Oil Resource Curse and the Yamani Syndrome

ALL in all, I wish we had discovered water’. These words have been attributed to Ahmed Zaki Yamani, Saudi’s Minister of Petroleum and Mineral Resources from 1962 to 1986.

At the height of the 1973 oil embargo, which saw the Arab world virtually re-defining the nature of international economic relations, Yamani cautioned at the peak of the euphoria that if the oil resource and the oil weapon were not used properly, one was behaving like the foolish soldier, who fires a bullet in the air, only for the same bullet to be inflicted on the source.

 

In broad terms, the immediate foregoing constitutes the tragedy of the Nigerian condition or non-condition, according to Prof. Kayode Shoremekun, professor of Political Science and International Relations, Covenant University, Ota, Lagos.

Shoremekun, in his paper titled: “Nigeria, Oil and the Yamani Syndrome”, presented at the Covenant University’s 36th Public Lecture, believed that the crude oil power status had seen the country going around with bloated ambition and aspirations, and misguided priorities.

Indeed, a number of oil rich countries have become victims to the “resource curse”, a term reserved for those countries, which have a wealth in minerals, fuels and resources but “tend to have less economic growth and worse development outcomes than countries with fewer natural resources.”

For example, since December 2005, Nigeria has experienced increased pipeline vandalism, kidnappings, and militant takeovers of oil facilities in the Niger Delta.

Additionally, kidnappings of oil workers for ransom are common and security concerns have led some oil services firms to pull out of the country and oil workers unions to threaten strikes over security issues.

The instability in the Niger Delta has also caused significant amounts of shut-in production at onshore and shallow offshore fields, and forced several companies to declare force majeure on oil shipments.

Bunkering has recently surged, and according to Nigerian National Petroleum Corporation (NNPC) data, pipeline vandalism increased by 224 per cent in 2011 over the previous year.

In addition to losses in official oil sales, oil theft and illegal refineries are causing environmental damages and costing the country $7 billion a year, according to the Federal Government.

According to the Nigerian National Oil Spill Detection and Response Agency (NOSDRA) approximately 2,400 oil spills had been reported between 2006 and 2010 that resulted from sabotage, bunkering, and poor infrastructure. The amount of oil spilled in Nigeria has been estimated to be around 260, 000 barrels per year for the past 50 years, according to a report cited in the New York Times.

The oil spills have caused land, air, and water pollution and severely affected surrounding villages by decreasing fish stocks and contaminating water supplies and arable land. The United Nations Environment Programme (UNEP) released a study on Ogoniland and the extent of environmental damage from over 50 years of oil production in the region.

Shoremekun stated that owing to the prophetic insights of a Zaki Yamani, oil has turned into a feature, which has helped to orchestrate the worst aspects of the existence of Nigeria.

According to him, the indices of such existence included a magniloquent profile that was in a sharp and sad contrast to the country’s productive base.

He said:  “As if to completely fulfill the apocalyptic prophesies of Yamani, oil which if properly handled should have been the basis of our prosperity, has become one of the main sources of our instability.  Unfortunately, this instability has potentially mortal consequences for the nation.  Indeed, the grim reflection in some scholarly circles is that, a book is waiting to be written and this book will probably be title: Oil and the Mortality of Nigerian State.

Speaking on the Niger Delta crises, he said that oil spills had destroyed the environment, which led to poverty in the area.  “The poverty has in turn been responsible for the pervasive violence in the area.  The poverty is rendered more searing and graphic by the fact that it is even below the average in a poor country like Nigeria.  The Niger Delta is impoverished country like Nigeria, is to be counted among the poorest of the poor,” he added.

For the country to benefit maximally from hydrocarbon resources, Shoremekun called for an overhaul of the subsisting policies, which he said, had generated, over time, the monumental crises in the Niger Delta.

He explained: “One central feature of this policy lies in the fact that till date, the productive dynamics of the oil industry continue to elude us.  What is probably not well known is that from the crude oil alone, Nigerian has the capacity to generate gasoline, kerosene, chemicals, polymers and naphtha, such that in a well-managed state, Nigeria would not have to import any petroleum product?

“When this bleak scenario is completed with the fact, if we had in place, viable steel industries, then Nigeria would have been on its way to being a super-power in the authentic sense.  Unfortunately, the Nigerian steel industry has merely followed on the heels of the Nigerian oil industry.  Who knows, the foregoing may well and partly explain why one of then presidential candidates was reported to have wept for Nigeria.”

He also urged the federal government to address the fundamental problems, which bedevils the Nigerian oil industry to avoid the Yamani Syndrome.

By Roseline Okere, October 30, 2013