By George H. Wittman on 1.17.08 @ 12:08AM
Gazprom wants control of Nigeria's oil. It may get it.
Russia wants to expand its role in global energy operations, and
it has selected the gas deposits of Nigeria as a main target.
Politics and the petroleum business in Nigeria begins and ends with
payoffs, and the Russians are now in it up to their state-owned
Gazprom's neck. Effectively it is one government cartel dealing
with another -- with plenty of private deals in between.
"Dash," as the practice of offering a special economic
inducement is known in West Africa, can be as simple as a cash
gratuity or as complex as an economic aid program set in a
politically important region. The Russians have shown that they
know the game and now are in full scale negotiations with officials
of the Nigerian National Petroleum Corporation (NNPC).
The entire project is supposed to have begun a year ago with a
letter sent from Vladimir Putin to Nigeria's President Umaru
Yar'Adua. In fact it began some time before with Russian political
operatives, some diplomatic and some Gazprom-connected, feeling out
the Nigerian government scene for appropriate routes to the
presidency through which to initiate talks on Russian penetration
of the Nigerian oil and gas industry.
For Moscow to get its foot in the door, certain things were to
be considered early on: First, there is a chronic shortage of
electricity that limits Nigerian economic development. Second,
Nigeria has only one LNG export facility and Gazprom would have to
build another or participate in the grand scheme to pipe gas across
the Sahara. In the latter case the Russians could emphasize their
extensive pipeline experience, but that capability is widely held
internationally and not a highly competitive "dash."
THE STRONGEST CARD in the Russian hand is their willingness to take
on the problem of solving the electrical power shortage. This is a
large and complicated undertaking. Initial discussions have been
held regarding utilization of the nearly two and a half billion
cubic feet of gas gained daily as a by-product of oil production
and now flared off. The retrieved gas would be used to fuel
electrical power plants.
The Russians do have a particular knowledge of flare-off
problems because of their own considerable experience with the
excess gas generated during their own oil production. Solving the
Nigerian gas problems by recycling excess gas into electricity
production would be a major industrial "dash" quite worthy of
special treatment of the Russians by the Nigerians. Gazprom's
objective, in turn, is to be rewarded with access to one of the
world's largest gas deposits, thus increasing Moscow's existing
dominance as Europe's gas supplier.
The traditional oil companies' (Exxon Mobil, Royal Dutch Shell,
and Chevron) near-monopoly in Nigeria is clearly threatened by
Gazprom's competitive ambitions and willingness to spend a fortune.
The multi-national companies have invested a reported $5 billion in
liquefied natural gas projects in the last five years. Further LNG
plant development, however, is needed to increase Nigeria's revenue
stream and Gazprom is said to be looking into that aspect of
development also.
Gazprom has played the anti-colonial card to the maximum. The
Russians like to draw comparisons with their own efforts after 2000
of ridding themselves of what they call "the attempted resource
grabs" of western companies after the fall of the Soviet Union.
It's obvious, nonetheless, that Russia, with Gazprom as its
agent, would like to move substantially into African resource
development. Their Nigerian venture is a major first step. But it
is also part of the worldwide trend of state-owned and managed oil
companies competing directly with the traditional western
firms.
Of course, along with the major industrial benefits proffered by
Gazprom is the dispensing of well-placed personal "dash" to key
Nigerian political and commercial players. As any Nigerian
politician will explain, these are not bribes -- merely the
socio-economic price of doing business in their country.
Those Nigerians who have studied in the United States point to
the similarities in Washington lobbying and municipal building
projects nationwide. It's useless to argue against this convenient
but inapplicable logic.
The Gazprom venture into Nigeria was initiated under the
leadership of its former chairman, Dimitry Medvedev. As Russia's
next president Medvedev will make sure the project proceeds apace.
It's one of the priority projects Vladimir Putin will be leaving on
his protege's "to do" list -- unless Putin wants to handle this
matter himself as prime minister. The West needs to take notice and
compete -- but on its terms!
topics:
Vladimir Putin, Business, Russia, Africa, Energy, Oil
