China and Nigeria Ink Major Oil Deal

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OilLast month the China State Construction Engineering Corporation Limited (CSCEC) and the Nigerian National Petroleum Corporation (NNPC), a state-run company, signed a $23 billion deal to build three refineries and a petrochemical complex in Nigeria. With this deal, China positioned itself as one of the largest investors in Africa. According to reports, China is the continent’s second-highest trading partner, behind the United States.

The three refineries will be built in Bayelsa, Kogi and Lagos and are expected to produce an additional 750,000 barrels of oil per day. Nigeria, the most populous country in Africa, is the world’s 12th largest oil producer and 8th largest oil exporter. Currently, according to reports, Nigeria’s Niger Delta is one of the most oil-polluted places in the world, with more than 6,800 recorded oil spills, equalling between 9 million and 13 million barrels of oil spilled. Will China address these problems or add to them? Many wonder. ?The environment of much of the Delta has been severely polluted, and?livelihoods and health of Delta dwellers ruined. But the?negotiators of deals might not identify this level of “problem,? notes one expert who has worked in Nigeria since 1963 and declined to be named. ?I think it’s entirely likely that China will ignore the problems.?
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E. C. Ejiogu, Ph.D., Assistant Research Professor, Center for Innovation, at the University of Maryland agrees.??It is a no brainer that the Chinese will not raise a finger to address or solve the problems that plague the oil business in Nigeria. Well-informed people all over the world are rightly concerned about the upsurge of China?s involvement in the deals all over Africa in the extraction of minerals and natural resources,? he says. ?That concern hinges on the poor track records of the state in both Africa and China when it comes to responsive governance and accountability. The balance sheet so far hasn?t been positive. There have been cases of theft and other forms of corrupt activities that have been associated with Chinese deals in Namibia, Guinea-Conakry, and the DRC. Why would the story in Nigeria, a notorious cesspool of corruption, be different??
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With such a deal comes profit. But though it seems like a win-win for both parties, many remain skeptical if the people of Nigeria will benefit. ?The beneficiaries would be the Chinese, primarily, and of course corrupt state officials in Nigeria,? insists Ejiogu. ?I think this deal might pressure Western oil corporations to begin unhealthy competition with the Chinese to curry favor from unscrupulous state officials in Nigeria.?
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Despite this, most cannot doubt China?s influence on the continent. As Gerald A. LeMelle, Executive Director of the?human rights organization, Africa Action, observes, ?Generally, China has been the most generous of the large donor countries in terms of investing in infrastructure and industrial developments. They also cancel numerous amounts of debt.? But he adds, ?On the flip side, Chinese investments usually come at a tremendous cost. China extracts enormous amounts of oil and resources at extremely favorable terms that far outweigh their aid benefits. The Chinese care nothing about human rights, labor rights or the environment as these are not respected rights in China. The Chinese, as a matter of policy, ignore corruption and, in fact, publicly express that it is an effective way of doing business.?
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Prof. Ezekiel Umo Ette, Ph.D. Assistant Professor of Social Work and Community Development at Northwest Nazarene University, also says Nigeria will also be to blame if the country’s citizens do not benefit from the landmark agreement. ?The negative that is readily apparent in this deal is that despite the rhetoric, Nigerian leaders seem to care less about human rights and Chinese position on the issue. Like the Chinese, Nigeria has signaled to the world that they would go after profit and commodity no matter whose toes are stepped on. Yet, this is a repudiation of the western industrial companies who have repeatedly refused to have anything to do with the Nigerian refineries because of the potential low profit arising from Nigeria’s gas subsidy. By refusing to help Nigeria and Nigerians run their refineries, they opened the door wide for China to take control of Africa’s supply.? But he points out, there could be an upside. ?The positives, if Alhaji Ladan of the NNPC is to be believed, are that the importation of gasoline will cease and the savings realized,? says Ette. ?There is also the potential for jobs.? ????

Despite the worldwide criticism, China has played a major role in Africa, partnering with African companies and opening up opportunities, some say. ?We all know that CSCEC is such an important conglomerate in China that is highly reputed for its international construction contracts. This deal simply confirms that such endeavors will continue to accelerate in the future,? concludes Chen-shen J. Yen, Ph.D. Research Fellow at the Forum on African Studies in Taiwan for the Institute of International Relations of National Chengchi University. ?China?s longtime standing as the champion of Third World causes makes its economic activities less suspicious. In addition, its insistence on non-intervention of domestic affairs is much welcomed by African leaders who are not happy with Western criticisms on the governance issue. China?s investment became a leverage that these African countries can use to get a better bargain with the American and European investors.?