What Guyana needs to know about ExxonMobil Pt 2 … Oil rich but still poor: Lessons from Nigeria, Chad and Papua New Guinea

Jun 22, 2017 Features / Columnists, News, What Guyana needs to know about ExxonMobil

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(continued from our Sunday edition)

 

Introduction :

Nations such as Chad, Papua New Guinea and Nigeria have quite a few things in common. One obvious similarity is that they are rich with oil.

Unlike economic giants like Russia, they are just too weak to enter the oil producing rank on their own. They need the help of profitable, international companies.

With their less than favorable business climate, those weak, poor nations, with high levels of corruption and in some cases, civil unrest, were able to attract the attention of ExxonMobil, an American superpower of the oil and gas industry.

But what has been the fate of these nations and their oil savior ExxonMobil? Are they much better today than they were before Exxon?

In part two of this series, we shall examine this perspective.

CHAD

Chad, a Central African nation, is considered to be one of the poorest and most corrupt countries in the world. So when news surfaced in the early 2000s that it struck oil, everyone thought that this should have been an instant blessing.

In spite of being landlocked, dirt poor and corrupt, the kind and compassionate ExxonMobil expressed interest in Chad and demonstrated this to a great extent. So great were the contributions that Chad’s President, Idriss Déby, threw out two other oil companies that were operating in the country at the time and decided that Exxon was to be dealt with solely.

In the beginning, oil seemed to be a tremendous economic turning point for the Central African nation. The country earned billions of dollars in revenue; about US$9B to be exact since Exxon Mobil opened the Kome oil field near the southern town of Doba in 2003.

But with all that money in its pocket, Chad it seemed, ended up in a situation of ‘more money more problems’.

Instead of oil revenues being used to increase poverty alleviation and improve public services like education, infrastructure, and healthcare—It brought instead, more corruption, pollution, and the misuse of natural resources.

According to the 2004 Corruption Perception Index (CPI), C was ranked as the third most corrupt out 142 countries. The next year, it was ranked as the most corrupt out of 158 nations. Ten years later, Chad placed among the top 20 most corrupt nations on the CPI.

Additionally, the World Bank in one of its reports on this nation found that Chad’s oil failed to reduce poverty, but instead became associated with increased civil conflict and a worsening of governance.

In short, Chad is worse off than it started.

This experience is not unique to Chad. So common is this experience that it has received a name—the resource curse.

PAPUA NEW GUINEA

Papua New Guinea is perhaps one of the most culturally diverse nations in the world. Like Guyana, this nation is rich with natural resources, including oil.

But the development process to encourage oil and gas production has sparked much worry in that country.

In fact, many independent media outfits and bloggers have commented that the oil resources have failed the people of Papua New Guinea; that it is disappearing into thin air with no meaningful signs of development and prosperity to show.

After collecting billions of dollars from the oil sector, Papua New Guinea still was not able to prevent itself from falling flush onto the sword of the resource curse and plunging further into the abyss of corruption.

Additionally, with almost half of the population under the poverty line, the state of governance in the nation continues to face increasing constraints and challenges.  The tensions and unrests between the citizenry and ExxonMobil have been one of the reasons for this.

Additionally, http://theconversation.com, provides a telling dissertation by Michael Main, who was at the time of writing his reflective piece, a doctoral student at the Australian National University.

Main focused his attention on the Papua New Guinea liquefied natural gas (LNG) project; one of the largest extractions project in the Asia-Pacific region. It is operated by Exxon with other partners.

The researcher said, “In February 2009, the economic consulting firm, Acil Tasman (now Acil Allen), produced a report for ExxonMobil about the project’s impact. The purpose of the study, which was posted on ExxonMobil’s website but has now been removed, was to provide an analysis of the likely impacts of the project on Papua New Guinea’s economy.”

“The report said the project has the potential to transform the country’s economy by boosting GDP and money from exports. These would increase government revenue and provide royalty payments to landowners.

It claims the project could potentially improve the quality of life of locals by providing services and enhancing productivity. Workers and suppliers would reap rewards, as would landowners who would also benefit from social and economic infrastructure.”

Main showed that years on, those promises did not materialize.

He noted, “In the years since construction began, Papua New Guinea’s ranking on the United Nations Development Program’s Human Development Index has fallen by two places to 158, having been overtaken by Zimbabwe and Cameroon.”

“Far from enhancing development indicators, the largest development project in PNG’s history has coincided with an unprecedented downgrade in the country’s development status.”

Main also sought to look into the fact that not much is known about the actual impact of the project on the lives of locals. He posits that a reason for this could be the fact that the gas field is in the mountainous Hela Province.

The researcher who holds a Masters Degree in Development Studies highlighted that the people in that area were anxious for the coming of oil; under the impression of course that it would uplift their standard of living.

But it was quite the opposite. After years of operation and premium profits, landowners of the area are still punishing.

Main who has actually visited the area says, “In fact, it has, in important ways, made life worse for the majority of people living in the project area.”

But Main is not alone in his attempt to expose the problematic actions of Exxon in Papua New Guinea.

Taking another shot at this was another team of investigative journalists who had the support of the Australian Centre for Independent Journalism. Video feature by the team was produced by the Gumption Group with support from the Mailman Foundation, the Nation Institute and the Fund for Investigative Journalism.

According to their documentary which can be found online, “There are some disturbing facts buried in the debris of ExxonMobil’s $19 billion liquefied natural gas project in Papua New Guinea—funded in part by a U.S. government loan.

A landslide from an ExxonMobil quarry there killed 27 people in 2012—a disaster ExxonMobil and the PNG government declared to be an act of God.”

In their video feature, (https://www.youtube.com/watch?v=KPIUFZl7f-U&t=767s) the team showcases interviews with villagers and survivors of the incident who said no assistance was offered by the Exxon subsidiary.

Exxon has denied this nonetheless, stating that its affiliate did provide help to the event.

NIGERIA

The oil curse is one that has not left Nigeria untouched.  In the 1950s, Nigeria had struck black gold (oil) and there were great plans to make the African nation an extremely developed one.

The country which was dealing with civil unrest, high levels of violence, and corruption still attracted the attention of several heavyweights in the oil and gas industry, ExxonMobil included. But things took a turn for the worse after Nigeria was hit with a windfall of profits from the oil sector.

The nation’s agricultural and manufacturing sector which it depended on to support the economy prior to oil was neglected. The dependence on oil essentially led to the lack of diversification in the economy. This is one of the reasons for Nigeria’s inability to advance when oil prices and revenues are low.

Poor policies and planning also served to entrench the oil rich nation into acts of corruption while its people are still waiting for the benefits to be passed down.

Nigeria is to date now more polluted than it was before with its dependence on oil and there are more environmental challenges than ever. In fact, there have been numerous reports about the oil spills in the nation that have affected many communities there.

According to globalcitizen.org, “Nigeria is the third biggest economy in Africa, largely due to the share of crude oil in its exports. In 2000, oil and gas exports accounted for 98% of earnings in Nigeria.

Nigerian GDP at purchasing power parity more than doubled between 2005 and 2010. However, the country’s human capital and its overall living standards are still lagging far behind. Wealth generated by oil revenues has not passed down to the citizens of Nigeria, as 45% of the population still lives below the poverty line.” (https://www.globalcitizen.org/en/content/oil-in-nigeria-a-cure-or-curse/) .

Pulitzer Prize-winning reporter Steve Coll, author of the exhaustive book, “Private Empire: ExxonMobil and American Power” also spoke of the difficulties the people of Nigeria encountered with Exxon regarding support for their development goals.

More information in this regard and on other nations can be seen at (https://www.youtube.com/watch?v=TREblxdbJ1k&t=306s) which speaks to ExxonMobil’s secrets from Indonesia to Nigeria.

Guyana, a nation, with its own weak institutional systems, constant mismanagement of resources and high levels of corruption, will soon be joining the ranks of an oil producing country.

With ExxonMobil poised to be a central part of Guyana’s history in this regard, one can only hope that Guyana does not become another, Chad, Nigeria or Papua New Guinea.

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