Concerns Mount about Chinese Oil Interests in Africa

China has made no secret of the fact that it needs more natural resources to further develop its country and people. It’s the most populous nation in the world, with a population of 1.3 billion. Some analysts see China’s interest in Africa, and recent large-scale investments on the continent, as evidence that the country is bent on “plundering” Africa for its own selfish purposes. At the center of this exploitation, they say, is China’s thirst for oil. Beijing, however, says it’s dedicated to developing the continent, and underplays its influence in Africa’s oil industries. In the third of a five-part series focusing on China in Africa, VOA’s Darren Taylor explores the country’s heightened interest in the continent’s oil reserves.

China received less than nine per cent of Africa’s total oil exports last year, according to senior Chinese government official, Sun Baohong, who says 36 per cent of African oil in 2006 went to Europe, and 33 per cent to the United States.

International security analyst, David Goldwyn, agrees that there’s a lot of “hyperbole” about China’s oil interests in Africa.

“China’s influence in the oil market in Africa is not so significant - but there are some real issues to be dealt with,” he says.

Goldwyn and other analysts are convinced that China cannot maintain its current growth without increasing its dependence on African oil.

“Energy is a big driver for Chinese behavior and that is because China at one point was self-sufficient, and as its economy has grown, it is now the world’s second largest consumer of crude oil in the world – almost seven million barrels a day in 2005, and that number’s certainly higher now. And they are the third largest importer at 3.1 million barrels a day – and that number’s probably higher also,” Goldwyn explains.

He says China’s relatively rapid growth from an impoverished, agrarian country to global economic power has been a “big shock” to the world, but that it is “unquestionably a good thing for the Chinese economy to grow – nobody blames the European economy and the US economy for growing and wanting more oil; nobody should blame China either. But the fact is: they need a lot more oil.”

Where the US has failed to secure diverse oil supplies, Goldwyn asserts, China has succeeded.

“China has very successfully diversified its supplies away from what was a very dominant reliance on the Middle East, to where it now relies on Africa for a significant portion of its oil, and also Eurasia.”

According to Goldwyn, the US gets most of its African oil from Nigeria and Angola, with a “scattering” from other countries.

“The 1.8 million barrels a day that we (the US) got from Africa in 2005 was 18 per cent of what the US consumed (that year). China took a lot less oil from Africa - out of 1.7 million barrels a day it imported, less than 800,000 came from Africa - but it was 31 percent of their imports,” he outlines.

The message to be taken from this, says Goldwyn, is that Africa is a “very strategic supplier of oil to China – way more strategic than Africa is to the United States. Africa is important to the United States. But you can see the difference in priority that Africa has in Chinese foreign policy, and Africa has in US foreign policy, in small part, by this difference.”

Stephen Morrison, of the Africa Program at the Center for Strategic International Studies in Washington D.C., says competition between the West and China over African oil – specifically in the Gulf of Guinea - is set to increase significantly.

“There’s every indication that the Gulf of Guinea’s going to remain a very hotly competed and very attractive source, and that we’re going to see more discoveries and more competition and it’s going to be centered around Nigeria and Angola, but with other energy-rich states involved as well.”

Goldwyn says the US remains the “most important” consumer of Nigerian and Angolan oil, but that China takes more oil from Congo-Brazzaville, Equatorial Guinea and Sudan.

“So you can see here that there is success for Chinese foreign policy in developing strong relationships with certain African suppliers, and that some countries are more important to it than others.”

Goldwyn says there’s also a lot of hype about China striving to “lock up” supplies of African oil for itself, but that this isn’t supported by the facts.

“Some of the supply that they own…they don’t even take into China; it’s traded on the open market.”

Morrison says China’s failure in 2005 to purchase Unical, the American oil and gas firm, was perceived in Beijing as a “spiteful” attempt by the West to thwart China’s globalization efforts and economic expansion.

“The accelerated entry by the Chinese into Africa on the energy side of things, in the minds of policymakers and energy executives in China, is directly linked as a reaction to that defeat…This (failure to seize possession of Unical) has been a motivating experience for the Chinese.”

Goldwyn says China has lots in common with the West in terms of energy security.

“We both need security of supply because we want to keep our economies going. We both want access to acreage in other countries, because both have companies that try and exploit oil, develop oil and bring it to the market. We both need a safe operating environment because Chinese workers get kidnapped in Nigeria and other places just like US workers or European workers, and we both want to protect our investment. And both the US and (Europe) and China have political and moral and security goals.”

Goldwyn says Africans also want a safe operating environment for their citizens, and they, too, want to promote development.

“They want to leverage oil wealth for development, to respect local communities, to maintain social peace, and they want to be more secure and not less secure because of the oil, and they have their own political, moral and security goals.”

Western and Chinese companies are faced with a dilemma when operating in violence-prone oil regions in Africa, says Goldwyn.

“What’s the best way to be safe? Is it to take sides in conflict areas; is it to be close to the government and to help the government do its job? Or is it to stay as far away as possible from the government when it’s doing security? And here we have the Niger Delta and Sudan as case studies.”

The Chinese are desperate to secure additional supplies of African oil, says Goldwyn, and are therefore willing to take great risks – including investing in and pouring manpower into strife-torn areas in Africa - to achieve their aims. Beijing has invested heavily, for example, in Nigeria’s Delta region, where rebels are fighting the government for a share of the oil wealth.

In Ethiopia’s Ogaden region, rebels recently attacked an oil field and killed nine Chinese oil workers, abducting several others.

But Goldwyn says the question observers of Africa’s oil industries are asking is not one concerned with violence - but rather with corruption.

“There is no question that African governments leave money on the table - and large sums of it – when they do private deals rather than tendering (oil) blocs in an open way,” he claims.

Pang says concerns in the West that China’s oil relationships with Africa are based on corruption are “hypocritical” given allegations that Western companies’ have for years been bribing African politicians for access to oil.

Sun, a former director of what she describes as China’s “oil project” in Angola, says much of the criticism vented at China’s involvement in Africa’s oil sector is unfair.

“When we initiated our project of cooperation with Angola, I was not a genius, I was no professional to think out how to engage in oil transactions with Angola. What we did was to learn about how Angola had dealt in business with Brazil, Spain and even Germany. And I don’t know why those countries are not picked for criticism. And now China is again and again picked for criticism with regard to its oil interests (in Africa).”

But Prof. Ian Taylor, of the Department of International Relations at Scotland’s St. Andrews University, says this “what’s good for the goose is good for the gander” approach doesn’t help Africa, and its continued underdevelopment as a result of “economic mismanagement.”

He harks back to April last year, for evidence that some of China’s policies in Africa aren’t geared towards anti-corruption.

“When on the very same day that the Dutch were pulling out of Kenya and suspending nearly $150 million worth of aid to Kenya, on the grounds of corruption and mal-governance, the Chinese were signing off on an important oil exploration agreement with Nairobi.”

Sun maintains that “good governance in Africa is in the Chinese interest” as well, but that China isn’t willing to interfere in other countries’ domestic affairs.

Ultimately, says Goldwyn, it’s up to African leaders to ensure that their people reap the benefits from their oil, and don’t allow foreign companies – whether Western or Chinese – to corruptly exploit the continent’s natural resources.

But, says Taylor, many of Africa’s political elite are themselves corrupt, and to expect them to suddenly change the way they do business and to dedicate themselves to helping their people instead of lining their own pockets, is “overstretching.”

“The question of which way behavior will go, is up to Africans – because the host sets the rules; the countries set the rules. And everyone who invests in a country is going to have to live by them,” says Goldwyn.

Sun agrees that Africa’s development, and its enhancement of its own natural resources, is in the hands of Africa, not of China.

“Africa must reach an African consensus to reach their development goals, not a Beijing consensus.”