Wednesday, July 30, 2014

Big Men

Nigeria is one of the world's major oil producing countries. There is no doubt in the minds of Nigerian politicians, journalists, militants and ordinary people that oil has been bad for Nigeria. This opinion on the impact of oil on Nigeria is mirrored in Ghana and America. The average Nigerian is worse off today than before oil was found. America is also one of the world's major oil producing countries. The impact of the oil industry in America is quite different. Why?

That question is not directly dealt with in this documentary. Rachel Boynton set out to make a documentary about West African oil and starting Nigeria, the largest producer in the region. But in trying to get inside an oil company she came across Kosmos Energy a small Texan oil company hunting for oil off the Ghanaian coast. Jim Musselman and his management team were happy to be filmed. This led to a film telling two stories. Firstly a cautionary tale of the problems that oil has caused in Nigeria. Secondly a story of Ghana's first oil field.

Kosmos Energy was brought to Ghana by George Yaw Owusu (of E.O. Group), who became their man in Ghana. Oil exploration and setting up the infrastructure for oil production is a long and expensive process during this time the government changed in Ghana and the financial crisis caused the price of oil (and prospective returns to investors) to drop. Rumours of a sweet deal between the Ghanaian Government of President Kuffour and Kosmos Energy (via E.O. Group) cause both the political opposition and American oil company Anadarko to complain of corruption. Which led to investigations by both the US Department of Justice and the Ghanaian Department of Justice. Details of this are not followed up by the film maker and eventually the US Department of Justice found no wrong doing. The fallout from these investigations were that George Yaw Owusu and Jim Musselman were sacked. Owusu was later reinstated and Musselman went on to form another oil company.

The issue for countries like Ghana who have valuable natural resources to export is how to structure the industry so that the country gains a benefit and they don't suffer from Resource Curse. As every Ghanaian Boynton interviews from shoppers to presidential candidates states Ghana gained very little from its gold industry and from its cocoa industry and they don't want that cycle to be repeated with oil. They are also acutely of the situation in near by Nigeria. What should be the government's cut in terms of tax and royalties and how should it be spent?

Despite having great access to the Kosmos Energy management and to one of their investors from the Blackstone Group you still have to read between the lines of the bland innocuous and passive phrases they use when talking about things. The ordinary Nigerians and Ghanaians are much more blunt and straight forward.

Unashamedly everyone from the money men in New York to the militants in the Nigia delta admits that oil (or any valuable thing) will bring out the worst consequences of greed in everybody concerned. Though they all think that only they are the only ones that are justified in what they want out of oil.

The quote from Milton Friedman that opens the film also sums it up:
Is there some society you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed? What is greed? Of course, none of us are greedy, it’s only the other fellow who’s greedy. The world runs on individuals pursuing their separate interests.

Rachel Boynton talks about her film to Kim Hill and Bloomberg and WNYC. Other reviews of the film. The Washington Post's version of events.

The answer to why oil has impacted differently in America and Nigeria is indirectly answered in this film. In America the oil was found by Americans, exploited by American companies employing American workers, funded by American capital and the oil is mostly used by American industry and American consumers. In Nigeria the oil was found and exploited by American (or European) companies employing non-Nigerians, funded by American (or European) capital and the oil is mostly exported to be used in other countries. The small percentage of oil money that comes to Nigeria is jealously fought over and stay in few hands. The same goes for Saudi Arabia and other 3rd world countries. The joys of free trade and foreign investment.

As a side issue I was intrigued to see the number of different newspapers for sale in a newspaper kiosk in Accra, Ghana. There were at least 20 different titles for sale in a city of 2 million people (and capital of a country of 25 million) and as far as I could see they were local papers. It is interesting to see that the doom and gloom about the death of newspapers isn't global yet.

Ian's rating 2.5/5

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