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Oil platform off Angolan waters testifies to Africa's growing importance
The Associated Press

Published: October 12, 2006


ABOARD THE BENGUELA BELIZE PLATFORM, Angola The behemoth rises from the Atlantic Ocean seabed, testament to Africa's growing importance to an energy-hungry world fearful of its dependence on the explosive Middle East, and to Angola's growing importance within Africa.

Chevron Corp.'s US$2.3 billion Benguela Belize platform, dwarfing the Statue of Liberty at 1,680 feet (512 meters), is the third such tower built in the world. It is the first outside of the Gulf of Mexico, and an innovation in Africa's Gulf of Guinea, where floating platforms long have held sway. Drilling some months ago drew the first crude into the structure.

"Within a few years, analysts reckon Nigeria (Africa's biggest oil producer) will be playing catch-up with Angola" in deep-water production, Petroleum Economist magazine says in its latest edition.

Angola's oil output is projected to surpass 2 million barrels a day next year and increase by 90 percent from 2005 levels by 2010, according to conservative estimates of the International Monetary Fund. It says that would double Angolan government revenues, even allowing for a price drop. Chevron produces just over 500,000 barrels a day and plans to double production in the next five years.

Angola offers stability despite a 30-year civil war and a continuing low-level conflict by separatists in the Cabinda enclave, where the vast majority of its oil is produced. The recent signing of a peace pact with one separatist faction coincided with deployments of more government troops in the enclave, where human rights activists say the government is trying to suppress them.

The Gulf of Guinea — if you look at a map of the continent picture a face, it's the area at the back of the neck — encompasses waters from all of sub-Saharan Africa's oil producers except South Africa and is a magnet for investment where competition for influence is fierce between European, U.S., Chinese, Indian and other Asian interests.

This year, Angola overtook Saudi Arabia as the leading source of crude oil for China. China's president and prime minister visited Africa this year, as did the leaders of Russia, Iran, Bolivia and Venezuela.

In just a matter of years, said Jim Blackwell, the Angola-based managing director of Chevron's southern Africa operations, "Africa has become an important part of the world's oil supply, drawing more focus from governments like the United States and China."

Chevron was the first company to produce oil in Angola, starting in 1957. Production grew despite the civil war that erupted after independence from Portugal in 1975 and ended in 2002.

Today, Chevron's sprawling seaside operation at Malongo, a fenced enclave within the enclave of Cabinda that includes massive oil storage tanks, an aging dock, staff housing and greenhouses, is protected by land mines. Alan A. Kleier, an American who is general manager of Chevron operations for Southern Africa, said Chevron was negotiating with the government, which laid the mines, to find other means to protect the property. Cabinda is hedged in between the two Congos and shares no border with Angola.

While Nigerian militants and others in Africa complain that oil companies import staff to do work that could be given to locals, in Angola Chevron boasts that 88 percent of its 6,000 employees are nationals — a percentage the company surpasses only in the United States and Europe.

"Of all the places I have worked in around the world, this is one of the most stable settings," said Blackwell, who's worked in Afghanistan, Kazakhstan and Nigeria. Angolan officials "drive a hard bargain but once you strike a deal with them, they do stick to it," he said.

That would give Angola points over Chad, Africa's newest oil producer, which last month threatened to expel Chevron and Exxon Mobil Corp. in a dispute over payments that led to renegotiating a contract drawn up in 2000.

Still, the World Economic Forum last month put Angola at the bottom of a list of 125 countries in a poll measuring business competitiveness. It examined issues such as judicial independence, property rights, government favoritism and corruption. Angola ended up below corrupt and crime-riddled Nigeria, which ranked 101.

Human rights groups charge Angolan officials are hiding oil revenues, making it impossible to know whether money is being stolen or wasted. Opposition politicians complained last month when the government announced it was revising its budget calculations, based on the price it receives for a barrel of oil, from $45 to $56, which they said was way below what oil companies actually are paying. Oil has been hovering around US$60 a barrel, and producers are considering cutting output because they see prices as depressed.

Chevron officials said their contracts prohibit them from saying how much they pay the government — a restriction that has hampered years of efforts to bring oil revenues out into the open in countries like Angola and Nigeria, which earn billions from petroleum but whose people live in misery.

Angolan officials argue that they are struggling to turn around a nation nearly destroyed by war. One in four Angolan children does not live beyond five years, and those who survive die by 40. Most Angolans live on less than $2 a day.

By conservative estimates, Angola earned US$8 billion from oil last year and has a population of just 14.5 million in an area twice the size of Texas and five times the size of the United Kingdom.

"The government is getting huge windfalls. Though no one really knows how much they are getting, it's a huge amount that properly dealt with would pay for a proper poverty reduction program," said Sarah Wilkes of Global Witness, which is campaigning for transparency about oil revenues around the world.

The government says it is reforming. A Chevron official pointed a reporter to the Ministry of Finance Web site, where oil figures supposedly are published, but it had outdated material and a link promising a diagnostic study of the oil sector came up blank.

Back at the new platform, at a US$300-million console equipped with two joysticks, a young man who looks like he'd be more at home playing video games controls the drilling.

With parts constructed in Angola, Korea, Europe and the United States, the platform was put together on site in just six weeks — ahead of schedule and under budget at a saving of $230 million compared to building a floating rig.

The cutting-edge technology could be transforming the way oil is produced in Africa — but is unimaginable to the majority of Angolans.

___

On the Net:

http://www.chevron.com/operations/africa/angola.asp Chevron's operations in Angola

http://www.nexus.ao/angola/index.cfm Official Angolan news and information

http://www.minfin.gv.ao Angola's Finance Ministry site

ABOARD THE BENGUELA BELIZE PLATFORM, Angola The behemoth rises from the Atlantic Ocean seabed, testament to Africa's growing importance to an energy-hungry world fearful of its dependence on the explosive Middle East, and to Angola's growing importance within Africa.

Chevron Corp.'s US$2.3 billion Benguela Belize platform, dwarfing the Statue of Liberty at 1,680 feet (512 meters), is the third such tower built in the world. It is the first outside of the Gulf of Mexico, and an innovation in Africa's Gulf of Guinea, where floating platforms long have held sway. Drilling some months ago drew the first crude into the structure.

"Within a few years, analysts reckon Nigeria (Africa's biggest oil producer) will be playing catch-up with Angola" in deep-water production, Petroleum Economist magazine says in its latest edition.

Angola's oil output is projected to surpass 2 million barrels a day next year and increase by 90 percent from 2005 levels by 2010, according to conservative estimates of the International Monetary Fund. It says that would double Angolan government revenues, even allowing for a price drop. Chevron produces just over 500,000 barrels a day and plans to double production in the next five years.

Angola offers stability despite a 30-year civil war and a continuing low-level conflict by separatists in the Cabinda enclave, where the vast majority of its oil is produced. The recent signing of a peace pact with one separatist faction coincided with deployments of more government troops in the enclave, where human rights activists say the government is trying to suppress them.

The Gulf of Guinea — if you look at a map of the continent picture a face, it's the area at the back of the neck — encompasses waters from all of sub-Saharan Africa's oil producers except South Africa and is a magnet for investment where competition for influence is fierce between European, U.S., Chinese, Indian and other Asian interests.

This year, Angola overtook Saudi Arabia as the leading source of crude oil for China. China's president and prime minister visited Africa this year, as did the leaders of Russia, Iran, Bolivia and Venezuela.

In just a matter of years, said Jim Blackwell, the Angola-based managing director of Chevron's southern Africa operations, "Africa has become an important part of the world's oil supply, drawing more focus from governments like the United States and China."

Chevron was the first company to produce oil in Angola, starting in 1957. Production grew despite the civil war that erupted after independence from Portugal in 1975 and ended in 2002.

Today, Chevron's sprawling seaside operation at Malongo, a fenced enclave within the enclave of Cabinda that includes massive oil storage tanks, an aging dock, staff housing and greenhouses, is protected by land mines. Alan A. Kleier, an American who is general manager of Chevron operations for Southern Africa, said Chevron was negotiating with the government, which laid the mines, to find other means to protect the property. Cabinda is hedged in between the two Congos and shares no border with Angola.

While Nigerian militants and others in Africa complain that oil companies import staff to do work that could be given to locals, in Angola Chevron boasts that 88 percent of its 6,000 employees are nationals — a percentage the company surpasses only in the United States and Europe.

"Of all the places I have worked in around the world, this is one of the most stable settings," said Blackwell, who's worked in Afghanistan, Kazakhstan and Nigeria. Angolan officials "drive a hard bargain but once you strike a deal with them, they do stick to it," he said.

That would give Angola points over Chad, Africa's newest oil producer, which last month threatened to expel Chevron and Exxon Mobil Corp. in a dispute over payments that led to renegotiating a contract drawn up in 2000.

Still, the World Economic Forum last month put Angola at the bottom of a list of 125 countries in a poll measuring business competitiveness. It examined issues such as judicial independence, property rights, government favoritism and corruption. Angola ended up below corrupt and crime-riddled Nigeria, which ranked 101.

Human rights groups charge Angolan officials are hiding oil revenues, making it impossible to know whether money is being stolen or wasted. Opposition politicians complained last month when the government announced it was revising its budget calculations, based on the price it receives for a barrel of oil, from $45 to $56, which they said was way below what oil companies actually are paying. Oil has been hovering around US$60 a barrel, and producers are considering cutting output because they see prices as depressed.

Chevron officials said their contracts prohibit them from saying how much they pay the government — a restriction that has hampered years of efforts to bring oil revenues out into the open in countries like Angola and Nigeria, which earn billions from petroleum but whose people live in misery.

Angolan officials argue that they are struggling to turn around a nation nearly destroyed by war. One in four Angolan children does not live beyond five years, and those who survive die by 40. Most Angolans live on less than $2 a day.

By conservative estimates, Angola earned US$8 billion from oil last year and has a population of just 14.5 million in an area twice the size of Texas and five times the size of the United Kingdom.

"The government is getting huge windfalls. Though no one really knows how much they are getting, it's a huge amount that properly dealt with would pay for a proper poverty reduction program," said Sarah Wilkes of Global Witness, which is campaigning for transparency about oil revenues around the world.

The government says it is reforming. A Chevron official pointed a reporter to the Ministry of Finance Web site, where oil figures supposedly are published, but it had outdated material and a link promising a diagnostic study of the oil sector came up blank.

Back at the new platform, at a US$300-million console equipped with two joysticks, a young man who looks like he'd be more at home playing video games controls the drilling.

With parts constructed in Angola, Korea, Europe and the United States, the platform was put together on site in just six weeks — ahead of schedule and under budget at a saving of $230 million compared to building a floating rig.

The cutting-edge technology could be transforming the way oil is produced in Africa — but is unimaginable to the majority of Angolans.

___

On the Net: