The Oil and the Glory

Do Nigerian oilmen think Americans are suckers?

Officials from Nigeria’s state oil company don’t think very highly of the Chinese, according to a December 2009 State Department cable. They’re greedy for oil, quick to stomp on labor rights, and "do not know how to deal with a democratic government," a source from the Nigeria National Petroleum Company (NNPC) complained to U.S. officials.  ...

PETER PARKS/AFP/Getty Images
PETER PARKS/AFP/Getty Images

Officials from Nigeria’s state oil company don’t think very highly of the Chinese, according to a December 2009 State Department cable. They’re greedy for oil, quick to stomp on labor rights, and "do not know how to deal with a democratic government," a source from the Nigeria National Petroleum Company (NNPC) complained to U.S. officials.  "’We are lucky we have a democratic government" [the source] said, ‘Under the military, the Chinese and Russians would be here.’"

The diplomats’ takeaway, summarized in the cable release by WikiLeaks, is that given "the poor image of the Chinese," they were never a "serious threat" to the international oil companies operating on Nigeria’s shores. 

But I can’t help thinking that the American diplomats got a bit duped here. The Nigerians may have been telling the Americans exactly what they wanted to hear.

In fact, Nigeria is working quite closely with China in the oil sector and seems all too eager to accept the "large loans with low interest rates" belittled by the sources quoted in the cable. Earlier this year, Abuja and Beijing signed a massive $23 billion deal to build oil refineries in the West African country. Russia’s Gazprom has also been working with NNPC for the last several years.

As for the other complaints the source expounds upon, they seem a bit off in the context of Nigeria’s oil industry. For example, the source laments that "the Chinese were the first to bribe local officials to win contracts and get around local laws." Really? It’s not as if the Nigerian petroleum industry was running so cleanly before; Shell, the longest-operating oil company in Nigeria, was accused of bribing officials in 2009. Long before that, Shell even admitted to fueling corruption in local communities near oil sites. The NNPC has an equally tarnished record; as a Stanford University working paper nicely puts it,  "Although NNPC performs poorly as an instrument for maximizing long-term oil revenue for the state," — i.e. it’s job — "it actually functions well as an instrument of patronage, which helps to explain its durability." In other words, it’s only efficient at one thing: greasing the wheels.

Complaining to the Americans, I suspect, might have in fact been a very wise play on the Nigerian side. At the time of the cable’s writing, Nigeria’s legislature was attempting to pass a Petroleum Industry Bill that international oil companies were calling a non-starter. Nigeria  used the Chinese as a bargaining chip, as if to show that the country could get along fine without the international oil companies if they weren’t prepared to play by Nigeria’s rules. What we’re seeing in this cable is the final phase of that hook: reconciliation. Nigeria didn’t really want the Chinese to come in. As the Nigerian official told the embassy, "No one really desires to see the IOCs [international oil companies] go when we have worked with them so long. Long-term friendships develop, a lot is learned from them, and we know how they do business."

(H/T: Akin)

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