Sharing the Spoil?Norway and Tanzania's Oil & Gas!

Sharing the Spoil: Norwegians and Oil Prospecting off the Indian Ocean Coast of Tanzania

By Chambi Chachage

June, 2011

 “…all citizens together possess all the natural resources of the country in trust of their descendants” – The Arusha Declaration

Introduction

The Norwegian trio – government, non-governmental organisations and companies – have of recent been involved heavily in matters pertaining to oil prospecting off the Indian Ocean Coast of Tanzania. This triad constitutes what can be regarded as a Corporate-State-Civil Society (CSC) Tripartite Foreign Direct Investment (FDI) Setup. That setup can loosely be defined as the interplay of international power relations in a given land between entities emanating from a foreign country with the overall aim of benefitting it.

As far as the state is concerned the Norwegian Embassy in Tanzania/Zanzibar has been the flag bearer in this setup. In the case of civil society organizations the Norwegian People’s Aid (NPA) has been at the forefront. Statoil, a Norwegian Oil company, is the corporate face in the triad. Other key players in this setup include the Norwegian Agency for Development Cooperation (NORAD); Norsk Hydro, a company whose gas and oil division merged with Statoil; and NorWatch, a Norwegian watchdog in global affairs.

In this paper then, the overall role of Norwegian entities in oil prospecting off the Indian Ocean Coast of Tanzania is revisited. A special attention is paid to the claims made by these entities on its role therein in relation to critiques emanating from the media and civil society organisations. Since the whole on and off shore of the Indian Ocean in Tanzania is licensed for oil/gas exploration and companies from as far as Australia, Brazil and the United Kingdom are involved, this paper also analyses the power struggles between Norway and other countries within the context of the new scramble for African natural resources.

The Status of Oil and Gas Prospecting

Africa is experiencing a ‘black gold’ rush. From its Atlantic to Indian Ocean seaboards foreign companies are scrambling for oil and gas prospects. Its Mediterranean seaboard, particularly in the case of Benghazi in Libya, is embroiled in a bitter ‘civil-cum-imperial war’ for oil control. At its heart the struggles continues in the ‘two Sudans’.

This rise in demand for Africa’s energy resources is attributed, in part, to “the quest by oil-dependent global powers such as the United States, Japan and other countries of the European Union (EU) to diversify the sources of crude oil and gas supplies away from the volatile Middle East region” (Cyril Obi 2010: 181). Such growing importance of Africa in Euro-America is an “anticipation of the effects of Peak Oil on economic growth” (Gary Littlejohn 2011: 141). However, the rising demand is also partly attributed to the rise of China and India as rival global powers thirsting for oil to fuel their expanding economies.

Within the colonial and neo-colonial imaginaire, the discourse of Africa as a ‘last frontier’ informs the new scramble for its natural resources. Since its western coast has been explored more than the eastern one, it is the latter that tend to currently invoke this discourse. No wonder its section in a recent dossier on is subtitled ‘Exploring the East African frontier’ and it is thus introduced accordingly: “After attracting less activity than other regions of the continent, East Africa now hosts a raft of new oil and gas exploration and production projects” (John Hamilton 2011: 78).

Tanzania is a relative newcomer in the East Africa region even though, geographically, “it is the largest and has greatest potential for petroleum exploration” (Economic and Social Research Foundation-ESRF 2009: 9). Uganda is the pioneer with an oil exploration history that dates back to the early 1920s. Kenya and Burundi have such a history that only goes back to the 1950s. Rwanda and the Democratic Republic of Congo (DRC) are also late newcomers.

Scramble for oil has particularly been noticeable in Uganda because it had been confirmed that there huge oil deposits in its mid-western area around Lake Albert. According to Hamilton (2011), the Ugandan find is estimated at 2.5bn barrels. The discovery resulted in a legal tussle between the London-based explorer, Tullow Oil, and its former partner, Heritage Oil. As United Press International-UPI (2011) indicates, this embroilment has dragged in Eni, an Italian oil firm that wanted to buy Heritage’s Ugandan holding, and Tullow partners at the French energy company Total and China National Offshore Oil Corporation.

However, the ‘imperial gaze’ is shifting to Uganda’s neighbors. The “gas-filled waters off Tanzania”, among other oil prospective areas in East Africa, are “now catching the eyes of the worlds bigger oil players” (Hamilton 2011: 78).  According to the Tanzania Petroleum Development Corporation (TPDC) website, there are at least 17 licensed Oil and Gas Exploration Companies that operates in Tanzania. They hail from the UK (Tullow Oil, Hydrotanz, Petrodel Resources/Heritage, Pan African Energy, Dominion Oil & Gas); France (Mauriel ET Prom); Canada (Antrim Resources and Artumas Group).

The Role of Norway in Oil Diplomacy

Norway has been one of the key Nordic donors-cum-development partners of Tanzania. Jarle Simensen (2010) correctly locates 1985 as the turning point in the relationship since it was then when the Scandinavian countries joined the International Monetary Fund (IMF) and World Bank bandwagon of demanding economic reform as a condition for continued aid. This is the year in which the late Mwalimu Julius K. Nyerere stepped down as Tanzania’s President after a protracted struggle with these International Financial Institutions (IFIs) and the country firmly wandered down the road to neoliberalism as it started abandoning the Arusha Declaration of 1967 that aimed to “see that the Government exercise effective control over the principal means of production and pursues policies which facilitate the way to collective ownership of the resources of this country” (Nyerere 1968: 233).

Ironically, NORAD’s website affirms that 1985 is the very year that Norway begun providing “assistance to Tanzania within the petroleum sector”. The website further asserts that the assistance “has been important in the establishment of a petroleum data archive at the Tanzania Petroleum Development Corporation (TPDC) in the period 1985-1997”. Tellingly, it also notes that the Norwegian assistance “was also provided for the commercialisation of the Songo Songo gas field.” By 1985, as the then Tanzania’s Minister responsible for Water, Energy and Minerals, Al Noor Kassum (2007) reminisces, Norway was playing an advisory role through the Norwegian Petroleum Directorate (NPD). However, he recollects that when asked to give a second opinion after AGIP discovered and declared a gas deposit in Songo Songo Island uneconomic to develop, “NPD estimated the gas reserves to be sizeable and AGIP was therefore requested to relinquish the block around Songo Songo so that TPDC could carry out further exploration in the area” (Kassum 2007: 127).

As a government/state Norway has thus been at the forefront of furthering its oil interest around the world. In doing so it has curved a more or less ‘symbiotic relationship’ with Norwegian oil companies and civil society. This is particularly the case with the current government that came to power through the efforts of CSOs and maintains a stake in oil corporations in line with the quasi left-leaning ideology of ‘social democracy’. When the Norwegian symbiotic relationship is extended to foreign countries it manifests itself as a Corporate-State-Civil Society Tripartite Foreign Direct Investment setup. Tanzania is increasingly subjected to this CSC setup in the wake of Norway’s Oil for Development (OfD) Initiative.

Exporting the Oil for Development Model

In September 2005 the Norwegian government launched the OfD Initiative. According to the Director General, Deputy Head of Tax Law Department at the Ministry of Finance in Norway, Stig Sollund (2011), the initiative forms an important part of the country’s development assistance to the ‘developing countries’ that have oil and gas. He further introduces it in a philanthropic tone as aiming to assist these countries “in their efforts to manage petroleum resources in a way that generates economic growth, promotes welfare of the population in general and which is environmentally sustainable” (Sollund 2011: 45). NORAD’s website affirms that since it was initiated “the programme has received request for assistance from close to 50 countries”. No wonder in his interview with the Swedish radio, the OfD Director, Petter Nore, affirmed that “there is a perception in the world that Norway can assist countries in making oil a blessing and not a curse.”

The immediate former Norwegian Ambassador to Tanzania, Jon Lomøy, played a very crucial role in cementing the CSC setup in the country. It is not by chance that as a former Deputy Director General of the Department for Africa, Asia, Latin America and the Middle East in the Ministry of Foreign Affairs responsible for overseeing the OfD program and bilateral aid, he was appointed to the ambassadorial position in the country at a time when oil was increasingly becoming the center of attention among prospecting companies and a thorny issue in the debate on the 1964 Union between Tanganyika and Zanzibar that constituted the United Republic of Tanzania. His tenure therein ran from January 2007 to March 2010.

Thus it was during Lomøy’s ambassadorial tenure in Tanzania that the PSA application of the Norwegian company Statoil ASA went through. It was signed on 18 April 2007 licensing it to explore oil and gas in Block – 2 Deep Offshore Basin in Figure 1 above.

Statoil was incorporated as a limited liability company under the name Den norske stats oljeselskap a.s on 18 September 1972. As a company wholly owned by the Norwegian State, Statoil's role was to be the government's commercial instrument in the development of the oil and gas industry in Norway.  In 2001, the company became a public limited company listed on the Oslo and New York stock exchanges, and it changed its name to Statoil ASA. On 1 October 2007, the oil and gas division of Norsk Hydro ASA was

merged with Statoil, and the company was given the temporary name of StatoilHydro. On 1 November 2009, the company changed its name back to Statoil.

It was also during Lomøy’s latest ambassadorial tenure that that the Norwegian People’s Aid (NPA), a CSO that was heavily funded by the Norwegian Embassy/NORAD, held an international conference on oil in Tanzania. NPA also commissioned a study on oil.

TO BE CONTINUED