber and oil, says as much as $1 billion a year of Angola's oil revenue is unaccounted for since 1996. It may have been diverted from the Angolan National Bank into Angola's national oil company and to the presidency, the group says.
Jose Eduardo Dos Santos, 64, has been Angola's president since 1979. The country held its only elections in 1992, and he won, continuing his rule.
`No Proper Debate'
``There is no proper debate on openness or transparency or reconstruction,'' says Sarah Wykes, an African specialist at Global Witness. ``How much of the oil wealth is going to the good of the country? Without good governance, you'll never know.''
Angola ranked 151st out of 158 nations in Transparency International's 2005 Corruption Perceptions Index. The agency rated Angola 2.0 out of 10 for perception of bribery and misuse of public funds. Iceland scored 9.7, making it the most transparent.
Ismael Gaspar Martins, Angola's UN ambassador, says the government has been tackling the issue of transparency.
``If conditions are so bad, or opaque, of course you would not invest,'' Martins says. Angola is spending 40 percent of its budget on social issues such as education and health, he says.
``One of the things needed is rehabilitation of the infrastructure,'' he says. ``This is a major effort that is being done.''
`Not My Job'
Total officials say they support more transparency. At the same time, they won't tell the Angolan government how to run its affairs.
``Our philosophy is, we work with the government in place,'' de Margerie says. ``How can an NGO tell me I have to change the government?'' he says, commenting on nongovernmental organizations such as Transparency International. ``That's not my job.''
France, which produces only 3 percent of the oil and gas it consumes, has always taken unconventional routes when it comes to petroleum. Industrialists set up Cie. Francaise des Petroles, which became Total, at the government's behest in 1924. That year, the government granted the new company a 23.75 percent share in Iraq Oil Co., which had been owned by Deutsche Bank and was given to France as compensation for damages in World War I. Oil was discovered in Iraq in 1927.
`Can't Find Petroleum'
After World War II, CFP had trouble discovering oil and relied on refining. It was even ridiculed as ``Can't Find Petroleum,'' a play on its initials. CFP's fortunes changed when Serge Tchuruk, a former Mobil executive, became CEO in 1990.
``A company that could not find oil and was dependent on refining was dangerous,'' Tchuruk says. ``The general opinion was that Total was a dead company.''
Tchuruk disposed of 200 subsidiaries, eliminated 6,500 jobs and rechristened the company Total in 1991 ahead of selling shares on the New York Stock Exchange. He expanded exploration, leading to major discoveries of oil in Colombia and natural gas fields in Indonesia.
Tchuruk, 68, stayed for five years before leaving to run Paris-based telecommunications equipment company Alcatel SA. He handpicked Desmarest, then 49, to replace him.
Desmarest had joined Total in 1981 after graduating from Ecole des Mines in Paris and spending more than a decade as a technical adviser in the French ministries of economics and industries.
`Cold-Blooded Guy'
``He's a cold-blooded guy,'' says Tchuruk, who remains a Total board member. ``I say that in the positive sense. You have to take risks. You have to know up to what point you can go and when you'd better back off.''
Desmarest continued Tchuruk's aggressive expansion. Desmarest flew to Tehran in 1995 to sign a $610 million contract to develop Iran's Sirri offshore oil field, stepping in after U.S. President Bill Clinton barred Conoco Inc., which had won the contract, from working in Iran.
Alfonse D'Amato, then a Republican senator from New York, pushed for sanctions on Total and sponsored the Iran and Libya Sanctions Act, which called for financial penalties on non-U.S. firms that dealt with Iran. Clinton signed the bill into law on Aug. 5, 1996. The law didn't cover Total's existing contracts.
In 1997, Total again tweaked the U.S.'s nose with a deal to run the second phase of Iran's South Pars natural gas field, the biggest in the world. As Shell and others stood on the sidelines, Total took a 40 percent stake in a $2.2 billion contract along with Gazprom and Malaysia's Petroliam Nasional Bhd., known as Petronas.
U.S. Waiver
Desmarest ignored the threat of sanctions. In May 1998, the U.S. granted Total a waiver after Secretary of State Madeleine Albright said the sanctions wouldn't prevent the project from proceeding.
While Total was exploring in Iran and Libya, a series of mergers rocked the industry. With oil prices at less than $15 a barrel, companies discovered that the best way to grow was to take over rivals and cut costs.
In August 1998, BP acquired Amoco Corp. and followed nine months later with Atlantic Richfield Co. Desmarest says he was concerned Total might end up being bought. Instead, he planned on striking first.
``We were mindful that we were becoming an attractive target,'' he says.
Desmarest says he realized Total was too small to tackle Elf and first went after Petrofina.
`First-Mover Advantage'
``The strategic conclusion was clear,'' says Albert Frere, 80, who controls Cie. Nationale a Portefeuille SA, Total's biggest shareholder, with 127 million shares valued at $7.8 billion. ``The one who linked with Petrofina had the first-mover advantage.''
On Monday, July 5, 1999, three days after the Petrofina paperwork was finished, Desmarest faxed a 42 billion-euro offer to Philippe Jaffre, his counterpart at Elf.
``We did not want to wait one extra day,'' Desmarest says. ``When you shoot first, you have the credibility of a management team which takes initiative.''
Jaffre hired Goldman Sachs Group Inc. and Morgan Stanley to make a counteroffer for Total. Shareholders preferred Desmarest.
``Total had a CEO who'd spent two decades in the oil industry,'' Institute of French Petroleum President Olivier Appert says. ``Elf's had no understanding of the business he was in.''
Jaffre had been a civil servant in France's ministry of finance and CEO of Paris-based lender Credit Agricole SA before being named to head Elf.
Sub-Saharan Africa
What Elf did have was a history of investing in sub-Saharan Africa and finding oil in Angola, Congo, Gabon and Nigeria. One of the most-promising areas was off Angola. Engineers discovered the Girassol field in 1996 after exploring along the Congo River, which flows along northern Angola and into the Atlantic.
It took five years to develop a three-dimensional seismic appraisal covering 1,100 square kilometers (425 square miles) of ocean and then narrow it to a production field of 140 square kilometers, slightly larger than the city of San Francisco.
Then Total had to install well-head and gathering systems in 1,400 meters of water and connect the pieces without the aid of divers. It added riser towers, 1,250-meter-tall structures made of four production pipelines, to bring the oil to the platform.
It also installed two pipelines to pump water or gas back into the well, feats never accomplished at such depths. In 2001, the Girassol field started production. The platform, two football fields long and weighing 343,000 tons, is painted an easily visible bright yellow. Girassol is Portuguese for sunflower.
Rivals Circle
Rivals are circling in the once-empty expanse of the Atlantic Ocean. Exxon Mobil pumps 550,000 barrels a day from its two Kizomba offshore-Angola fields, which came on line in 2004. BP is planning to spend $8 billion in Angola and expects to pump its own oil in 2007.
In June, China Petrochemical Corp., known as Sinopec, offered $2.2 billion to explore in two offshore locations even though it has little deep-water experience. Total may help operate the fields with China, which is the biggest consumer of oil after the U.S., says Andrew Hayman, a Geneva-based analyst for IHS Inc., a consulting firm in Englewood, Colorado.
``Angolans recognize that the Chinese don't have the experience and expertise to go that deep yet,'' Hayman says. ``Total certainly does.''
Oil Sands
To supplement its offshore activity, Total is exploring oil sands, a semisolid form of oil that companies first mine and then upgrade. In September 2004, Total paid $1.6 billion for Canada's Deer Creek Energy Ltd., which plans to mine oil sands north of Fort McMurray, Alberta.
To get the oil out, engineers will shoot steam jets hundreds of feet under the frozen ground to loosen the tar-like mix. Total may also bring in giant cranes with shovels to scoop oil-soaked rocks.
``Our first reaction was that this is not our business; it is mining,'' de Margerie says. ``Something I would have said was undoable in 2000 is now doable.''
In Africa, Total's offshore production requires even more extreme measures. One challenge is to keep the oil temperature at more than 40 degrees Celsius so it flows smoothly through as much as seven kilometers of flow line from the well-heads to the platform. That's not easy when the seabed water temperature is only 4 degrees.
With standard non-insulated steel tubing, the oil temperature would fall 18 degrees Celsius for every kilometer of flow line, turning the oil semisolid. Total devised synthetic foam that withstands water pressure of 140 bar, or 2,000 pounds per square inch, and offers an insulation capacity 500 times greater than steel.
`Limit of Equipment'
``At those depths, you come to the limit of equipment,'' says Olivier de Langavant, head of Total's Angolan operations. ``You don't have to reinvent the wheel, but you have to stretch the limit of material.''
By the end of the year, another massive vessel will float to the east of the Girassol field's platform. Total plans to start production from Dalia at depths of 1,500 meters to bring in about 240,000 barrels a day. The company has two more fields to bring on stream by 2013, adding another 500,000 barrels a day.
``Unconventional is now conventional,'' de Margerie says. ``Being a big company helps because we can take risks.''
As the West's grasp on the petroleum-rich Middle East and Latin America grows more tenuous, Total and its rivals are spending billions of dollars in the most-inhospitable regions of the globe.
Whether such risk-taking yields increasing profits depends on the world's continued addiction to oil and its willingness to pay stratospheric prices for it.
To contact the reporters on this story:
Kambiz Foroohar in London at kforoohar@bloomberg.net
Tom Cahill in Paris at tcahill@bloomberg.net
Sangamon,
IMO, you seem to be one of the most balanced and realistic posters on this board. One of the few people that realizes the investigation is a problem for the share price. It is amazing to me that others ignore it like it is not and did not happen. I mean, come on, the share price cut in half after the investigation began.
I bought in at 43 cents, as I think the investigation is factored in here. I know, I know, it can go down to zero. BUT it can also go up a lot, and if the investigation comes up with no punishment and no problem, we stand to move a lot fast in the upwards direction.
So my money is in for the gamble, and it will stay in untill we get a big uptick.
Cheers to you,
"I'm not a decision maker on that, but I suspect that the idea of a roadshow has been put on hold until there is more clarity regarding future leadership and the nature of the investigations that are ongoing. Given the circumstances, the timing may not be right.
Dan Keeney, APR
DPK Public Relations"
- Yea, I know, but if you listen to this board, the investigation is a non-issue and we have nothing to fear. Ignore the half-price stock since the investigation began. Ignore the departure of the company leadership.
I understand the board moderators and frequent posters don't like to hear any negative views, but come on. Let's look at reality. Let's look at this post above. Stop hiding our heads in the sand here and face the problems we have to deal with.
We have some great potential, but in order to reach it, we must get through our problems and not ignore them. The stock price is already devalued due to the investigation, that is a positive. Shareholders are reacting well to the lost leadership, as well, so that is a positive. IMO, a smart investor looks at the good and bad, not just the good. And the potential of losing our rights or facing stiff stiff fines for bribery or other alleged improprieties is a valid and true possibility. Why ignore it? It makes us feel better about our position. But does it help? No, it does no good. So what can we do?
Let's put pressure on ERHE to give us information about the investigation. Pressure them to tell us what they are looking at, what the govt is trying to accomplish by this, what penalties we may potentially face. If we get enough people asking for this information, they will see the need to communicate with their shareholders. We have the right to know this stuff. Instead, shareholders are ignoring it and acting like it makes no difference. We all know that is not the truth.
My last post of the day, hopefully there are some shareholders on this board that want ERHE to give us information that we deserve.
Best of luck to all, and great to see the share price is holding up nicely today.
articles:
July 27, 2006, 3:58PM
Oil Hopes at Center of Sao Tome Election
© 2006 The Associated Press
SAO TOME, Sao Tome and Principe — Incumbent candidate Fradique de Menezes is aiming to consolidate his grip on power in Sunday's presidential election in Sao Tome, a tiny island nation off West Africa that hopes to benefit soon from a fledgling oil industry.
Parties close to Menezes won a general election four months ago, and a second five-year term would ensure him a central role in developing offshore oil reserves in one of the world's poorest countries.
U.S.-based Chevron Corp. and its local partners recently announced that offshore drilling had found oil and natural gas deposits, though production is not expected to begin for several years.
Menezes's main rival is one-time foreign minister Patrice Trovoada, the 44-year-old son of former two-term president Miguel Trovoada. Nilo Guimaraes has little campaign money and no party support.
Political instability and corruption allegations have contributed to the collapse of four governments over the past five years.
About 80,000 people _ roughly half the population _ were registered to vote. Results were not expected until Monday.
Sao Tome's public health, energy and transport infrastructures are decrepit.
However, the country lies in the Gulf of Guinea, one of Africa's most active oil exploration areas, and voters hope future oil revenue will raise the standard of living.
______________________________________
INTERNATIONAL
Russian taxmen still haunt foreign investors
Posted online: Friday, July 28, 2006 at 0000 hours IST
MOSCOW, JULY 27: Foreign investors in Russia still fear heavy-handed treatment by the tax authorities even after President Vladimir Putin’s call to eradicate ‘tax terror’, the coordinator of a business lobby group said in an interview.
But, with Russia enjoying a consumer boom on the back of record oil prices, most investors who have gained a foothold in the country are bullish about their prospects despite pervasive red tape and corruption.
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Alexander Ivlyev, a partner at accounting firm Ernst & Young, said the tax issue would come up at the annual meeting of the Foreign Investment Advisory Council (FIAC), a forum set up in 1994 to create dialogue between government and business. “This question has not been properly settled and is becoming acute. Something must be done,” said Ivlyev, organiser of the FIAC meeting in October.
According FIAC research, tax demands served against large companies rank in the top three factors influencing foreign investors’ views of the Russian business climate, after economic growth and high oil prices.
In the most dramatic case, Russian oil major YUKOS was brought to its knees by $33 billion in punitive back tax claims. Creditors this week voted to bankrupt YUKOS, and the company now faces liquidation.
In the wake of the YUKOS affair, widely seen as a Kremlin operation to destroy the company’s politically-ambitious owner Mikhail Khodorkovsky, companies with foreign ownership were hit by a series of smaller back-tax claims.
—Reuters
any guesses on stock price monday afternoon??
I am giving my prediction as 35 cents
amj,
I am entitled to my opinions just as you are entitled to yours. I am not trying to cause trouble and I am not posting very often. I also do not discourage anyone to voice their opinions or insight.
So, my take on what may be happening, people can take it or leave it:
CEO and CFO gone looks very bad for a company. The timing of all of this makes me think it relates to the investigation. Whether it does or not really makes no difference though. The disrubing part is that they didn't have anyone else in place immediately. I would feel better about the future if they already knew the direction they were going and what leaders were taking them there.
Don't know if oilphants riddles are valid or not. But some changes are coming or the company is being attacked through the investigation. And YES, I do think ERHE is at risk in this and rights can be taken away. I don't think it is likely, but I do think it is possible. If it were not an issue (and I know many of you feel this way) the price would not have cut in half after it started. To me and IMO, that is just plain logic.
I expect the share price to suffer on Monday, and I expect it to stay lower than Friday's close until we get some sort of closure on the investigation (which I don't think will happen for a long time) OR some major deal is announced. I no longer think that disclosure of Chevron drilling will have a huge impact on ERHE. They simply have too many other troubles to gain much on that news.
And yes, I think ERHE's future is in doubt, at least in their current structure / agreements. They need to be bought by someone to move forward in teh future.
ALL IMO. GOOD LUCK ALL LONGS, I AM STILL HERE AND HOPING.
haven't read through all the posts, but I haven't seen anyone even suggest that the departure is closely related tot he investigation. this seems rather obvious to me. juswt imo. but this is not good, and I also don't see why people are emphatic that we can't lose our rights.
open your eyes people, it is possible.
still going to hold, got into this to lose it all or make out big. i still think it is possible to make great money here, but it may take a long while.
I think the chances decrease for number of attacks, but I still believe the sites are very accessible. I have spent significant time on the sea, it is a major part of my life. Protection of offshore sights is very difficult. Additionally, I don't look at 150 miles as being far off for even very small boats.
I agree that the most likely target would be a US owned rig (Chevron or Exxon, someone like that) versus a company with local ties, but you never know. They could try to hit directly at a local business/company for political reasons. If Al Quada, I would say US is more likely for sure.
I have already seen word that US protection will be around the area. But we all know that is very difficult. There is even likelihood that an attack could be directly at that protection versus the rigs, and the USS COle is proof of that.
In summary, I don't believe that attacks offshore will be very likely, and see them as very uncommon if they happen at all. But if one does happen, I see it being a far more major event than any of the small local attacks that are happening now.
I only have three posts per day, this is it, so sorry I can't respond to anything else today. I am also heading out on the water here shortly, though I will be staying within ten miles of shore the entire day. LOL.
Cheers,
balance- I don't necessarily agree regarding access to offshore sights. I believe this leads to great vulnerability to large scale planned attacks (versus a few rebels doing something on their own).
BUT, we are far away from that now, and hopefully by that time Nigerians will start to see more effect from the monies the country is making. It takes time to trickle down, but once there are small changes in the lives of some of these people, it will make a huge difference.
Of course there will always be threats of Al Quada in Nigeria, it is one area they have singled out to attack. But again, hopefully they will be completely tamed by the time ERHE has oil rigs in place.
Unfortunately, keeping the money in the hands of the rich is a problem everywhere and a major cause for much of the turmoil in the world. Religion is probably the only higher factor (JMO).
Great post Homeport.
Clearly terrorism and direct attacks on oil facilities is a major problem in the area. If the Nigerian Government is not able to pass on the money they make from oil to the general population, these problems will continue to grow. You can't have foreign oil workers making tons of money while people continue to live in extreme poverty or things will blow up (literally).
There is a lot of effort being made all over the world at getting oil from new sources, not just JDZ. I don't say that to downplay the JDZ potential, I think it has great promise, I would not have invested in ERHE otherwise. If we can just get these big companies to get moving ASAP and spend their profits, we could get more oil and drive the price back down.
______________________
AP
Exxon Mobil 2Q Profit Jumps 36 Percent
Thursday July 27, 8:53 am ET
Exxon Mobil 2Q Profit Jumps to 2nd Highest Level for U.S. Company
IRVING, Texas (AP) -- Exxon Mobil Corp. said Thursday it earned $10.36 billion in the second quarter, the second largest quarterly profit ever recorded by a publicly traded U.S. company.
The earnings figure was 36 percent above the profit it reported a year ago. High oil prices helped boost its revenue by 12 percent to a level just short of a quarterly record.
ADVERTISEMENT
Exxon Mobil's report comes a day after another large U.S. oil company, ConocoPhillips, said it earned more than $5 billion in the quarter and at a time when many drivers in the U.S. are paying $3 for a gallon of gas -- increasing the likelihood of further political backlash in Washington.
Exxon Mobil, the world's largest oil company by market capitalization, said earnings amounted to $1.72 per share in the April-June quarter compared with a profit of $7.64 billion, or $1.20 per share, a year ago.
The results topped Wall Street expectations but came in behind Exxon Mobil's record profit of $10.71 billion set in the fourth quarter of 2005.
Analysts polled by Thomson Financial expected the company to earn $1.64 per share.
Revenue rose to $99.03 billion from $88.57 billion in the prior-year quarter. That was short of Exxon Mobil's record third-quarter revenue of $100.72 billion -- which also stands as record revenue generated by any U.S. public company ever in a single quarter.
Exxon Mobil said it spent $4.9 billion on capital and exploration projects during the quarter, up 8 percent from a year ago, while distributing $7.9 billion to shareholders in the form of dividends and share repurchases. Congress has been urging the big oil companies to put more of their profits toward boosting the supply of energy for consumers.
Exxon Mobil shares rose 82 cents to $67.42 in premarket trading.
Only allowed to post three times, so two articles are attached:
Nigeria: NEITI, DPR, Civil Society Parley Over Transparency in Oil Sector
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Vanguard (Lagos)
July 25, 2006
Posted to the web July 26, 2006
Luka Binniyat
Port Hacourt
HARCOURT - Civil Society organization operating in the Niger Delta, last Friday in Port-Hacourt the River State Capital, hailed the Audit report of the Nigerian Extractive Industry Transparency Initiative (NEITI), but called for more measures that would strengthened the NEITI principle.
This call was made at one-day interactive session between the groups and NIETI and the Department of Petroleum Resources (DPR) and took place at the Protea Hotel, Portharcourt.
Speaking at the opening ceremony, the Chairman of NEITI, Mrs. Obeageli Ezekwesili, told the gathering that opening the oil sector to the close scrutiny of the public is about the most important contribution that the present administration has made toward the overall development of the Niger Delta.
"Nobody ever imagined that one day Nigerians would be given the opportunity to know, criticize and make contribution in the way that oil revenue is made and utilized", she told the gathering.
"If I were from the Niger Delta", she said. "I would consider the fact, that this government is putting in systems and process for the transparent exploitation of our oil wealth as far the most significant contribution it has bestowed on us".
She said that NEITI is the present government deliberate measure to demystify the oil sector and bring it open to public scrutiny.
"Nigeria is the only member country of EITI that has carried out financial, Process and Physical Audit of its oil industry", she said, "and the result has generated so much interest that makes it reparative for the NEITI bill to be passed to law".
She then called on the Civil Society to help pursue the passage of the Bill before the National Assembly.
"I plead with you all to seat together and have a robust interactive session so as we can improve on the modest achievement we have made", she said.
In his submission, the Director of DPR, Engr. Tony Chukwueke, ran down the history of the law governing oil exploitation in Nigeria from 1959 to the present government, and agreed that avenues for defrauding the country by oil operating companies was legally created.
According to him, until 2005, Oil Bid Round, allocation of oil blocks was done on the discretion of the Minister of Petroleum.
"Prior to 1973", he said, "all concessions were owned by foreign companies, who were granted Oil Prospecting Licenses (OPLs) on discretionary basis and operated under a Royalty/Tax regime governed by the Petroleum Act that was not favourable to government"
According to him, that led to the then military government to establish the Nigerian National Petroleum Corporation (NNPC) in the same year.
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"In 1973, following Nigeria joining OPEC, Government acquired majority interests in all producing Oil Mining Leases (OMLs) for the NNPC", he said.
He however noted that in the early 1980's, the military Government introduced indigenous players on a discretionary basis and in the 90's extended this to the Deep Offshore
"The discretionary allocations were on 'Sole Risk' basis", he said, "the concept of 'Technical Partner' was introduced", he went on, "the 'Sole Risk' award created a second tier operators (under DPR 'supervision')", he notes, and affirmed that, "the industry was operating in a 'confused' state - Budget Pronouncements became the main avenue to change the law" Engr. Chukwueke, explained.
______________________________________________
World Bank Under Wolfowitz Steps Up Fight Against Corruption
By Barry Wood
Washington
26 July 2006
Wood report - Download 491k
Listen to Wood report
The World Bank, based in Washington and owned by its 184 member governments, spends about $20 billion a year to promote economic development in poor countries. The Bank in recent years has stepped up its efforts to combat corruption to make sure that its money is used properly.
Since becoming president of the World Bank in March 2005, Paul Wolfowitz has made the fight against corruption a major priority. Calling it the single biggest obstacle to development, Wolfowitz has suspended or delayed loans to Chad, Bangladesh, and India, when corrupt activities were uncovered. Wolfowitz also commissioned a far-reaching study on the effects of corruption.
"The report argues also compellingly, that the best check against corruption is to strengthen governance systems supported by regular monitoring," he said. "Simply uttering the word corruption drives headlines but the real issue that we are addressing at the World Bank Group is how to promote good governance and accountability."
It wasn't always this way. As recently as the 1990s, the Bank was accused of turning a blind eye to corruption. It lent billions to the corrupt government of Mobutu Sese Seko in what was then called Zaire and is now known as the Democratic Republic of the Congo. In Mozambique, the Bank's advocacy of privatization of state-owned enterprises was linked to a financial scandal that culminated in the murder of a respected journalist and bank examiner in the year 2000. Economist and university lecturer Joe Hanlon has written extensively about the World Bank and Mozambique.
"I've argued for some time that the donors are complicit in the corruption, and, in fact, they supported corruption in Mozambique," he said. "So when the World Bank forced the local banks to give loans to privatized companies that the local banks said would never be repaid, the World Bank said, 'we want you to give the loans anyway to support privatization.'"
Mozambique, like many countries in Africa, has a huge corruption problem that is accentuated by single party dominance, a lack of checks and balances within the government, limited rule of law, and linkages between corruption and organized crime.
Wolfowitz, who this month has been in Africa reviewing development projects, says a free press is vital to combating corruption.
"I think when people try to say there is a sharp differentiation between economic development and political development, they ignore such things as the fact that, when you have a free press, you have a check on corruption that isn't there when it is muzzled and controlled," he said.
Critics of the World Bank say Wolfowitz's anti-corruption campaign doesn't go far enough. A coalition of environmental, human rights and leftist political groups want corporations linked to corruption banned from World Bank projects. They say some bank projects like the Chad-Cameroon oil pipeline continue to be riddled with corruption.
But many observers say the World Bank has put real teeth into the anti-corruption effort. It has established an office of institutional integrity and sent anti-corruption teams to countries that are recipients of Bank's loans. It has promised to blacklist firms that engage in corruption. World Bank chief economist Francois Bourguignon says there are good reasons for waging a long-term fight against corruption.
"The crime of corruption is knowing that it destroys incentives for any kind of [constructive] activity," he said. "If you know that when you undertake a profitable activity, then somebody will come and expropriate part of your gain, then the profitability is being reduced."
Wolfowitz says the anti-corruption campaign promotes economic development. It is, he says, about making sure that the Bank's resources go to the poor and don't end up in the wrong pockets.
Good post, Rocky. Funny, though, if I had posted this, you would have complained I was a basher and done everything you could to get me kicked off the board.
You will continue to see resistance to going above 43 cents.
That is the level where I bought, and it is Murphy's Law for all purchases I make of penny stocks. LOL.
Sorry to all who suffer from that......
Sorry if I missed this, but does anyone have an educated guess or verification of when the drilling results from Chevron will be announced?
Is there anything else that will move this stock other than word about the investigation?
Thanks
Briefly: Nigerian vice president denies receiving bribes
The New York Times
Published: July 21, 2006
WASHINGTON
Nigerian vice president denies receiving bribes
The vice president of Nigeria has angrily denied that he accepted bribes or had a business relationship with Representative William Jefferson, Democrat of Louisiana, who is the target of a federal corruption investigation that is threatening to complicate U.S. relations with that oil-exporting West African nation.
In a statement, Vice President Atiku Abubakar of Nigeria, a leading candidate in presidential elections next year, insisted that Jefferson had never "suggested, in any way, providing any personal economic benefits" to him.
It was the first detailed effort by Abubakar and his political advisers to distance him from the wide- ranging corruption investigation centered on Jefferson, who denies wrongdoing. (NYT)
WASHINGTON
Testing is scaled back for mad cow disease
The U.S. Agriculture Department is scaling back its testing program for mad cow disease to about one- tenth of what it has been for the past two and a half years.
Agriculture Secretary Mike Johanns said there was little justification for the current level, which rose to about 1,000 tests a day after the first U.S. case of mad cow disease in 2003. (AP)
BOSTON
Governor shuts down part of tunnel to airport
Governor Mitt Romney of Massachusetts on Thursday closed the eastbound lanes of the freeway tunnel that goes under Boston Harbor to the city's international airport after two problem bolts were found during inspections after the deadly collapse of ceiling panels in a nearby stretch of the system.
Romney said state engineers had found two bolts that appeared to have slipped in a ceiling panel, one by half an inch and another by an inch.
"It is perhaps an overreaction but we want to err on the side of public safety," Romney said at a news conference. He predicted the closure would last hours, not days. (AP)
WASHINGTON
Nigerian vice president denies receiving bribes
The vice president of Nigeria has angrily denied that he accepted bribes or had a business relationship with Representative William Jefferson, Democrat of Louisiana, who is the target of a federal corruption investigation that is threatening to complicate U.S. relations with that oil-exporting West African nation.
In a statement, Vice President Atiku Abubakar of Nigeria, a leading candidate in presidential elections next year, insisted that Jefferson had never "suggested, in any way, providing any personal economic benefits" to him.
It was the first detailed effort by Abubakar and his political advisers to distance him from the wide- ranging corruption investigation centered on Jefferson, who denies wrongdoing. (NYT)
_______________________________________
another article:
Nigeria: Chevron Earmarks $250 Million for Local Contractors
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This Day (Lagos)
July 21, 2006
Posted to the web July 21, 2006
Onyebuchi Ezigbo
Abuja
Multinational oil firm, Chevron Nigeria Limited, yesterday disclosed it has set aside contracts worth $250 million to be undertaken by local companies operating in Nigeria just as it unveiled plans to commence work to build a 720 mega watt (MW) capacity power station in Agbara, Ogun State.
The Chairman and Managing Director of Chevron Nigeria/Mid-Africa Business units, Mr. Fred Nelson, who disclosed this to newsmen in Abuja said the company is presently working out the details of the project preparatory to take-off in a few months time.
"One of the urgent needs in this area as well as in the country is additional power. We have selected to site the station to generate 720MW electricity power close to Egbin thermal station in Lagos. We want to be part of the overall solution to power problem in Nigeria", he said.
He said the implementation of the power project will be two-phased, with the first phase delivering 350MW on completion adding that the company is also working with CIEP to come out with a master plan for domestic gas in Nigeria which is intended to boost power business in the country.
The Chevron boss spoke of the firm's programme of developing the indigenous capacity, saying that it has proposed a project execution for local contractors to the tune of $250 million.
He said Chevron has contracts already in place worth about $250m to be executed within Nigeria, and that the plan is to use the project in assisting local companies to help achieve world-class performance.
"The execution of our projects carries along with opportunities for local contents. In the way, we intend to continue to help in building-up local capacity", he said, adding "what is required is for all to join hands to ensure the development of a sustainable capacities within the country".
According to him, "the effort will be tailored to bridge the gap between the current capability and future targets. Other capacity build-up is in the area of infrastructure and capital development and we have been involved in a number of projects in these areas".
He said the company will continue to take the lead in support of the Federal Government policy on local content in the industry.
For, instance the local content scope for the Agbami development is the most work done to date for an FPSO development, he said.
As an example of Chevron's commitment to local content, he explained that the company has provided support for a local company (VRMT) to establish laboratory facilities in Lagos for advanced analysis of crude samples.
Nelson, who expressed optimism on the company's future prospects, said Chevron is fast emerging as a major force in the deep-water operations with the successful discoveries in Agbami.
"When the Agbami deep water oil field comes on stream in the last quarter of 2008, it will be delivering close to 250,000 barrels per day for the country.
On the company's contribution to the Federal Government's tripartite development plan, which involves governments at the centre and state level working with the oil firms, Nelson said Chevron has volunteered to contribute $50 million on annual basis towards development projects in the Niger Delta.
Meanwhile, the Nigerian National Petroleum Corporation (NNPC) and its joint venture partners will next month launch a $350 million fund to support local companies. The fund is part of effort to jerk-up the nation' local content level in the sector.
NNPC Group Managing Director (GMD, Mr Funsho Kupolokun, who made this known yesterday in Abuja at the Sullivan Summit said the money would be given out as loan and would attract a single digit interest rate.
"The initiative is a deliberate effort to raise the national local content level from its current 21 per cent to 45 per cent at the end of 2008," he said.
Kupolokun said relative to other comparative countries, the national local content level in Nigeria was quite low.
He said the Nigerian oil and gas sector was re-positioning itself through series of mutually complimentary initiatives to deliver service sector opportunities.
The GMD said an industry data base joint qualification system (JQS) had been developed to track in-country capacity in specific areas.
He said the system would also be used for electronic market place to increase efficiency and speed up approval process.
Relevant Links
West Africa
Petroleum
Industry and Infrastructure
Nigeria
Economy, Business and Finance
Kupolokun said four free-trade zones had also been set up to provide incentives for oil and gas investors by lowering investment barriers and enhancing project profitability.
He named the trade zones as Calabar, Lekki, Olokola and Onne while he told Africans in the Diaspora to take advantage of the stability and transparency in the oil sector and explore areas of partnership with indigenous companies for the common good.
He said the oil industry was committed to building strong global partnership to maximise dividends from government reforms in pursuit of national aspiration.
--------------------------------------------------------------------------------
Copyright © 2006 This Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). Click here to contact the copyright holder directly for corrections -- or for permission to republish or make other authorized use of this material.
ot response: the articles i have posted are very relevant to the stock. if you don't want to read them, don't read them and keep me on ignore. all people have their choice to do so.
if you took the time to actually read these articles, you would see that they are the most recent articles in the news related to this area of the world and specifically the oil industry. i have seen complaints that things have been discussed before, but the discussion surely wasn't about an article that was just released. dont know why you are afraid of the truth and the current news? i prefer to read current articles and not stick my head on the sand.
you also forget that i own this stock and am comfortable with the choice i made in buying it. i know it can go to zero, but i also hope it can grow significantly. so not sure where the bashing comments come from.
THis article is good regarding transparency:
_________________________________
Ghana: Transparency International Accuses G8
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Ghanaian Chronicle (Accra)
July 19, 2006
Posted to the web July 19, 2006
Joseph Coomson
Transparency International (TI) has accused the world's eight industrialized countries (G8) for missing the chance to offer hope for the world's poor.
However, it said that a fraction of the momentum of recent years was carried forward in the G8's Update on Africa.
Within that, Transparency International welcomed the G8's reaffirmed support for the African Peer Review Mechanism (for monitoring governance progress), transparency in oil and gas, and the United Nations Convention against Corruption.
It said the recovery of stolen assets, making revenue streams transparent and implementing anti-corruption instruments are the key ways to ensure development and investment that fulfils the promise of a better future for the continent.
These were contained in a communiqué released by the Transparency International (TI) on the G8 summit at St. Petersburg in Russia on Monday.
The group further indicated that the statement on Fighting High-Level Corruption points to a maturing understanding of corruption and numbered days for impunity of public officials.
Transparency International also said the statements on oil and on Africa contain nods to the requisite initiatives, but are short on detail and lack concrete commitments.
On Fighting High-Level Corruption, Transparency International (TI) welcomed the G8 recognition of the horrendous effects of corruption on development, democratic governance and the rule of law, but they must do more.
Relevant Links
West Africa
International Organizations and Africa
Legal and Judicial Affairs
Ghana
Crime and Corruption
Aid and Assistance
It said Canada, Germany, Italy, Japan and the United States should ratify the United Nations Convention against Corruption (UNCAC) without further delay and support robust monitoring. Canada, Italy, Japan, the UK and Russia must enforce the foreign bribery prohibition contained in the OECD Convention and UNCAC. It said the G8 cannot prescribe anti-corruption and transparency measures that they themselves have not followed.
Comment on energy was not left out. It reiterated that although transparency and anti-corruption measures in the oil sector were mentioned, there were no specific measurable steps taken. "Awareness and recognition of the need for these measures is a positive development, but real progress will only come when G8 countries hold themselves to specific targets," it said.
Germany is billed to host the next summit in 2007. Chancellor Merkel indicated that the G8 would tackle global poverty next year. Transparency International calls on the German government to ensure that governance and development are at the heart of the agenda for next year's summit and to ensure a participative process, starting now, in which civil society feeds into the programme for 2007.
OT: This is not related to Nigeria, but is an example of striving for transparency....
____________________________________________
Programme for transparency in mining revenue begins
Accra, July 19, GNA - Tax revenue from Ghana's mining sector is negligible but interest groups have initiated a new programme to streamline revenue and tax that accrue from the sector to ensure openness and accountability.
They are implementing the Extractive Industries Transparency Initiative (EITI), a new programme initiated by the United Kingdom UK Prime Minister Tony Blair in South Africa in 2002.
Cameroon, Botswana, Azerbaijan and Kazakhstan are some of the countries that have signed on so far to voluntarily implement the EITI but Ghana and Nigeria are implementing the EITI as pilot projects for their resources, which are precious minerals and oil.
EITI is a voluntary initiative to focus on company payments, government revenues with non-governmental organisations serving as watchdogs in participating countries with natural resources but where the resources were likely to bring about conflicts of any form.
The German Technical Cooperation (GTZ), which is supporting Ghana's Project in collaboration with the Ministry of Finance and Economic Planning, on Wednesday organized a workshop for revenue agencies, representatives from the mining districts, the Minerals Commission, the Revenue Agencies Governing Board and the Large Taxpayer Unit to crate awareness of the EITI and discuss issues and problems regarding the initiative in the country.
The workshop would among other areas focus especially on the introduction of reporting templates to the relevant revenue agencies and district assemblies.
Organisers expect that the implementation of the initiative would help to reconcile payments by mining companies and revenue receipts by the Government in order to ensure transparency and accountability in amounts received, the recipients and mode of utilization.
Although the country's corporate tax is currently pegged at 25 per cent and is described as globally competitive of the mining companies operating in the country, only five were liable to pay corporate tax in 2004 and four in 2005 while in 2006, only two companies were liable.
According to Mr Chris Afedo of the Large Taxpayer Unit, the reasons for this trend was attributable to the carry forward of losses of concession granted and the accelerated depreciated scheme available to the mining companies.
The accelerated depreciation scheme is applied to mineral exploration rights, building, structures and works of permanent nature, plant and machinery and costs incurred in respect of mining prospecting, exploration and development among other areas considered to be of high risk. The carry forward allows the companies to deduct the tax against income in the subsequent tax year.
Mr Afedo, who spoke on the mineral sector in Ghana and revenue flow, said mining between 1998 and 2005 contributed a little above five per cent to the gross domestic product and gold production in the same period contributed over 30 per cent of the country's export earnings.
Revenue flows from mineral operations to the State within the EITI would focus on corporate income tax (profit tax), mineral royalties, dividends and withholding tax.
Mr Afedo explained that the EITI was to provide transparency in the "legitimate payments by companies to governments, as well as transparency over legitimate revenues by the host countries.
"Comparison of the data should allow detection of discrepancies and so bring about greater accountability."
Mr Amponsah Tawiah, Director of Monitoring and Evaluation, Minerals Commission, said the Government, prior to the launch of the EITI initiative, was practicing an aspect of the initiative.
He said the Government was also embarking on gold auditing process whereby both the Government and industry would have common understanding for the gold that was exported by the mining companies.
The EITI concept, he said, was that the prudent use of natural resources wealth was an important engine for sustainable economic growth that contributed to sustainable development and poverty reduction.
"But if it is not properly managed it could create negative economic and social impacts with untold hardships on the citizens, who rather should have benefited from the natural resource," he said.
Mr Harry Owusu, Executive Secretary of the Revenue Agencies Governing Board, said revenue from natural resources was on course.
He reiterated that without transparency in the mineral sector with regard to concessions; duty on machinery; service delivery and payment of royalties; there could be social acrimony and cited the developments in some communities including the Tarkwa area as examples.
Mr Owusu mentioned some instances where the youth took the law into their own hands and went on the streets over the distribution of royalties and a particular community demanded royalties to the tune of two billion cedis.
There is also the instance where a company left the country without reclaiming the degraded land.
He said by the end of May 2006, money accruing from
mining amounted to 145.2 billion cedis. The Deputy Minister of Mines, Forestry and Lands, Mrs Rita
Iddi said mining played an important role in the economy. It
generated 33 per cent of export earnings, 11 per cent of total
revenue, five per cent of GDP and seven per cent of corporate
tax earnings. She said the Minerals Commission received high revenue
from mining in 2005 and that the industry was also providing
auxiliary jobs for Ghanaians. She said there was the need to broaden the scope of
transparency and accountability. Dr Christoph Habammer of GTZ said so far Britain, Norway,
the Netherlands, France and Germany were sponsoring
projects under the EITI. He said the countries had set up a 5.6 million-dollar trust
fund for the project adding that Germany would support the
creation of a website for the flow of information since the
project was ongoing. It would also give technical assistance
such as training workshops for tax administrators and the civil
society. The theme for the workshop was "Development through
Transparency; Implementing EITI in Ghana". GTZ at the workshop donated a 20,000-euros Nissan
X-Trail four-wheel drive vehicle to support the activities of the
Revenue Agencies Governing Board.
Obasanjo's oil windfall scandal
By Senior Fyneface
Posted to the Web: Thursday, July 20, 2006
EACH time Nigeria benefits from unexpected revenue windfall from oil and gas sales, the next thing that follows is scandal, which usually concerns the spending of such windfall earnings. First, it was former military president, Gen Ibrahim Babangida, now we have the current case of civilian president, Gen Olusegun Obasanjo.
If Dr Pius Okigbo (of blessed memory) lamented for the entire nation on the reckless manner the Babangida administration blew over $12.4 billion receipts in the special escrow accounts, the world-renowned economist must be crying to the Almighty God concerning the country following the disclosure by the authorities of the Revenue Mobilization and Fiscal Commission (RMAFC) that President Obasanjo has already blown over $13.2 of the latest oil windfall. The first oil windfall was as a result of a surge in the prices of crude oil (an average of $28 per barrel during the Gulf crisis) following the scarcity of supplies in international market orchestrated by a shortfall of five million barrels per day from the Gulf of Suez. This was Babangida’s windfall.
The second, Obasanjo’s windfall, (which is still on) came as oil prices surged above $70 per barrel, also orchestrated by shortfalls in supply to the market as a result of the crisis in Iraq, Iran and Nigeria’s Niger Delta. The two oil windfalls episodes share several things in common particularly in the manner the monies earned were spent. This is in addition to the two players being former military rulers though President Obasanjo under the current dispensation, was supposed to have been democratically elected by the Nigerian voters. The Pius Okigbo-headed Panel that investigated the spending of the Babangida oil windfall earnings revealed that $12.2 billion of the $12.4 billion was “spent on what could neither be adjudged genuine high priority projects or truly regenerative investment”. In common-man language, the money was squandered.
The Joint Senate Committee on Finance, Appropriation and National Planning, investigating the alleged illegal spending of the Obasanjo’s windfall was told on Thursday June 15, 2006, that so far, the Presidency has spent over $13.2 billion of the monies in manners that could best be described as blurred. Also in common man's language, the money was squandered. President Babangida, who allocated 200,000 barrels of crude oil per day to fund the LNG Project, initiated the concept of escrow and special accounts in 1986. In 1988 other special escrow accounts were created to fund specific development projects majority of which had remained in the drawing board till today.
It took The Revenue Mobilization Allocation and Fiscal Commission (RMAFC) Chairman Hamman Tukur, when he addressed, the Joint Senate Committee on Finance, Appropriation and National Planning investigating illegal withdrawals from the Federation Account on Thursday June 15, 2006 to disclose that the President Obasanjo administration since 2003 created and has been operating three special escrow accounts namely, “export crude oil, excess Petroleum Profit Tax (PPT) and excess Royalty Accounts illegally maintained exclusively by the Presidency, out of which $13.2 billion has so far been withdrawn”.
The Babangida administration, as the Okigbo Panel disclosed, lodged all the windfall money- $12.4 billion in dedication, stabilization and other special escrow accounts, which were hardly applied for the purpose for which they were originally intended.
The late Dr Okigbo while presenting the report of his panel to the then Head of State, late General Sani Abacha, in 1994, was quoted as having said, “these disbursements were clandestinely undertaken while the country was openly reeling with crushing effects of the structural adjustment programme of the Babangida administration and external debt burden. This represented, no matter the initial justification for creating the accounts, a gross abuse of public trust. Had these resources of $12.4 billion, or even a significant portion been paid into the external reserves, the impact on the Naira/Dollar exchange rate today; on the attitude of our external creditors; on the credibility of Nigeria and on the environment for foreign investment, etc, would have been incalculable”.
The panel inaugurated in 1994, revealed how Babangida, in connivance with the top officials of Central Bank of Nigeria (CBN) and some NNPC executives squandered the Gulf war crude oil sales windfall. It was discovered that the money was blown on questionable and often unexplained expenses by the administration.
Continues tomorrow
•Mr. Fyneface, a journalist, writes from Port-Harcourt.
I am not sure I understand what you are saying, actually I know I don't understand what you are saying. I am willing to give my opinions, I just don't know what you are asking.
But to claify the point of transparency, punishment for bribery, etc....- with the current day of globalization, countries that do not open their borders and offer complete transparency (along with showing that they are providing a true open market- not based on bribery, kickbacks, etc...) will suffer and trail those countries that abide by true fairness and openness.
Nigeria has some great assets, and they are far better served if they operate in a legitimate fashion. International pressure will push them this direction, which is great, but they still have a lot to overcome.
I think the potential for the region is great provided they don't continue to partake in questionable business ethics. Additionally, if they do not dispurse the money to their citizens in a more fair manner, the country will continue to have inner turmoil, which is bad for international business.
It is all about being as fair and open as possible.
DOn't know if that is what you were asking????
and what I am saying is that his views on Globalization has proved to be on track. His "theories" are based on humans and how they deal, so that is part of the equation.
There is no doubt that transparency and avoidance of illegal activities (bribery, for example) increase the likelihood and safety of investments for the corresponding country. It is where Nigeria is behind. They have the goods (oil, minerals) just not the safety for investment. As transparency increases and illegal activity is routed out, the better investment opportunities become.
I am in no way saying there is not huge promise in the territory, and I believe stock price for ERHE already has these negatives factored in, so as it gets better, stock price should rise. Hopefully that will be the case.
You are right magic, two wrongs do not make a right, I should not reply to insults with insults. You will never hear me say I am perfect, and I am not afraid to admit when I am wrong. I apologize to all, even those that constantly want to fight and hurl insults.
Read the articles, and other relevant articles. The answers are quite clear. I also suggest you read Thomas Friedman's "The Lexus and the Olive Tree" for a better understanding of Globalization, transparency, and International business. I fully agree with his theories, as they have been proved correct over time. But to give you a basic answer, countries that deal with bribery and not by a fair set of rules suffer at the end, as it prevents an influx of international monies into their country. It also leads to unstable governments and lack of security for investments in the area.
Hope you can understand, it may be above you.
Read the last paragraph especially ! ! !
http://www.crisisgroup.org/home/index.cfm?l=1&id=4274
Nigeria: Want in the Midst of Plenty
Africa Report N°113
19 July 2006
EXECUTIVE SUMMARY
Nigeria is Africa’s most populous nation and perhaps also its most poorly understood. It has endured six successful and numerous failed military coups, a civil war that cost well over a million lives, three inconclusive transitions to democracy and recurrent factional violence. Despite more than $400 billion in oil revenue since the early 1970s, the economy under performs, and the great majority of citizens have benefited little. More effective institution building is imperative.
This background report is the first in a new series on Nigeria. Subsequent analysis and policy recommendations will deal with issues such as the Niger Delta, federalism, inter-communal tensions in the Plateau State and elections. Throughout its 46 years of independent history – 28 years under military rule – analysts, historians and others have often over simplified the country either in terms of its ethnic divide between Hausa-Fulani, Igbo and Yoruba, or through a religious dichotomy of “the Muslim north against the Christian south”. Demagogues have exploited such social cleavages for their own ends, often fuelling civil strife.
The country’s history since independence suggests, however, that the politicisation of ethnicity and religion and factional mobilisation along these same lines is a direct by-product of the monopolisation of power and assets by ruling elites eager to avoid open and fair competition. With Nigeria’s emergence as a major oil producer, pervasive patron-client networks have developed at all levels of government. Federalism has permitted entitlements to be spread more widely across society but it has in turn fuelled a proliferation of state and local institutions that have made governance fragmentary and unwieldy. Unable to obtain their fair share of the country’s wealth, most citizens have been left with two choices: fatalistic resignation or greater identification with alternative hierarchies based on ethnicity, religion or other factional identities.
In the absence of checks and balances, especially during periods of military rule, the state has failed to fulfil most of its major functions, and large segments of the public have ceased to expect social services, public utilities, infrastructure, security or administration from it. Many groups have resorted to self-help measures through ethnic, religious, community or civic organisations. Under the military dictatorship of General Sani Abacha, this dissociation between citizens and government produced a slow-motion version of a failing state. By 1999, the majority of Nigerians were worse off than their parents had been at independence in 1960.
The 1999 return to democracy meant a fresh start. However, the past weighs heavily on the democratic experiment. Widespread corruption and persistent electoral malpractice continue to undermine politics as a whole. Military rule has cast a long shadow, and Nigeria remains dangerously reliant on oil receipts and mired in patron-client networks. New challenges have arisen, with inter-communal clashes across the country causing more than 14,000 deaths since 1999 and displacing more than three million. Militias have sprung up, notably in the oil-rich Niger Delta, where growing tensions are a direct result of decades of environmental harm and political neglect.
Concurrently, Nigeria is striving to assert its political weight in West Africa, across the African continent and beyond. It is all too easy for the world to perceive it only as a major world oil producer and a regional policeman. However, if the international community fails to better grasp the internal dynamics and intricacies, there is a very real potential for the persistent levels of violence to escalate with major regional security implications.
DO YOUR OWN RESEARCH ! !
http://csr-news.net/main/strong-words-on-global-fight-against-corruption-treading-water-on-africa-an...
Strong words on global fight against corruption, treading water on Africa and oil
July 19th, 2006
Berlin / St Petersburg, 17 July 2006 – The G8’s statement on Fighting High-Level Corruption points to a maturing understanding of corruption and numbered days for impunity of public officials. The statements on oil and on Africa contain nods to the requisite initiatives, but are short on detail and lack concrete commitments.
Fighting High-Level Corruption
Transparency International (TI) welcomes the G8 recognition of the horrendous effects of corruption on development, democratic governance and the rule of law, but they must do more. Canada, Germany, Italy, Japan and the United States should ratify the United Nations Convention against Corruption (UNCAC) without further delay and support robust monitoring. Canada, Italy, Japan, the UK and Russia must enforce the foreign bribery prohibition contained in the OECD Convention and UNCAC. The G8 cannot prescribe anti-corruption and transparency measures that they themselves have not followed.
Energy
Although transparency and anti-corruption measures in the oil sector were mentioned, where were the specific measurable steps? Awareness and recognition of the need for these measures is a positive development, but real progress will only come when G8 countries hold themselves to specific targets.
Africa
The summit missed the chance to offer hope for the world’s poor. A fraction of the momentum of recent years was carried forward in the G8’s Update on Africa. Within that, Transparency International welcomes the G8’s reaffirmed support for the African Peer Review Mechanism (for monitoring governance progress), transparency in oil and gas, and the United Nations Convention against Corruption. Recovery of stolen assets, making revenue streams transparent and implementing anti-corruption instruments are the key ways to ensure development and investment that fulfils the promise of a better future for the continent.
Germany 2007
Chancellor Merkel today indicated that the G8 will tackle global poverty next year. Transparency International calls on the German government to ensure that governance and development are at the heart of the agenda for next year’s summit and to ensure a participative process, starting now, in which civil society feeds into the programme for 2007.
from Vanguard:
VIEWPOINTS
Obasanjo's oil windfall scandal
By Senior Fyneface
Posted to the Web: Thursday, July 20, 2006
EACH time Nigeria benefits from unexpected revenue windfall from oil and gas sales, the next thing that follows is scandal, which usually concerns the spending of such windfall earnings. First, it was former military president, Gen Ibrahim Babangida, now we have the current case of civilian president, Gen Olusegun Obasanjo.
If Dr Pius Okigbo (of blessed memory) lamented for the entire nation on the reckless manner the Babangida administration blew over $12.4 billion receipts in the special escrow accounts, the world-renowned economist must be crying to the Almighty God concerning the country following the disclosure by the authorities of the Revenue Mobilization and Fiscal Commission (RMAFC) that President Obasanjo has already blown over $13.2 of the latest oil windfall. The first oil windfall was as a result of a surge in the prices of crude oil (an average of $28 per barrel during the Gulf crisis) following the scarcity of supplies in international market orchestrated by a shortfall of five million barrels per day from the Gulf of Suez. This was Babangida’s windfall.
The second, Obasanjo’s windfall, (which is still on) came as oil prices surged above $70 per barrel, also orchestrated by shortfalls in supply to the market as a result of the crisis in Iraq, Iran and Nigeria’s Niger Delta. The two oil windfalls episodes share several things in common particularly in the manner the monies earned were spent. This is in addition to the two players being former military rulers though President Obasanjo under the current dispensation, was supposed to have been democratically elected by the Nigerian voters. The Pius Okigbo-headed Panel that investigated the spending of the Babangida oil windfall earnings revealed that $12.2 billion of the $12.4 billion was “spent on what could neither be adjudged genuine high priority projects or truly regenerative investment”. In common-man language, the money was squandered.
The Joint Senate Committee on Finance, Appropriation and National Planning, investigating the alleged illegal spending of the Obasanjo’s windfall was told on Thursday June 15, 2006, that so far, the Presidency has spent over $13.2 billion of the monies in manners that could best be described as blurred. Also in common man's language, the money was squandered. President Babangida, who allocated 200,000 barrels of crude oil per day to fund the LNG Project, initiated the concept of escrow and special accounts in 1986. In 1988 other special escrow accounts were created to fund specific development projects majority of which had remained in the drawing board till today.
It took The Revenue Mobilization Allocation and Fiscal Commission (RMAFC) Chairman Hamman Tukur, when he addressed, the Joint Senate Committee on Finance, Appropriation and National Planning investigating illegal withdrawals from the Federation Account on Thursday June 15, 2006 to disclose that the President Obasanjo administration since 2003 created and has been operating three special escrow accounts namely, “export crude oil, excess Petroleum Profit Tax (PPT) and excess Royalty Accounts illegally maintained exclusively by the Presidency, out of which $13.2 billion has so far been withdrawn”.
The Babangida administration, as the Okigbo Panel disclosed, lodged all the windfall money- $12.4 billion in dedication, stabilization and other special escrow accounts, which were hardly applied for the purpose for which they were originally intended.
The late Dr Okigbo while presenting the report of his panel to the then Head of State, late General Sani Abacha, in 1994, was quoted as having said, “these disbursements were clandestinely undertaken while the country was openly reeling with crushing effects of the structural adjustment programme of the Babangida administration and external debt burden. This represented, no matter the initial justification for creating the accounts, a gross abuse of public trust. Had these resources of $12.4 billion, or even a significant portion been paid into the external reserves, the impact on the Naira/Dollar exchange rate today; on the attitude of our external creditors; on the credibility of Nigeria and on the environment for foreign investment, etc, would have been incalculable”.
The panel inaugurated in 1994, revealed how Babangida, in connivance with the top officials of Central Bank of Nigeria (CBN) and some NNPC executives squandered the Gulf war crude oil sales windfall. It was discovered that the money was blown on questionable and often unexplained expenses by the administration.
Continues tomorrow
•Mr. Fyneface, a journalist, writes from Port-Harcourt.
articles often contain both FACTS and OPINIONS. It is not all opinion, and it is not all facts. And sometimes, there are items listed as facts that are wrong. I provided the article, I did not provide my evaluation of the article.
You are simply looking for a fight because I post articles that do not support your hypster opinion. That is your problem, not mine.
Going to the beach where you can hide your head in the sand easier? LOL.
You are welcome, Homeport, and can do.
I see you didn't answer the question. Not surprising.
Look back at previous posts I have made. I do not think that every article is accurate, and I don't believe everthing in every article. I especially don't believe TABLOID publications and would never compare them with more "news worthy" papers and information. I use my God given brain to conclude a difference between these types of publications.
There is very good information in each of those articles. Whether you agree with everything in them or not, they make valid points and give facts. If you refute things that are said, feel free to tell what and why you disagree, and feel free to post a link to the reason.
Don't know why you are so afraid of the truth and want to argue against it all the time.