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Cablegate: Nigeria: Barking Down a Dry Well - Few

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 LAGOS 000085

SIPDIS


SENSITIVE


E.O. 12958: N/A
TAGS: ECON PBTS ENRG EFIS PGOV NI CM
SUBJECT: NIGERIA: BARKING DOWN A DRY WELL - FEW
ECONOMIC CONSEQUENCES FROM BAKASSI RULING

REFS: (A) Abuja 2934
- (B) Abuja 2833
- (C) Abuja 2721
- (D) Abuja 2337
- (E) Abuja 2268


SENSITIVE BUT UNCLASSIFIED, PLEASE TREAT ACCORDINGLY


1. (SBU) SUMMARY. Nigeria should endure no economic
losses due to the decision of the ICJ awarding the
Bakassi Peninsula to Cameroon. Despite speculation of
vast crude reserves offshore, several existing oil
wells in the waters impacted by the decision appear to
be non-producing and there is little expectation of
significant production from the disputed region in the
near future. Further, there is virtually no other
economic activity associated with the peninsula beyond
fishing and farming. Meanwhile, there are social and
political reasons for the ongoing attention paid to the
ruling in the Nigerian press. A recently formed joint
commission may resolve Nigeria's post-judgment
reservations by establishing a timetable for the phased
withdrawal of Nigerian troops from the peninsula. END
SUMMARY.


2. (SBU) In mid-November, Econoffs met with
representatives of ExxonMobil to discuss the economic
impact of the International Court of Justice (ICJ)
ruling which essentially granted Cameroon possession of
the Bakassi Peninsula. The company's representatives
referred to maps drawn for ExxonMobil after the ICJ
decision indicating new lines of demarcation associated
with the ruling. The ruling delineates territorial
waters offshore for each country. From the maps Exxon-
Mobil showed us, it appears that Nigeria retains most
of the offshore territory that it originally claimed,
as only a relatively small, well-defined area of water
near Bakassi was claimed by both parties. Because the
islands of Equatorial Guinea rest in the Gulf near both
Nigeria and Cameroon, there is not enough distance
between these countries' shorelines to create
international waters. Because of the remoteness of the
region and the direction of the offshore boundary drawn
by the ICJ, the ruling should have no effect on
shipping lanes or any port access for either country.
Likewise, existing agreements between Nigeria and
Equatorial Guinea, and between Nigeria and Sao Tome and
Principe should not be affected by the ruling, although
recently renewed attention is being paid to each for
strategic and development reasons.


3. (SBU) Cameroon began exploring and developing oil
fields in the Bight of Bonny in the 1980s. It was
thought the waters held the promise of fantastic
returns on investment, but this has not been borne out.
The court claims over Bakassi began in 1994, with
Nigeria and Cameroon each claiming an arc of water
extending out from the peninsula in its respective
favor. According to the maps published by the court
and others produced for ExxonMobil, the ICJ ruling
chose neither's claimed offshore boundary, but rather
drew a new boundary line. Ten oil wells exist in the
main zone that fell between the Nigerian and
Cameroonian claimed lines, all developed by Cameroon
and, as a result of the ICJ ruling, now resting within
Cameroonian territory. It appears that none are
producing, and four or five may be dry. An additional
ten wells exist in other waters claimed by Cameroon and
one Cameroonian well now falls within Nigerian
territory, but it too appears to be non-producing. The
company representatives do not believe there are
significant onshore oil deposits at Bakassi. This
belief was also expressed by ExxonMobil's VP for Africa
in a separate conversation with the Ambassador.


4. (SBU) One field that now straddles both countries'
boundaries is producing oil at a varying rate up to
40,000 barrels per day (bpd) from a well on the
Nigerian side of the new boundary. The ExxonMobil
representatives speculate that development rights to
this field will be negotiated between the countries,
akin to the Nigeria - Sao Tome and Principe Joint
Development Zone (N-STP JDZ) farther west in the Gulf
of Guinea, or the border agreement between Nigeria and
Equatorial Guinea.


5. (U) During a November visit to Calabar, Econoff was
informed that very little non-oil economic activity
exists in and around the Bakassi Peninsula. The people
of Bakassi live in small villages and subsist mostly by
fishing from small wooden boats resembling long canoes
rowed into the Bight of Bonny. There is no organized
fishing industry in the region.


6. (U) While in south-east Nigeria, Econoff attended a
conference in Akwa Ibom state in which the Bakassi
ruling was addressed in a question and answer session
following a presentation on environmental issues. Some
anger over the loss of Bakassi was voiced by the
audience of approximately 1500, and it was asserted
that roughly 75 percent of the Nigerians now living in
Bakassi are of Akwa Ibom origin. Population estimates
range from 30,000 to 300,000, with anything over
100,000 improbable. Beyond expressing a sense of
solidarity with their kin, conference participants
conjectured that if many Bakassi residents chose to
return to Akwa Ibom state, the repatriation would be
very taxing on the state's infrastructure and its
communities' social structures, which will necessitate
a repatriation plan and funding from the federal
government.


7. (SBU) Although definitely a minority, some economic
editorialists and private sector consultants have
opined that the ICJ ruling provides an overall economic
benefit to Nigeria. They note that while Cameroon was
awarded the land territory of Bakassi and disputed
areas around Lake Chad, it did not win the offshore
boundary lines it sought. Some analysts further
speculate that the territory maintained by Nigeria as a
result of the ICJ ruling holds more than 10 billion
barrels of crude oil, especially at its boundary with
Equatorial Guinea. Because there is now a ruling by an
international body delineating an offshore boundary,
and that boundary is not detrimental to Nigeria's long-
term economic interests, the political risk in the
region is substantially reduced. With reduced
political risk, private firms may develop the region
with confidence that the concessions they negotiate
with one country or the other will be secure.


8. (SBU) Several international oil company executives
told Econoff that they nonetheless remain reluctant to
explore or develop the region until all public
controversy has abated and a mutually satisfactory
understanding between the countries is achieved.
ExxonMobil officials deduce that if Nigeria ever
believed that the oil reserves off Bakassi were
commercially exploitable, it would have drilled in the
region from 1994 to the present as Cameroon did. Given
that most of the wells already drilled in the disputed
region are dry or non-producing, and the GON has told
the oil companies they should not expect increases in
development funds in the 2003 budget, there seems to be
little incentive to begin or expand serious development
in the waters off Bakassi in the near future.


9. (SBU) COMMENT: Some media reports speculated that
Obasanjo had miscalculated regarding the outcome of the
case. However, Mission interaction with GON decision-
makers in advance of the ruling and after it was
announced indicates that the GON was aware the ICJ
likely would award Bakassi to Cameroon. Given the
years-long drumbeat of "Bakassi is Nigerian," the GON
could not take steps to prepare its people in the weeks
immediately before the ruling was announced. Rather,
the GON had to await the ruling, gauge the level of
public unhappiness, and respond accordingly.


10. (SBU) COMMENT CONTINUED: Although "oil-rich" is
the modifier placed in front of virtually every mention
of the word "Bakassi" in the Nigerian media, pundits do
not focus on resources or access to the Cross River's
deepwater channel. Rather, journalists emphasize on
the sufferings of individuals at the hands of
Cameroonian gendarmes and the essential principle of
national integrity and indivisibility. Bakassi must be
Nigerian, the theme goes, because its inhabitants
always were, are and ever will be Nigerian, and it is
the duty of a government to protect the interests of
its citizens. In short, no matter how much discussion
there may be about natural resources, Nigeria's
interest in retaining control of Bakassi is founded not
on economic interests or even concerns about its naval
vessels being able to reach the Port of Calabar but
rather on a mixture of national pride and concern for
the fate of the peninsula's inhabitants.


11. (SBU) With the approach of the April presidential
election, opposition candidates may try to use the ICJ
ruling to embarrass the Obasanjo administration. A
Nigerian-Cameroonian commission, facilitated by the UN
Secretary General, has been formed to attempt to

SIPDIS
resolve Nigerian concerns over the ICJ ruling. The
commission held its first meeting in Yaounde in early
December, but an agreement on any substantive point
likely awaits the post-election period, as the
President cannot to make any concession before voters
go to the pools; thereafter, he can move but may still
proceed very deliberately, in order to put this issue
to rest without provoking new outcry.


HINSON-JONES

© Scoop Media

 
 
 
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