The Curious Bonds of Oil
from the 11-part series
Making a Killing
The Business of War
The Center for Public Integrity
The tongues of yellow flames from flaring
gas burn like candlesticks lined up in a cathedral, lighting the
night sky of the port city of Malabo and sending black fumes billowing
upwards. In the waters offshore, oil rigs and production platforms
sit majestically, sucking hundred of thousands of barrels a day
from the deep sea oil fields of Equatorial Guinea.
Until a few years ago, this nation of
486,000 consisting of five islands and a square snip of
coastal West Africa between Cameroon and Gabon was a small
and insignificant sideshow in the political drama of the African
continent. But the beginning of large scale oil production in
1996, along with new concerns about the security of Mideast oil
supplies, has thrust West African nations like Equatorial Guinea
to the forefront of the global politics of oil.
Already, 15 percent of the United States'
imported oil supply comes from sub-Saharan Africa. Oil experts
predict that the amount of oil the United States receives from
the prolific fields of Nigeria, Equatorial Guinea and Angola will
double in the next five years.
"African oil is of strategic national
interest to us and it will increase and become more important
as we go forward," Walter Kansteiner, assistant U.S. secretary
of state for African Affairs, said during a July 2002 visit to
Nigeria the largest oil producer in West Africa with an
estimated 24 billion barrels in reserve.
U.S. Vice President Dick Cheney, a former
oil company executive, predicted the same a year earlier, when,
referring to the instability of Mideast oil, he said, "Along
with Latin America, West Africa is expected to be one of the fastest-growing
sources of oil and gas for the American market."
Today, U.S. oil firms dominate the Equatorial
Guinea landscape. ExxonMobil, Amerada Hess, Chevron Texaco and
Marathon Oil have the largest share of the country's oil production.
Based on new discoveries, analysts expect their total collective
investment of $3 billion to approach about $5 billion by the end
Other countries also have interests in
the region. The French, traditional rivals to the United States
in West Africa, have long-standing ties to neighboring Gabon.
The French oil giant TotalFinaElf, along with ExxonMobil, drills
the Ekanga fields that straddle territory of both Equatorial Guinea
and Nigeria. The Malaysian state oil company, Petronas, is the
largest shareholder in the South African-listed company, Energy
Africa, which is active in Equatorial Guinea.
ExxonMobil, the first oil multinational
to launch commercial exploration in Equatorial Guinea's offshore
waters in 1995, controls the Zafiro oil field. Stretching from
25 to 60 miles offshore, it is Equatorial Guinea's most productive
field, with a potential yield of close to 200,000 barrels of oil
per day. The company's oil vessel Zafiro Producer pulls out about
160,000 barrels per day, and the Magnolia stores the oil for refining
until shipment across the Atlantic to markets in the United States.
The 23-year-old regime of President Teodoro
Obiang Nguema Mbasogo has been criticized for allowing the oil
companies to exploit Equatorial Guinea's oil riches with little
obvious benefit to the people. The U.S. Energy Department notes
that the government's share of oil revenues is relatively small
by international standards. Obiang has announced plans to renegotiate
contracts to increase the country's participation in oil licenses.
Meanwhile, the president and his family
have been buying up multimillion-dollar homes in the United States.
"The government gave the American oil companies carte blanche
and threw its doors open," said Christanio, a Jehovah's Witness
missionary from Canada who has spent nearly four years in the
capital Malabo. "The Americans are slicing their way effortlessly
through the oil blocks." Equatorial Guinea has an estimated
600 million barrels in crude oil reserves, and the quantity of
oil being pumped daily from its waters is on the rise. A combined
figure for all the oil companies is expected to surpass 300,000
barrels per day by the end of 2002. But, with the most modern
oil drilling technology and oil exploration experts deployed to
harness the country's deep sea reserves, supplies may dry up in
as little as a decade, said Max Birley, vice president of Marathon
Oil Equatorial Guinea.
"It depends on what production profile
the government of the country wants, which is also determined
by the security of the government," Birley said in an interview
with ICIJ. "Thus, an insecure government will want the oil
reserves exhausted as quickly as possible."
The latest sign of insecurity a
March 2002 coup attempt that resulted in the arrest of 120 dissidents
has rattled the nerves of the multinational oil companies.
Jose Luis Mbomio, community development manager of Hess Triton,
told ICIJ that the oil companies compiled a report after the coup,
assessing the security situation and detailing possible options
if the country were to disintegrate into violence. The report
looked at the risks to investment and possible security measures
to put in place.
Of major concern is how to secure the
country's three modest ports in Malabo, Luba and Bata. The bigger
challenge will be the protection of offshore oil rigs and vessels.
Some U.S. oil companies already include
former U.S. military men in their security departments in Equatorial
Guinea in what appears to be a strategic move to inject a greater
level of protection into operations. Ritchie, who asked that his
last name not be used, is an Earth satellite engineer who spent
10 years in the U.S. Navy and a couple of years in Nigeria working
on government contracts and for oil multinationals before joining
Marathon in Malabo. Another American engineer at Marathon, who
gave his name only as Curtis, spent four years in the U.S. Army.
Neither thinks much of the government or its military. "The
troops are undisciplined, unprofessional and illiterate,"
said Curtis. "They can also be very defiant."
Oil from troubled waters
Equatorial Guinea was a Spanish colony,
unique in sub-Saharan Africa, and has had a checkered political
history since independence in 1968. During Christmas celebrations
in 1975, dictator Francisco Macias Nguema ordered his militia
to kill 150 political opponents in the Malabo stadium as loudspeakers
blared, "Those were the days my friend." By 1976, two-thirds
of the elected assembly had disappeared and an estimated one-third
of the population was either dead or in exile. In 1979, Nguema
was tried and executed after his nephew, the current president
Obiang, deposed him in a coup.
The country has been a nominal constitutional
democracy since 1991, but the 1996 presidential and the 1999 legislative
elections were marred by fraud and other irregularities.
Though no specific law prohibits public dissent, to speak against
the president is widely regarded as a crime, and those who openly
criticize the government often end up in jail. In April and May
2002, following the aborted coup, several key opposition figures
were arrested for "breach of national security." Lawyer
Fabian Nseu Nguema of the opposition People's Union, the country's
second major opposition party, was arrested on April 29 for "insulting
the head of state" and, according to his wife, Elodia Nchama,
suffered "physical and psychological torture" while
in custody. Most of those detained are kept at Black Beach prison,
a notorious interrogation and detention center.
The U.S. State Department has routinely
complained about the country's human rights record, and Washington
closed its embassy there in 1995. In 1999, the International Monetary
Fund pulled the plug on any economic assistance to Equatorial
Guinea because of government corruption.
Oil money has exacerbated that corruption.
The landscape in Malabo and Bata, the two major cities in Equatorial
Guinea, is dotted with state-of-the-art buildings belonging to
the president and senior members of his government that stand
in stark contrast to the slums in which the majority of people
live. In 2000, the president bought a house in the posh Washington,
D.C., suburb of Potomac, Maryland, for $2.6 million and another
one in nearby Rockville, Maryland, for $1.15 million. The president's
son, Teodoro N. Obiang, purchased a house in the ritzy celebrity
haven of Bel Air, Los Angeles, in March 2001, for $5.8 million.
Actress Farrah Fawcett lives across the street. The younger Obiang,
who is also his country's minister of Forests, Fishing and the
Environment and is in the running to succeed his father as president,
also owns a record label and publishing company in Los Angeles
called TNO Entertainment, which specializes in rap records.
The average Equatorial Guinean, by contrast,
has seen little of the country's oil wealth. A United Nations
development report ranked the country's per capita gross domestic
product of $4,676 as 79th out of 149 countries in the world in
2001, but even this is barely reflected on the ground. In 2000,
the World Bank reported that the average income per capita was
a little over $2 a day.
"After the oil is taken, the money
will be taken away and shared," said Rosa, a local restaurant
operator, who has no expectations of benefiting from the country's
oil wealth. "This place is bad," added David, a bulky
Canadian oil field worker, sitting at the seaside Shangri-la bar
in Malabo pubs being about the only thriving local businesses
in Equatorial Guinea. "I am here only because of the oil,"
he added, asking that his last name not be used.
Chantal Kengueleoua, the deputy U.N. Development
Program representative in Malabo, warned of the consequences of
the government's failure to use its oil wealth to develop an economic
infrastructure and provide for the education and well-being of
its people. "The government and U.S. oil companies here must
invest in the local economy or else we are creating the pre-conditions
for conflict," she said in an interview.
Indeed, concern about political stability
in West Africa, estimated to have about 30 billion barrels in
oil reserves, has made Equatorial Guinea and its neighbors favored
candidates for U.S. and European military assistance. Worries
that another politically unstable government could be a terrorist
breeding ground have added a note of urgency.
According to an African defense attaché
in Malabo, about 10 weeks after the Sept. 11, 2001, terrorist
attacks on the United States, a senior security officer working
with one of the foreign embassies in Malabo alerted the U.S. ambassador
in neighboring Cameroon that al Qaeda planned to attack U.S. oil
installations in Equatorial Guinea and Nigeria.
George Staples, the U.S. ambassador in
Cameroon who has diplomatic responsibility for Equatorial Guinea,
convened a high-level meeting with defense attachés from
the region and the general manager of ExxonMobil in Equatorial
Guinea, Ben Haynes. A security alert was issued and remained in
force until May 2002, as oil companies scurried to find ways to
forestall attacks on their offshore rigs.
The oil companies do not view Equatorial
Guinea's military a product of decades of brutal dictatorial
rule with much confidence. The army is believed to have
only about 1,320 men under arms, the navy 120, and the air force
100. Seven of the army's nine generals are relatives of the president;
the other two are from his tribe. There is no clear command structure,
the level of discipline is low, and professionalism and training
are almost non-existent, according to locals and foreign oil workers.
Even the presidential guard an indication of the lack of
trust in the country's forces is comprised of 350 Moroccan
Oil companies are even less enamored of
Sonavi, the private security company owned by Gen. Armengol Ondo
Nguema, head of national security in Equatorial Guinea and the
president's brother, with whom they must contract. Sonavi, headquartered
in the wealthy neighborhood of Caracolas near the airport, was
formed to service the oil industry with guards for the onshore
properties and offshore rigs and platforms. But the Equatorial
Guinea government and the American oil multinational companies
are not prepared to leave security in the hands of Sonavi alone.
"The EG government does not have
enough capability to ensure the security of our operations,"
said Anacleto Olo Fernandez, who works for ExxonMobil and serves
as an interpreter between the oil companies and the government.
But despite the sense of vulnerability
many oil workers say they feel and the political instability of
the authoritarian government, Equatorial Guinea's oil wealth makes
it a country too attractive to pass up. So attention has focused
on shoring it up.
Calling in reinforcements
In 1998, the government of Equatorial
Guinea approached Military Professional Resources Incorporated,
a private military company based in Virginia, for help in upgrading
its armed forces. MPRI was founded in 1988 by retired senior Pentagon
officers. The company whose biggest client is the
U.S. government has trained troops in the Balkans, Latin
America and Africa and has boasted that it has "the greatest
corporate assemblage of military expertise in the world."
The same year, the Clinton administration
proposed creating the African Crisis Response Initiative to train
the militaries of select African countries in an attempt to ensure
that Rwandan-style genocide would never again occur and to deal
with the numerous small wars blighting the continent. Since its
inception, the program, which included the provision of military
hardware, has trained over 8,600 soldiers from Senegal, Malawi,
Benin, Mali and Kenya, according to the Pentagon.
The U.S. European Command coordinated
the U.S. military training activities for the program, with specific
ACRI training carried out by members of the Army Special Forces
Command. Sub-contracting was also conducted through MPRI and Logicon,
the information technology sector of Northrop Grumman.
While MPRI was busy with ACRI, it also
secured a Pentagon contract to "professionalize" the
military in Nigeria. The U.S. Defense Department, according to
the details of the August 2000 contract, was to pay half of the
estimated $8 million price tag, with the Nigerian government paying
the other half.
According to MPRI spokesman Ed Soyster,
a retired Army lieutenant general who was once director of the
Pentagon's Defense Intelligence Agency, Nigerian President Olusegun
Obasanjo wanted to create a professional army in which the officer
corps would not be tempted to interfere in politics. There have
been seven coups in Nigeria since its independence from Britain
U.S. government interests lay in the fact
that Nigeria, an OPEC member and the sixth largest producer in
the world, is the fifth largest supplier to the United States,
where U.S. refineries absorb close to half of Nigeria's 2 million
barrels of oil produced each day.
But MPRI's presence in Nigeria prompted
protests from senior members of the Nigerian military, the most
outspoken of whom was Lt. Gen. Victor Leo Malu, the army chief
of staff, who was later fired by Obasanjo. Malu told ICIJ that
his sudden departure from office was largely because of his opposition
to MPRI in Nigeria.
Malu questioned MPRI's plan to slash the
size of the Nigerian military from 100,000 to 50,000 and its need
to have access to sensitive military information. "How much
intelligence about your country do you give to a foreign country?"
Malu said he asked. He never got an answer and remains convinced
that the goal of the company was to gather intelligence for the
U.S. government a contention Soyster dismissed. "From
a military point of view, they weren't very effective," Soyster
said of the Nigerians.
The controversy surrounding its work in
Nigeria notwithstanding, it was Equatorial Guinea that proved
to be the greater challenge for MPRI.
MPRI first applied for a license from
the State Department, as required by U.S. law, to work in Equatorial
Guinea in 1998. But the department's Bureau of African Affairs
rejected the request because of Equatorial Guinea's history of
human rights violations.
MPRI appealed that decision to the assistant
secretary of state for African affairs, then Susan Rice.
"I pointed out to her that no one knows what's going on in
the country, and the U.S. ambassador has supported our application,"
This time, the private military company
cleared the Africa bureau's concerns, only to hit another roadblock
at the department's Bureau of Democracy, Human Rights and Labor.
Again, MPRI lobbied, this time in the U.S. Congress, and a contract
to assess Equatorial Guinea's defense needs was approved. Between
2001 and 2002, MPRI made several trips to Malabo to meet with
government officials and oil company executives. Bill Watson,
vice president of Hess Triton in Equatorial Guinea, was one of
those who met with MPRI, characterizing it as a "courtesy"
visit. Also participating in some of the meetings was Staples,
the U.S. ambassador to Cameroon, according to a military attaché
who was present at the meetings.
MPRI then submitted a proposal to revamp
the armed and police forces of Equatorial Guinea, but was granted
a license by the State Department in May 2002 to train only the
Coast Guard. U.S. Sen. Russell Feingold, a leading proponent of
human rights in Africa, has been at the forefront of opposition
to MPRI getting a contract for comprehensive military training
in Equatorial Guinea for fear that U.S.-trained forces will be
used against government opponents.
"Imagine the U.S. developing a Coast
Guard without considering a Navy?" said Soyster. "You
got to look at the whole thing. So we're licensed to do the Coast
Guard, but it's entirely up to the president of Equatorial Guinea
if he wants to continue with just the Coast Guard."
Soyster said he discussed Equatorial Guinea's
human rights record with Obiang on at least five occasions and
was told by the president that his country needed U.S. assistance
to deal with its problems and become more democratic. According
to Soyster, Obiang said he wanted "a disciplined force that
I can send to various places to take care of whatever the problem
Soyster said he warned the U.S. government
of competition from other countries, adding that "the big
flags over there are China and North Korea." The French,
Russians and Chinese are also active in companies that service
the oil sector.
An area of vital interest
In April 2001, an MPRI representative
met with the Pentagon's regional director for Central Africa to
discuss the company's hopes of winning the contract to train Equatorial
Guinea's forces. "They may need our help or moral support,"
Lt. Col. Karen Kwiatkowski wrote in a memo on the meeting, obtained
by ICIJ under the U.S. Freedom of Information Act. She quoted
the MPRI representative as saying that Equatorial Guinea was "the
Kuwait of the Gulf of Guinea" and, in a briefing paper three
months later, advanced that characterization to "a possible
'Kuwait of Africa' with huge oil reserves" that was "US-friendly
for both investment and security reasons." Kwiatkowski
also noted in her April memo that the highest-ranking U.S. official
to meet with Obiang when he visited Washington early in 2001 was
an assistant secretary of agriculture that after French
President Jacques Chirac had spared time to meet with him.
Despite concerns about Equatorial Guinea's
human rights record, Obiang's currency rose dramatically after
the Sept. 11 terrorist attacks. When he visited the United States
as it marked the first anniversary of the attacks, Obiang was
among 10 African leaders to meet with President George Bush for
talks on the prospect of war with Iraq and peace and development
on the African continent.
His visit was preceded by a report from
the African Oil Policy Initiative Group an ad-hoc coalition
of Africa consultants, energy executives and staff from a U.S.
congressional subcommittee on Africa. Titled "African Oil:
A Priority for U.S. National Security and African Development,"
the report recommended that Congress and the White House declare
the Gulf of Guinea an "area of vital interest" to the
United States a designation never before extended to any
region of Africa giving it strategic and military priority.
The Africa Oil Policy Initiative Group is led by Robert Heiler
and Paul Michael Wihbey of the Institute for Advanced Strategic
and Political Studies, a conservative Jerusalem-based think tank
which maintains that West African oil "can help stabilize
the Middle East, end Muslim terror and secure a measure of energy
"For too long official Washington
has been gripped by the perception that the United States has
no vital interests in the sub-Saharan Africa. Nothing could be
further from the truth," the June 2002 report said. "As
the political and security conditions of the Persian Gulf deteriorate,
the availability and appeal of reliable, alternative sources of
oil for the American market grows. African oil is emerging as
a clear direction U.S policy should take to provide a secure source
In July 2002, military officials from
the United States, France and Britain met with representatives
of the 15-member Economic Community of West African States, known
as ECOWAS, for talks on expanding military cooperation with West
African countries. The ECOWAS Monitoring Group, a regional peacekeeping
force of member country battalions, has already received a $5.3
million early-warning satellite communication system, with financial
and technical assistance from the United States and European Union,
and says it plans to establish two military bases, including one
in a coastal member state.
A senior African security operative based
in Malabo told ICIJ in April 2002 that plans were afoot to establish
a U.S. military base in the area to guard oil facilities in the
Gulf of Guinea. Fradique de Menezes, the president of nearby Sao
Tome and Principe, announced in late August 2002 that he had reached
agreement with the United States to build a U.S. naval base on
the island-nation as "a harbor for aircraft carriers patrol
boats and for Marines stationed in the region," according
to The Associated Press. The president's announcement followed
a visit to Sao Tome in late July by U.S. Gen. Carlton Fulford,
deputy commander of the U.S. European Command.
So far, the Pentagon has denied any plans
to build a U.S. naval base in Sao Tome, but its interest in the
region is clear.
Michael Westphal, deputy assistant defense
secretary for African affairs, told reporters in Washington that
the Pentagon planned to increase its military training to individual
African nations through organizations such as ECOWAS. He acknowledged
that the desire to create stability was linked to the war on terrorism.
"Instability creates a vacuum, which can draw terrorists
The African Crisis Response Initiative
has also since been modified to meet new concerns about terrorism.
Critics in the early days of the Bush administration complained
there was little to show for the $100 million spent on training
over the five-year life of the program, but that attitude has
changed. The administration in May 2002 decided to make the program
a permanent fixture and, under the new acronym ACOTA (African
Contingency Operations Training and Assistance), will increase
the scope of military training, tailored to specific country needs.
According to Pentagon officials, the new program will also coordinate
with European security assistance efforts in Africa.
Equatorial Guinea's oil-producing neighbors
offer other security threats. It has had several skirmishes between
1998 and 2001 with neighboring Nigeria and Cameroon over oil fields
that fall within the maritime boundaries of the three countries.
A dispute over the Bakassi Peninsular, an oil-rich territory bordering
Nigerian's boundary with Cameroon, is still raging, and there
are fears that could spill over into Equatorial Guinea and Gabon,
both of which share a complex marine boundary.
But it's the rapid oil wealth in contrast
to the abysmal living conditions for most Equatorial Guineans
that poses the greatest threat to long-term stability, in-country
In Nigeria, oil companies increasingly
face attacks by militant youths who sabotage their pipelines,
take their staff hostage and disrupt operations. That has not
yet happened in Equatorial Guinea, but "Equatorial Guinea
will get to the resistance level of Nigerian oil communities with
time," Kengueleoua, the U.N. Development Program representative
in Malabo, told ICIJ. Guaranteed security can exist only when
the government is accountable and democratic, she said, adding,
"These conditions are non-existent in Equatorial Guinea
and the oil companies have not helped."