By Iliyasu Gadu
From the findings of the various committees, the root of the matter had to do with the twin factors of declining productivity in the American economy and the fierce economic competition from rising economic powers mainly from the south-East Asian Region which was severely affecting America’s dominance of global trade.
The conclusion was that while America had been merely watching, its economy was coming under sustained threat; and the recommendation was that America should use its power and influence in the world to rejig the global economic architecture in order to restore its advantage.
Inevitably, this inquiry led to the status of oil and America’s dependence on foreign sources for it. It was not merely enough to aim to reduce and ultimately stop America’s dependence on foreign oil, the strategy also called for America to become a net exporter of oil thereby changing the dynamics of the international oil market. In pursuance of this, the incoming President Obama administration removed restrictions on the extraction of the vast deposits of oil and gas located in the shale rock formations of the mid-western states of the United States of America.
In tandem with this, it was also necessary to seek to effectively neutralise some selected key oil-producing countries which America’s oil strategy considered dispensable to its interests. Nigeria and Venezuela, both influential OPEC members and largest producers in their respective continents, were among countries specifically targeted in this regard. The Americans have a special reason to so target Nigeria. In the context of antecedents of America-Nigerian relations, we are considered too independent-minded and do not always yield to American pressure, on African regional issues. Accordingly, Americans do not readily consider Nigeria a reliable geostrategic partner in Africa. In the world view of the Americans, with Africa being considered as the next economic frontier and with China, America’s emerging competitor for global economic influence, making significant economic inroads into Africa; knocking out Nigeria as a rival for influence in Africa by targeting its oil exports to America and in the international oil market, fits into America’s strategic containment policy against Nigeria. It was this strategic consideration which informed America’s decision to cut its oil imports from Nigeria from a high of nearly 15% of its total global oil imports to as low as less than 5%.
It is not only our crude oil exports that have been targeted by the Americans, but our natural gas exports as well. Having arm-twisted the regime of General Sani Abacha into conceding the lead role of the consortium of contractors that handled the construction of the Nigerian Liquefied Natural Gas project to an American company, the Americans promised to allow Nigeria access to the lucrative American natural gas market when completed. But on the blind side of all this, the Americans in bad faith secretly encouraged and supported the construction of a similar natural gas project in Trinidad and Tobago; which by distance to the American market, volume and cargo delivery time stood in direct competition with Nigeria’s projected natural gas exports to America. And the result was that upon completion of Nigeria’s natural gas project when Nigeria was at the cusp of exporting the product to the American market as expected, the American government contrived to block access to the American natural gas market against Nigeria. Thus, all the projections and expectation of growing the huge Nigerian natural gas potential, which by all accounts is larger than our crude oil reserves, has hit the rocks.
The deliberate targeting of our oil and gas sector by the Americans, not discounting some acts of commission and omission on our part, is the main trigger for the recession we are facing today. The fall in oil prices resulting from America’s flooding of the oil market with shale oil, the cutback in America’s oil imports from Nigeria and the denial of access for Nigeria’s natural gas exports into the American natural gas markets all combined to reduce our foreign exchange earnings. The drastic reduction in our foreign exchange earnings in turn has led to severe pressure on the exchange rate of our currency and foreign reserves, leading ultimately to the plummeting fortunes of our economy.
The double whammy inflicted by America on Nigeria’s oil and gas can be summarised thus; America’s shale oil effectively keeps Nigeria’s Bonny light out of the lucrative American oil market. America’s shale oil export, backed by favourable economies of scale in the American oil industry, threatens our oil exports to Asia, specifically India and China
The coming of Shale oil in America and in the international oil market is one of the major reasons for the fall in global oil prices resulting in dwindling revenues for countries like Nigeria The fall in oil prices is also concomitant to the fall in the price of natural gas in the shut out global market as the price of the latter is tied to the price of the former. Nigeria’s natural gas not only got shut out from the lucrative American natural gas market, but also faces the prospect of being from Nigeria’s natural gas customers in Europe and Asia, due to American shale gas
In my article entitled “A Nigeria that Can Say No” written in 2008 when the sub-prime lending mortgage crises hit America, I pointed out that now that the soft underbelly of the American economy had been exposed, the effort to mend it will take a typical American scorched earth dimension. This dimension, I further pointed out, will result in whole countries being squeezed economically as the Americans proceed to muscle in on the arteries of global finance, trade and commerce;to re-establish the control that has been steadily slipping away from them in favour of emerging economic powers. I called attention to the fact that Nigeria will be particularly badly hit as dwindling revenues from oil will result in the inability of governments at all levels to meet their obligations.
Gadu writes from Lagos