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From: wolda002@umn.edu
Date: Wed Jul 28 2010 - 14:08:34 EDT
Fate of Foreign Oil Investors In Limbo Amid Ghana-Cote d'Ivoire Border
Dispute
Written by Editorial Dept
Thursday, 18 March 2010 21:07
A maritime boundary dispute between Ghana and Côte d’Ivoire that erupted
this month casts doubt on future international oil claims near the
contested area and raises questions about the reaction of foreign investors
to the uncertainty.
Earlier this month, Côte d’Ivoire appealed to the United Nations to
delineate its offshore border with Ghana, a bid seen as controversial since
Russia’s Lukoil discovered oil reserves only days before off Ghana’s
coast. Ghana’s Jubilee field will also begin operations later this year
and give the country commercial oil-producer status.
Ghana found oil in 2006 and analysts estimate it has one billion to two
billion barrels in proven oil reserves; Côte d’Ivoire is probably in the
same range or has slightly less oil.
The Ghanaian parliament passed a boundary commission bill this week,
according to media reports, which have also asserted that Côte d’Ivoire
does not expect discussions to regress into a fight over oil rights. The
commission would outline the country’s land borders and mark the limits
of its maritime boundaries.
While an actual war may not be looming between the African neighbors over
the rightful ownership of offshore resources, potential “unclear title
right at the margin” will most certainly be a problem, argued Peter Pham,
director of the Africa Project at the New York-based National Committee on
American Foreign Policy and an associate professor at James Madison
University in Harrisonburg, Virginia.
“I think both sides have a stake in settling this, because if there’s
uncertainty, no one is going to invest anywhere near the disputed area for
fear of having bought a license that’s worthless,” Pham cautioned.
A change of “one or two degrees” with respect to where a line is drawn
out to sea can have a “huge impact 100 miles offshore,” and neither
side will be in a position to profit from resources found there, Pham told
OilPrice.com.
The Côte d’Ivoire challenge is being closely monitored by U.S.
companies. The West African region, located in an Atlantic basin, is close
to the United States and attracts U.S. companies, said Sebastian
Spio-Garbrah, a New York-based analyst covering Africa at the Eurasia
Group, a research and consulting firm.
The outcome of the maritime boundary row will also have a bearing on a
number of small and mid-sized companies on both sides, Spio-Garbrah said.
Firms like Kosmos Energy, Exxon, Total and Tullow Oil are all “sort of
concerned” about the conflict, he said.
For the most part, though, oil investments have been made in blocks that
are "unambiguously in one country’s economic zone or another,” Pham
noted. But Ghana will move into a tricky “crunch” mode when most blocks
have been spoken for and the location of the rest are questionable, he
said, adding “that’s going to delay the sales on both sides.”
At the moment, the Ghanaian government has reached this key stage as far as
licensing is concerned, Pham said. Both countries are operating off the
“same ambiguous maps that France and Great Britain left” following the
Congress of Berlin in the 1800s, he said. The conference outlined the rules
of Europe’s conquest of Africa.
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Once the Ghana border commission stakes out a claim, Accra will have to
compare it to its neighbour’s claim, which also “needs to be better
articulated,” he argued. From there, he noted, the two can figure out the
exact area in dispute and start to negotiate.
At this point, Pham added, it is “nearly impossible” to say which
argument is legitimate.
But the dispute will “get very expensive,” he predicted, and how long
it takes to resolve will depend on the "political will on both sides.”
Africa, more accustomed to fighting over the movement of people across
borders, now has more at stake as oil blocks are at risk, he told
OilPrice.com.
Indeed, there is a “scramble” for natural resources in this “latent
belt of oil” stretching from Sierra Leona eastward to Nigeria, noted
Eurasia Group’s Spio-Garbrah, adding this region may one day become a
major producer.
The disagreement between Ghana and Côte d’Ivoire foreshadows the sort of
conflicts likely to take place in West Africa, as more oil wealth is
unearthed in “marginal areas” and in countries that petroleum firms
have not yet explored, said Spio-Garbrah.
These disputes, however, may simply become legal conflicts, he said, rather
than slide into all-out war.
By. Fawzia Sheikh
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