It was just some weeks ago that I read in one of the online newspapers that the Gambia was going on a trade mission to London to pitch the sale of three (remaining) oil blocks to potential investors. Blocks A1 and A4 were already in dispute as African Petroleum is still claiming legitimate ownership to the related exploration licenses. Blocks A2 and A5 are jointly owned by Far Ltd and Erin Energy. Again, few weeks ago we were in the news for all the good reasons as Far Ltd is claiming that its two oil blocks potentially contain 1.1 billion barrels of oil. This is a big deal as we are talking about per capita 550 barrels of oil for every Gambian, including babies or a potential oil revenues of $60 billion at the current average price of $55 per barrel. Most recently, the news is that there is a lot of interest in our oil blocks and we will soon see foreign investors flocking into the country to potentially bid for our prized assets. I say hold on. Let us slow down. Good strate
gic decisions are not made in a hurry!
When we put this into perspective given that our gross domestic product (Total goods and services we produced) in 2016 was less than a billion dollars, it will take us at least fifty-five years at the current pace to produce $55 billion, equivalent to our entire history as an independent nation. Our national budget on the other hand in 2016 was less than $350 million dollars, meaning at that level it will take us more than 150 years to utilize that $55 billion for our national budget. It must be noted that the $55 a barrel is a very conservative estimate as oil prices had been well over a $100 per barrel and it will get back to that level in the long run. It must also be noted that what we are interested in is how much of that potential oil revenues will be for the Gambia and for the benefit of Gambians and how much of it will be taken away by the investors. The population of Equatorial Guinea, for example, is about a half of that of Gambia’s population and they are the third largest oil producer in Sub-Saharan Africa and yet the average Equatorial Guinean does not have a better standard of living than the average Gambian. The reason is simply because the oil resources of that country is being mismanaged, as they only benefit the president, his family and their close associates. Even Jammeh Kanilai can attest to that.
Many African countries do not benefit much from their natural resources because in exploiting these resources we ended up making very bad deals. We negotiate with players like oil majors that are more powerful than us and therefore bargain better. Even Ghana which entered oil production very late and was expected to learn from the mistakes of its African predecessors and avoid oil curse stumbled big time. So far it has not worked out well for Ghana. One of the mistakes the country made was to borrow a lot of money in anticipation of a windfall from oil revenues which never materialized, as oil prices fell to a fraction of what it was when Ghana entangled itself in those debts.
Here is my take on our handling of our potential oil resources. We must avoid oil curse at all costs that has afflicted each and every oil producing country in Sub-Saharan Africa from Nigeria to Angola, Equatorial Guinea to Gabon. The truth is the average person in these African oil producing countries never really benefit from these oil resources. An average Nigerian or Angolan does not have a better standard of living than an average person from a non-oil producing country like The Gambia. These oil resources benefit the foreign investors such BP, Shell etc. more than the host countries and ultimately the average citizens in those Western countries since they invest their pension funds in these companies.
The Gambia does not have to follow the model of any of the Sub-Saharan countries since they have all failed miserably in harnessing their oil resources for the benefit of their citizens. We need to look up to successful countries like Norway and in Africa, Botswana. Botswana does not produce oil but the way it handles its diamond production is a model that can be followed by any African country in managing any type of natural resource, be it oil or gold etc. After all, Gambia can add more creativity to the good models used by these successful countries. We should learn the good strategies they have perfected and modify them to perfectly serve us. The oil should make a difference in the life of an average Gambian no matter whether she lives in Jarra or Wulli.
The Gambia at this point in time of our history needs to slow down in exploiting our oil resources. We should let FAR Ltd complete its work on the promising blocks A2 and A5 while we freeze selling the other three blocks – A1, A3 and A4. If FAR Ltd.’s investment comes out successful as all indications are pointing to, it should be more than enough to change our collective lives as a result of royalties, tax revenues and employment opportunities. This will give us opportunity to learn from any mistakes made in managing these first oil contracts, and there will always be lessons to learn. The purpose is to enable us to take majority control of future oil contracts so that we can maximize our benefits as a country. A successful blocks A2 and A5 should provide enough economic power in the hands of the country, say in the next few years to bargain for a better share of future oil contracts. In the future, our goal should be to have at least 50% ownership of any future oil contracts. This can be achieved by entering into partnership for future oil exploration, development and production. Our partners (oil companies) can bring in the expertise and resources while we will not be desperate to hand over our strategic resources to these oil companies for a penny. We will lose this opportunity if we sell all the oil blocks at this point in time since we are currently desperate for investment and we are at the mercy of the investors. The benefits of having significant ownership of future oil ventures will not only be in the form of royalties, taxes but we will also benefit directly from any profits from these ventures and better control over how these ventures operate. Let us not fire all our five bullets before the war starts otherwise we will be at the mercy of the oil companies for the rest of our history. That has not worked well for Nigeria, Angola, Gabon, Equatorial Guinea and it will never worked well for us either. It is not too late even if investors are interested in the remaining oil blocks, we can freeze the process as long as we have not signed any contracts.
Finally if the news/fake news emanating from Anton Bakov/Romanov Empire about buying an artificial island in the Gambia is anything to go by, then we do not need any additional evidence to convince ourselves that we need to slow down in disposing of our strategic assets. We have also learned that since the new government came to power, they had to settle out of court a lot of international disputes involving contracts entered into by the former regime with powerful and greedy foreign investors. This settlements cost us millions of dollars. The ongoing saga regarding printing of our national identity documents involving Semlex gives us enough lessons to learn from. The recent arrest in New York of a former Senegalese foreign minister allegedly involved in a very complex international fraud involving stealing of Chad’s oil resources should make it clear to us that we do not currently have the capacity as a nation to undertake such complex transactions to our full benefit. Let us slow down, exploit the oil blocks currently owned by Far Ltd and Erin Energy, learn lessons from it, gather the necessary experience, build our capacity and until then we can think about selling or exploiting the rest of the oil blocks.