U.S., Angola ties strengthen due to oil

LUANDA, Angola -- If not for its oil, Angola would scarcely warrant a second look from most potential investors. Riven by Africa's longest postcolonial war, the country has distinguished itself mainly for poverty, corruption and, most recently, the threat of famine.

But the blessings of geography and plentiful crude reserves have earned Angola increasing attention from the United States as Washington seeks to diversify sources of U.S. oil imports away from the volatile Middle East.

Angola's daily output of 920,000 barrels makes it the largest crude producer in sub-Saharan Africa after Nigeria. The national oil company, Sonangol, aims to double this output within eight years.

U.S. companies ChevronTexaco and Exxon, together with European competitors BP and TotalFinaElf, are among the energy giants pumping or exploring for oil off the African country's northwestern coast. Sonangol estimates Angola's proven crude reserves at 11 billion barrels, and it hopes to attract $20 billion in investment in its deep-water oil projects alone.

However, critics of the Angolan government accuse it of plundering the nation's petroleum wealth and neglecting the needs of its 12 million people. They say that by cozying up to Angolan President Jose Eduardo dos Santos for the sake of energy security, Western oil companies and the governments behind them are supporting a larcenous and autocratic regime.

"There's a clear moral question mark over the behavior of these companies in the country," said Gavin Hayman of the London-based human rights group Global Witness.

Missing revenue

Although oil sales generate 90 percent of Angola's hard currency, the government discloses scant details of its earnings, and few foreign oil companies have revealed how much they pay for the right to operate here. Global Witness and some other observers estimate that at least $1 billion in oil revenues goes missing or unaccounted for each year.

Sonangol's president Manuel Vicente scoffs at such allegations.

"This is all lies," he said in a recent interview. "This is an amount that cannot disappear."

Angola's proximity to the United States, the world's No. 1 oil importer, has helped make it an important supplier to U.S. refiners. Cargoes of Angolan crude can reach American ports in 21 days, less than half the time it takes oil from Saudi Arabia and other Persian Gulf suppliers.

Tankers carrying Angolan crude also bypass potential chokepoints, unlike cargoes of Gulf oil, which must pass through the congested and strategically vulnerable Straits of Hormuz. The United States now buys more crude from Angola than from Kuwait or Russia.

"It makes sense," Vicente said. "Indeed, we have a real advantage."

Deep roots

The roots of U.S. involvement in Angolan oil run deep. San Francisco-based ChevronTexaco operates Angola's most prolific oil patch, in the northwestern enclave of Cabinda. Gulf Oil, which became part of Texaco and later ChevronTexaco, pumped crude in Cabinda even during the civil war that erupted after colonial power Portugal granted Angola independence in 1975.

The war was declared officially over Aug. 2. Today, the Takula oil field 25 miles off the Cabinda coast is the core of a concession whose daily output of 450,000 barrels makes it one of ChevronTexaco's biggest producers.

As evidence of deepening U.S. ties, Sonangol sends employees to American universities and companies for training. Sonangol also operates the only regular passenger flights between Angola and the United States -- a twice-weekly service from the capital, Luanda, to Houston.

French company TotalFinaElf ranks Angola as its biggest source of crude outside Europe. The firm's showcase project is Girassol, or Sunflower, a field lying beneath 4,460 feet of ocean. TotalFinaElf pumps 200,000 barrels a day from this near-freezing depth.

Angola's independence from OPEC, the oil producers' cartel, enhances its appeal to Western companies and governments.

The Organization of Petroleum Exporting Countries has asked Angola to become a member, but Vicente has ruled that out for now. Although Angola cooperated with the cartel in January by cutting its production to help support prices, Vicente said Sonangol needs to maximize its oil revenues and objects to any OPEC-style quotas that might constrain its output.

Foreign oil companies have contributed greatly to the dual nature of Angola's economy. One strand of the economy -- based on oil, dollars and Western technology -- operates in parallel with another comprising the vast majority of Angolans, who survive on subsistence farming and foreign aid.

"Our goal is to be the catalyst of Angolan development," Vicente said.

Critics challenge the sincerity of this claim.

"When you don't publish an accurate budget, when you don't publish what you receive from the oil companies, it undermines the government's ability to further develop the economy of the country," said Arvind Ganesan of the organization Human Rights Watch.

Matter of sovereignty

Angolan officials treat any disclosure of such information as a matter of national sovereignty. When BP revealed it had paid a bonus of $111.7 million for the right to drill in an offshore area, Sonangol sent the British company a threatening letter.

"For what BP did, they should have lost the contract," Vicente said. "Thanks to the good relationship we had, I decided not to be so tough."

Consulting firm KPMG is working now on a World Bank-funded project to help Angola's Finance Ministry forecast future oil revenues, as an aid in planning public spending. The project aims to encourage good governance, but the government is under no obligation to divulge KPMG's findings.

As suggestions of missing millions linger, Angolans and foreign oil companies alike struggle with the legacy of the country's 27-year war and widespread deprivation.

Angola's few colleges can't produce enough geologists and engineers to meet the oil industry's needs. Pascal-Marie Ranger, platform manager for TotalFinaElf at Girassol, said four-fifths of his local employees were underqualified.

Years of fighting and neglect have left many of Angola's roads impassable, and its trains have long stopped running. To supply towns around the country with fuel oil, Sonangol must distribute it each day and at high cost aboard two 727 cargo jets.

"It's unthinkable," Vicente said, "but it happens in Angola."