Seizing Power E-Book

Robert Slater

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Bloomberg
• Sprache: Englisch

Seitenzahl: 259

Veröffentlichungsjahr: 2010

Beschreibung

How oil volatility may lead to violence among oil powers The world supply of oil is running out. Meanwhile, the balance of oil power is shifting away from the United States and the Arab states toward national oil companies (NOCs) in Russia, China, and some emerging economies in Africa and South America. As developing countries seek a middle-class existence, their demand for oil grows exponentially, causing oil prices to spiral, turning some into international bullies. Until another fuel is found the world risks being at the mercy of these tyrants whose insatiable appetites for higher oil prices heighten competition and spur the threat of violence, domestic as well as global. In Seizing Power: The Grab for Global Oil Wealth, bestselling author Robert Slater: * Profiles petroaggressors like Russia's Putin, Venezuela's Chavez, and IranÕs Ahmadinejad * Describes how oil-rich outlaw nations are using a valuable natural resource as a weapon in global politics * Warns that, as oil dwindles, these outlaw nations may turn upon one another in the fight for what oil is left Seizing Power clearly explains why oil is potentially toxic to world stability.

Leseprobe

Table of Contents

Title Page

Copyright Page

Timeline

Dedication

Acknowledgments

Introduction

CHAPTER 1 - Edging Toward Violence and Chaos

Rise of the NOCs

The New Petroaggressors

CHAPTER 2 - Two African Oil Nations: A Study in Contrasts

São Tomé and Principe

Chad

CHAPTER 3 - China Invades Africa

Angola

Zimbabwe

Aiding or Abetting?

CHAPTER 4 - Power in the Desert: The Gulf and the Middle East

And in the Rest of the Middle East . . .

The Future of Arab Oil

CHAPTER 5 - Testing the Oil System: The War, the Embargo, and Spare Capacity

The Strategic Petroleum Reserve: Has It Become Obsolete?

Increasing Demand and the Changing Market

CHAPTER 6 - The History of Oil and the American Dream

The High Price of (Whale) Oil and Peak (Whale) Oil Theory

Fueling Amerian Industry

Flight to the Suburbs Creates More Oil Dependency

Nationalized Oil

CHAPTER 7 - Ethics and Oil

The Exxon Valdez Oil Spill

Kazakhgate

Genocide in Darfur

CHAPTER 8 - Hedging: Insurance or Speculation?

Oil Futures

CHAPTER 9 - How Much Oil Is Left . . . and How Willing Is the United States to ...

Proven Versus Probable Oil Reserves

The Environmental Movement and the Peaksters

CHAPTER 10 - Oil for the Lamps of China . . . and India

India’s Economy

The Middle-Class Indian Behind India’s Oil Demand

CHAPTER 11 - Power Shift

Negotiating Better Terms

The Petrodictators

CHAPTER 12 - Russia: Putin’s War Against the Oligarchs

Russia’s Joint Venture with BP Corporation

CHAPTER 13 - Iran: Arrogance as an Oil Strategy

CHAPTER 14 - Venezuela: The World According to Chávez

CHAPTER 15 - Brazil and Petrobras: A National Oil Company in a Better World

Tadpoles and Technology

CHAPTER 16 - After the Power Shift: Where Will It All Lead?

The Search for Alternatives

List of Chapter Opening Illustrations

About the Author

Index

Copyright © 2010 by Robert Slater. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data: Slater, Robert.

Seizing power : the grab for global oil wealth / Robert Slater. p. cm.

Includes index.

ISBN 978-1-57660-247-8 (hardback)

1. Petroleum reserves. 2. Petroleum industry and trade. I. Title.

HD9560.5.S553 2010

338.2’7282—dc22

2010015434

Timeline

1970 DecemberOil price per barrel: $1.80.1973 OctoberOPEC refuses to sell oil to countries that sup port Israel in the Yom Kippur War. Oil price per barrel: $4.1974 DecemberOil price per barrel: $12. Some nations enact driving speed limits to conserve oil.1979 NovemberIslamic Revolution and Iranian hostage crisis begin. Oil price per barrel: $70.1981 OctoberSaudis flood market with cheap oil, forcing unprecedented price cuts by OPEC members. Oil price per barrel: $35.1990 AugustIraq invades Kuwait. Oil price per barrel: $24.1997 NovemberOPEC increases production. Oil price per bar rel: $18.1999 JanuaryIraq increases oil production. Currency crisis depresses Asian economies. Oil price per barrel: $10.2000 SeptemberGlobal oil output fears and bad weather increase oil prices. Oil price per barrel: $30.2004 SeptemberWorld becomes concerned about war in Iraq. Oil Price per barrel: $53.2005 AugustHurricane Katrina strikes Gulf of Mexico. Oil price per barrel: $65.2006 JulyTensions over Iran increase. Oil price per barrel: $77.2007 SeptemberOPEC announces output increase that is less than estimates. U.S. oil stocks fall lower than estimates. Six pipelines in Mexico are attacked by leftist group. Oil price per barrel: $80.2007 OctoberRising political tensions in eastern Turkey give rise to fear of violence. U.S. dollar declines. Oil price per barrel: $90.2008 JanuaryOil price per barrel $100.2008 MarchOil price per barrel: $110.2008 MayOil price per barrel: $130.2008 JuneOil price per barrel: $138.2008 SeptemberOil price per barrel: $952008 DecemberDue to the weakened global economy and the inevitable drop in demand for oil, oil price per barrel drops to $33.87.2009 AugustAs signs of economic recovery increase, oil demand climbs. Oil price per barrel reaches $70 a barrel.2010 JanuaryOil prices continue to rise, hitting $80 per barrel early this month.—U.S. Energy Information Association

To two people whose dedication and skill and care have been manifested thousands of times and in thousands of ways on my behalf: words do not come close to expressing my gratitude and affection for Professor Deborah Rund and Dr. Michael Shapira

Acknowledgments

I have written mostly about recent events in the history of oil, but the oil story actually began millions of years ago when geological processes began creating the substance in the earth that has since become such a valuable commodity. Only as late as 1859 did humankind even possess the knowledge or technology to bring the oil out of the ground, and, even then, it took the world a surprisingly long time to realize the benefits that could be derived from it. Once they were understood, however, world industrialization took a giant leap forward.

It was in 2006, when the price of oil had doubled from its price of three years earlier, $35 per barrel, that I became fascinated with the story. I began to look beyond oil’s meteoric rise in price and realized some of the other profound changes the oil industry had experienced. I decided to learn more about the impact of oil on economics, on global politics, and on the capital markets. I wanted to learn how vastly different and complicated the new oil order had become.

I wanted, in short, to know the answer to the question that everyone was asking in 2008: how had we gotten into this situation, where oil could cost as much as $135 a barrel and gasoline $4 a gallon? How could all the nations of the world, whether developed or undeveloped, poor or rich, let themselves be held hostage to whoever controlled what came out of the ground?

How had we suddenly reached the tipping point where alternative energy sources began to be attractive—not because they were “greener” than oil, but because they might be cheaper than oil would one day be?

What had changed? And why? And why at this point in history? And what were the global implications for all of us?

If the “end-to-oil” activists are right, then a day of reckoning is fast approaching. As the demand for oil grows exponentially, and the supply becomes ever more elusive, it would be surprising only if the situation did not lead to violence.

It all makes for quite a story, and I want to share it with you here. I would like also to thank the many people who spoke to me on the record and the many more who were willing to speak only off the record.

Those who spoke to me on the record include the following people, and I thank them here: Mordechai Abir, Roscoe Bartlett, Ian Bremmer, Ray Carbone, Duncan Clarke, Anne Corin, Phil Davey, Eric Dezenhall, Robert Ebel, Ron Gold, Marshall Goldman, Larry Goldstein, Sharif Ghalib, Fadel Gheit, Charles G. Gurdon, Antoine Halff, James Hart, Alan S. Hegburg, Michael Hiley, Walter Kansteiner, David Knapp, Jim Kunstler, Doug Leggate, Michael Makovsky, Gerritt T. Maureau, Dan Miner, Edward Morse, Hugo Munro, Philip Nelson, Peter Odell, George Orwel, Lou Pugliaresi, John Rigby, Mike Robinson, Stephen Schlein, Michael D. Sherman, Fred Singer, Uisdean R. Vass, Lew Watts, Thomas E. Wallin, Mary Warne, Sarah Yizraeli, and Jennifer Semensa.

Introduction: The Parable of São Tomé

The people [of São Tomé] are very friendly and its quite safe to go out in the park at night or even sleep on the beaches. The jungle is full of fruits and the ocean is full of fish, so the people do not have to worry about running out of food. There are no dangerous animals like tigers, lions, deadly snakes or spiders in the jungle. The most dangerous one is probably the mosquito that can give you malaria if you don’t protect yourself.

—São Tomé and Principe government fact sheet, 2008

São Tomé and Principe, where oil was discovered in 2003, are two small islands off the coast of western Africa. Their combined population is about 200,000 and per capita income is $390. The São Toméan government has been trying to raise funds for its own further exploration and production to avoid having a technology “partner” take too big a slice of the oil-production pie.

The way the government has chosen to raise funds is creative, if a bit unorthodox. It has been renting the country’s telephone lines to porn operators, who rout telephone-sex calls through them to various points on the globe. The country also sells commemorative stamps of Marilyn Monroe.1

São Tomé and Principe is only one of the players in the “new oil game.” So far, it is a fairly benign player, relative to others such as Russia, Chad, Iran, and Venezuela, who can arguably be called petroaggressors, but events in São Tomé and Principe are an appropriate parable for the chaos of petropolitics today.

One hundred fifty years ago, when oil was first discovered, there was a great quantity of oil, but little need for it. A century and a half later, there is a great need for it and an insufficient quantity. Oil was governed, in the intervening years, first by the Rockefellers, Carnegies, and men of their ilk; then by the “Seven Sisters” and the global big oil companies; and then by the Organization of the Petroleum Exporting Countries.

The common thread that ran through all these titans of the oil industry was that they were all businesspeople, singly or collectively. Except for a couple of world wars that increased demand, oil’s first 150 years were a period of relative stability in the oil markets.

But the order and stability enjoyed in the oil world in those years is not likely to be seen again. From the twenty-first century forward, oil fields and oil exploration will likely be characterized by unpredictability, chaos, and diminished supply. The world’s oil is in decline. It may last another fifty or one hundred years, but the world could run out of oil at some point in the next century or century and a half.

Centuries from now, historians will look back at this twilight in the earth’s evolution when civilization was oil-dependent. They will view it as a time in which nation competed against nation for the ever-scarcer and increasingly expensive commodity until a viable new source of energy was created to take over the job of running the world’s machinery and transportation and to control the world’s climate.

Until the world finds another cost-efficient fuel to run the engines of industry in the developed and developing countries, it risks being at the mercy of tyrants, terrorists, and speculators.

CHAPTER 1

Edging Toward Violence and Chaos

Crude oil may rise to between $150 and $200 a barrel within two years as growth in supply fails to keep pace with increased demand from developing nations, Goldman Sachs Group Inc. analysts led by Arjun N. Murti said in a report. . . . “The possibility of $150-$200 per barrel seems increasingly likely over the next six to twenty-four months, though predicting the ultimate peak in oil prices as well as the remaining duration of the upcycle remains a major uncertainty,” the Goldman analysts wrote in the report dated May 5.

—“Goldman’s Murti Says Oil ‘Likely’ to Reach $150-$200” Nesa Subrahmaniyan, Bloomberg, May 6, 2008

In 2008, the price of oil had risen so dramatically that it dominated the global conversation and the global media. The inexorable increase in the price of gas at the pump threatened to destabilize the global economy. Fuel prices were forcing the world to spend a disproportionate portion of its income not only on fuel but also on grain as alternative-energy products displaced foodstuff agriculture.

The solutions proposed so far—from “gas-tax holidays” to presidential requests to the Saudis to increase supply—have been only Band-Aids, not long-term solutions, and the proposed reasons for rising oil prices have been controversial: Was it the Arabs, acting as a greedy cartel? Was it the 2 billion Chinese and Indians whose burgeoning middle classes were placing unsustainable demands on scarce supplies? Was it some sort of satanic lobbying on the part of big Western oil companies against alternative-energy programs? Was it Wall Street speculators? What would the inflated oil prices do to economies already nearly down for the count from the subprime credit crisis?

The West was slow to see the warning signs of the oil-price run-up. As late as September 2003, when prices were less than $25 a barrel, Americans rarely exhibited any interest in oil. The only screaming at the gas pump occurred during the brief but troubling 1973-74 Arab oil embargo, when prices quadrupled from $2-$3 a barrel at the end of 1972 to $12 by the end of 1974.

With the new millennium, the benign indifference that we as a society had felt about oil began to morph into a vague curiosity and then into fascination. Suddenly, there seemed to be even more of a “Wild West” feeling in the business of oil than there had been in America’s wildcatting days after oil’s first discovery. We wanted to solve the riddle of how we had gotten into this mess and learn why every tyrant or upstart in every far-flung corner of the globe was holding our energy-dependent lifestyle hostage. We thought that if we could determine why the price of oil was climbing so quickly, then we might be able to find a way to reverse the trend and go back to “the good old days” when oil was just there and we didn’t have to think about it. This was the hope before the latest power shift brought a massive reallocation of global oil wealth and before a new and dangerous set of oil players had come into existence, creating new rules for geopolitics and setting us on a path toward chaos and violence. To understand how we got to this place, we need to look at where we’ve been.

Until the end of the nineteenth century, the main oil consumer was the United States, and the forces of supply and demand within the oil market maintained an equilibrium. In the nineteenth and early twentieth centuries, powerful forces, mainly the Seven Sisters, which included U.S. and European oil companies, ruled the game. But, as new oil discoveries were made, power began to shift to the developing nations’ national oil companies (NOCs). The original members of OPEC (Organization of the Petroleum Exporting Countries) were themselves NOCs, but they were largely under the thumb of the Saudis, who tried to maintain stability in the oil world, and, with a few notable exceptions, had not historically been one of the new national oil companies that were using their natural resources as weapons of aggression—the petroaggressors.

The Original Seven Sisters

1. Standard American Oil of New Jersey (later Exxon)

2. Royal Dutch Shell

3. British Anglo-Persian Oil Company (later British Petroleum)

4. Standard American Oil of New York (later Mobil)

5. Texaco America (later Texaco)

6. Standard American Oil of California (later Chevron)

7. Gulf Oil

Rise of the NOCs

In the beginning, it was largely the big oil companies that still controlled exploration and production, but the new oil states were eager to wrest control of their own oil industries from the hands of the major international oil companies and so began to see an opportunity for their independence.

The crucial turning point—the power shift—between the old oil world and the new oil order came in the early 1970s. The event was significant not so much in its financial impact as in its political impact. When the Saudis declared an oil embargo during the 1973-74 Yom Kippur War, it was the first time the world had faced oil shortages when oil was used as a political weapon.

In the 1980s and 1990s, a sleeping tiger and a sleeping elephant began to awaken. The economic engines of China and India, with their 1 billion-strong populations and desire to create their own middle classes, demanded oil to fuel their growth and fulfill their dreams of prosperity.

FIGURE 1-1 The diminishing supply of oil has led to a shifing cast of oil players—not only among the superpowers and the old “Big Oil” contenders, but also from the old players to the National Oil Companies (NOCs) in smaller, developing nations with highly unstable governments.

Source: Bloomberg.

It had been in the interest of the Saudis, the “alpha dogs” of OPEC, to keep the price sufficiently low so that consumers never felt pressure to seek alternative sources of energy. The Saudis sought to regulate oil prices by regulating the amount of oil they pumped. In the past, when prices had gotten too low, they pumped less; when prices became too high, they pumped more.

The system had worked fairly well. Westerners were loath to give up their oil addiction. Their established and luxurious lifestyles depended on it. But now there was a new dynamic as a result of the demand of the two emerging titans of Asia. India and China began to exert such a fierce pressure on oil supplies that the Saudis were finding it harder to keep oil prices low.

Third world rulers dreamed of finding oil the way they might have dreamed of winning the lottery: some to bring untold riches to their people, others simply to line their own pockets. The stage had been set for the next power shift—away from a stable and strong structure and toward the “anything goes” era of decentralization and the petroaggressors.

The rise of the NOCs, among them some of the most powerful oil enterprises in the world, was a key indicator that a new oil order now existed. Never even an issue before the early 1970s, the trend of higher oil prices seemed, by the early 2000s, to have taken on a frightening permanence. No feature of the new oil order had touched the immediate lives of so many people on a day-to-day basis as had rising oil prices.

The issue was not only about oil but also about what kind of oil, the most desirable being light sweet and the least desirable being heavy sour, with various other grades in between. The differences between grades related to the regions where they were produced and the technology and expense related to refining the different types and deriving useful distillate products.

THERE’S OIL, AND THEN THERE’S OIL

Crude oil comes in many varieties as categorized by sulfur content and viscosity. Oil that has a high sulfur content is referred to as “sour,” while oil that has a low sulfur content is “sweet.” Because sulfur is a pollutant, there are increasing “green” energy regulations that limit the use of distillates containing sulfur.

Viscosity relates to the density or thickness of the crude product (whether it’s liquid or tarlike). Tarry crude oil is considered “heavy,” and more liquid crude oil is “light.”

Different distillates can generally be derived from each type of oil, but heavy sour requires a more expensive refining process, and many refiners are not set up to refine heavy sour. That means that the oil supply-and-demand picture is not only about one commodity but also about supply and demand for specific products and available refining capacity. Gasoline, for example, has higher U.S. demand in the summer months. Heating oil has higher demand during winter.2

Light Distillates Light distillates include propane, butane, naphtha, and gasoline. Light sweet crude, which is both very viscous and low in sulfur, is the single most popular segment, for which there is growing demand. (Europe, for example, is gradually switching to more efficient diesel vehicles.) Unfortunately, light sweet crude comprises only about one-fifth of global output. Its leading producers are the United States, United Kingdom (North Sea Brent), Nigeria, Iraq, and western Africa.

Heavy Distillates Heavy distillates include heating oil and shipping fuel. The leading producers of heavy sour crude are Saudi Arabia, Kuwait, Iran, Venezuela, Russia, and Mexico.

The New Petroaggressors

The changes that had begun in the oil world in the 1970s were subtle and often difficult to see at the time, but those changes were creating a power shift. Our exploration of the new oil order begins with two nations in Africa—Chad and São Tomé and Principe. For centuries, these had been resource-poor countries, but now in the twenty-first century, they were suddenly hoping to join the exclusive club of global oil producers. The irony and the potential for peaceful or violent rivalries were lost on no one.

CHAPTER 2

Two African Oil Nations: A Study in Contrasts

By the 1990s, oil was becoming more and more difficult to find, and yet environmental issues prevented the harvesting of oil in areas where geological prospects were highly favorable. The large, oil-producing countries were no longer averse to turning oil into a political weapon—nor were the small ones. Disorder reigned. In retrospect, relative to the fierce competition and violence in the oil industry in the twenty-first century, the twentieth century looked almost benign. . . .

Suddenly, every drop of oil counted. Now, tiny and previously little-heard-from nations were finding their way into the global spotlight. What lay at the root of the power shift was oil: who had it, who needed it. An interesting contrast can be made in seeing just how the discovery of oil was handled in two African nations—São Tomé and Principe and Chad.

São Tomé and Principe

From May until October, it does not rain in São Tomé and Principe, the tiny, two-island nation 150 miles off the coast of western Africa. For decades, the local people had fished, picked fruit from the jungle, and manufactured cacao for export. São Tomé and Principe might have looked like a veritable island paradise, but, in reality, the islands’ citizens suffered in a yoke of poverty that they seemed unable to cast off. Even the high price of cacao had little impact on their fortunes; in the early 2000s, they had suffered from a recent drought, and they had badly mismanaged their agricultural system.

For the decade up until 2005, the national budget of São Tomé and Principe had been averaging about $50 million a year, much of it from traditional crops like cacao. Photo by Tom Cahill/Bloomberg News.

São Tomé and Principe was the second-smallest country in Africa. It had no significant natural resources, and almost half its population was under the age of fourteen. One of the poorest countries in the world, it was a sleepy nation that had so far largely escaped the world’s notice. In the past, the country had taken bailouts from Cuba, North Korea, and China just to survive. Like so many other tiny nations that were suddenly awakening to the modern world in the latter part of the twentieth century, São Tomé and Principe seemed to need a miracle.

In 2003, São Tomé and Principe’s per-capita gross domestic product was estimated at $1,200. Its annual budget showed only $74.11 million in revenues. It was that rarest of nation-states, peaceful within, and peaceful without. Political scientists like to say that resource-poor countries are far less likely than rich ones to plant democratic roots, and that they inevitably breed violence, but the citizens of São Tomé and Principe proved the academics wrong.

Democracy did grow in São Tomé and Principe, beginning in 1991, but violence did not. Two coups—one in 1995, the other in 2003—failed. Politics became a ferocious, fast-paced series of shifting coalitions. There were fourteen changes of government in a twelve-year period—more even than in most other African countries.

Because São Tomé and Principe possessed negligible resources, the country’s citizens lived without fear of outside aggression, but their economy seemed destined never to succeed. Most people lived in grinding poverty, many without running water or electricity. On June 19, 2004, in one of the scant references any newspaper made to the place, the British Daily Telegraph described São Tomé and Principe as a “run-down, fever-infested outpost of an old Portuguese empire with a history of slavery.”

In 2005, 199,000 people had only 7,100 landline telephones, 12,000 cell phones, and 23,000 Internet connections. The country had only two hundred miles of roads, of which only ninety-nine miles were paved. It had only two airports with paved runways. Its one high school held classes in three five-hour shifts, and it had no university. For the decade until 2005, the national budget had been averaging about $50 million a year, much of it from traditional crops, such as coffee and cacao, or from fishing. Foreign aid amounted to $35 million a year. Even by 2007, São Tomé and Principe’s foreign exchange and gold reserves came to only $36 million; and its exports, about $4 million.

In the 1980s, as part of a deal with the Spanish government, São Tomé and Principe had agreed to accept Basque political prisoners from France. In exchange, São Tomé and Principe received a promise from France of an increase in foreign aid. In addition, the country had other, less orthodox ways to raise funds—phone-sex call routing and Marilyn Monroe postage stamps.

Like other national governments, the government of São Tomé and Principe felt compelled to maintain an army, even though its annual military budget was only $1 million. The bad news was that the army had no vehicles and no planes and was ill equipped to defend itself against enemies; the good news was that it had no enemies. When the United States announced that it was sending a military attaché to build up São Tomé and Principe’s army, the citizens rejoiced despite the preposterousness of the mission and the lack of battle-ready soldiers. To the citizens of the tiny country, it must have seemed far too late for miracles, but a miracle came nevertheless.

In 1997, geological surveys revealed an enormous reserve of 4 billion to 11 billion barrels of oil just off the coast. The prospects were so good that a group of big oil companies offered São Tomé and Principe3 $237 million for the right to look for offshore oil. Suddenly, the poor began to hope: oil not only could save them from poverty but also might even make them millionaires.

In 2001, President Fradique de Menezes, a former cacao merchant, took office. Early on, he vowed that, unlike Nigeria, his nation would not fall victim to the corruption that usually accompanied a reversal in a country’s oil fortunes. The international community was delighted to find that not only did São Tomé and Principe’s president speak of wanting to use the oil wealth to help his country but also that the country looked more like a European state than an African one. The citizens’ clothes, the country’s architecture, the local cuisine, and the language (Portuguese) were all European. Ethnic conflict, instability, and government brutality were conspicuously absent. That’s what the oil industry liked, and that’s what many executives were counting on: ensuring political stability and the flow of oil profits to ordinary people.

When the exploration began in 2003 and when oil was actually discovered, wonder of wonders, it was all in São Tomé and Principe’s territorial waters. The people had not dared hope for a miracle, but they had gotten one nevertheless. It wasn’t that São Tomé and Principe’s balance sheet couldn’t do with an injection of good news—and a bit of cash—it was just that poor countries did not have such gifts land on their doorsteps; even if they did, the citizens of São Tomé and Principe had neither the technology nor the knowledge needed to make the raw material into a commercially viable commodity.

It was hard for the São Tomé and Principeans to take the discovery seriously, because the reality was that it would take time before anyone could successfully produce a single barrel of oil for export. It had only been in 2000-01 that São Tomé and Principe and Nigeria had hurriedly settled their disputed maritime border and agreed to jointly explore for oil in offshore waters. It had been predicted then that the Joint Development Zone could be producing 250,000 barrels of oil a day within five years. For a country to be counted as a genuine oil player, however, it had to produce a minimum 1 million barrels of oil a day. Even over time, said a few skeptics, there would be no “trickle-down” economics; most likely, any revenues would remain in the coffers of the politicians.

In 2004, ChevronTexaco, ExxonMobil, and the Norwegian firm Equity Energy shared the winning bid of $123 million for one of nine exploration blocks. The development race was on. Swedish firms began looking for telecommunications projects, Belgian enterprises sought work in construction, and companies from the United States, China, Norway, and Canada sent teams to the islands.