Small oil producers like Ghana, Guyana and Suriname could gain as buyers shun Russian crude

Small oil producers like Ghana, Guyana and Suriname could gain as buyers shun Russian crude

by | Mar 16, 2022 | Commentary, Headline News |

A woman sells drinks on a street in Georgetown in Guyana, one of South America’s poorest countries, March 1, 2020. Luis Acosta/AFP via Getty Images
Jennapher Lunde Seefeldt, Augustana University

As the U.S. and Europe cut back purchases of Russian oil, and energy traders shun it for fear of sanctions, the search is on for other sources. Attention has focused on Iran and Venezuela, both of which are led by governments that the U.S. sought until recently to isolate. But emerging and less-developed producers could also play roles.

Among the world’s many oil-producing countries, a few are positioned to jump the list and become increasingly active. They include the West African nation of Ghana (No. 33), along with Guyana (No. 42) and Suriname (No. 69), two small adjoining countries on the north Atlantic coast of South America. All three nations have become oil producers within the past 12 years, working with large companies like ExxonMobil, Tullow Ltd, Chevron, Apache, Total and Royal Dutch Shell.

I study factors that influence levels of democracy and social justice within nations, especially as they relate to natural resources and economic structures. As I see it, these newer producers are in a unique position compared to other oil-exporting nations, such as Nigeria and Ecuador.

In too many cases, developing nations opening their economies to oil production have been expected to accept the terms companies demand, with little room for negotiation and continued exploitation of host communities. In contrast, Guyana, Suriname and Ghana are better situated to obtain favorable terms.

Social scientists coined the term “resource curse” to describe countries that are rich in natural resources such as oil, but have poor economic growth or development. One challenge for these nations is negotiating equitable deals with foreign investors.

Striking better deals

As world markets grapple with the current oil price shock, niche producers are in especially favorable positions to secure advantageous contracts and more favorable terms from international energy companies. For example, oil companies typically pay host countries royalties on their revenues that average about 16%. To date, Guyana and Suriname have accepted fees of less than 6.5% in an effort to attract investors. Under current conditions, they may be able to ask for more during new contract negotiations.

Oil production started in Guyana in late 2019, and currently the country produces over 340,000 barrels per day. Guyana learned from its first block contract with ExxonMobil to demand more “local content” – a key condition in oil negotiations that refers to hiring local workers and using locally made goods and equipment. Natural resources minister Vickram Bharrat has called that agreement, made by a previous administration, “one of the worst ever between a government and an oil company,” and Guyanese officials say they will seek more-favorable terms in future agreements.

Suriname’s new offshore oil discoveries offer potential. Small operations are currently producing about 20,000 barrels per day, and major projects are expected to start by 2025.

Suriname is demanding increased insurance from oil companies in the event of an oil spill, along with prepared emergency cleanup procedures. These processes are continually reviewed and criticized, keeping companies on their toes.

Ghana started oil development in 2007 and now produces about 163,000 barrels per day. However, ExxonMobil pulled out of the country in 2021, reportedly to focus on higher-value projects elsewhere, and depressed demand during the COVID-19 pandemic cut into Ghana’s oil exports.

Men on an offshore oil platform in coveralls and helmets, smiling
Ghanaian President John Atta Mills turns a valve to symbolically open oil production in the Jubilee field off Ghana’s west coast, Dec. 15, 2010. Pius Utomi Ekpei/AFP via Getty Images)

Now, Ghana’s national oil company, Ghana National Petroleum Corp., is taking a larger role, buying shares in oil fields from companies like Occidental Petroleum. Greater state involvement is raising uncertainty about how much access Ghana will offer to foreign oil companies. Some, including Tullow Oil and Aker Energy, are producing there now, but Tullow’s shares have plummeted in recent years, and there has been speculation that it may leave Ghana.

Managing oil income

Nations and states that produce oil or other natural resources often put their royalties into sovereign wealth funds instead of simply adding them to general treasury funds. A sovereign wealth fund is essentially a rainy day pot that the government can use in times of economic stress to continue funding major priorities, such as infrastructure projects and social programs.

Some of these funds, notably in Norway and Alaska, have produced significant benefits for residents. However, some experts argue that they aren’t necessarily well suited for developing nations.

According to this view, the success of these funds depends on many hard-to-control variables, such as whether the country has a diversified economy, its level of corruption and global events like commodity price collapses. And managing the funds requires significant technical skills.

Ghana created an Oil Heritage Fund in 2011, and Guyana and Suriname are in the process of doing so. All three may need assistance to manage these funds effectively and maximize benefits for their citizens.

Transparency and peer support

Recognizing that it can be challenging for developing countries to negotiate with major corporate investors, a number of nongovernmental organizations have become active in this sector. One that’s particularly relevant to oil production is the Extractive Industries Transparency Initiative, which seeks to publicize information about extraction practices, contracts, taxing and spending processes, and more. This benefits the public by tracking where revenue goes and promoting accountability.

The New Producers Group works to help countries manage resources effectively through peer-to-peer relationships and knowledge exchange. Emerging producers can learn from other nations’ experiences and collaborate with other governments on issues that affect them all. For example, the organization has held several events recently, analyzing what the global transition away from fossil fuels means for emerging oil producers, and how these countries can manage the transition while working to end poverty.

As members of both organizations, Ghana, Guyana and Suriname have access to tools that many early producers did not. All three countries have participated in multilateral meetings and exchanges with peers and shared information with local citizens.

Keeping the public informed helps to hold government officials and corporations accountable and promotes public involvement. Citizens and civil society watchdogs criticized ExxonMobil’s first contract in Guyana for not including citizen feedback and being created behind closed doors.

Public involvement and transparency also reduce the potential for corruption, a common problem in resource-rich nations. Transparency International’s Corruption Perceptions Index measures perceived levels of public sector corruption in nations worldwide. On a scale with 100 as the worst score, Guyana and Suriname scored 39 and Ghana scored 43, so all three states have significant room for improvement.

As the world slowly transitions away from fossil fuels, emerging producers are acutely aware of the need to seize the moment for development’s sake, but also seek to meet climate change pledges. Guyana and Suriname may have an asset in the fight against climate change: dense forests that can absorb large quantities of carbon, helping to offset emissions.

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Guyana has unveiled a Low Carbon Development Strategy for 2030 and has partnered with Norway to generate carbon credits for protecting its forests. I see partnerships like these as ways to advance environmental goals alongside the social and economic development that these nations desperately need.The Conversation

Jennapher Lunde Seefeldt, Assistant Professor of Government and International Affairs, Augustana University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Slave-built infrastructure still creates wealth in US, suggesting reparations should cover past harms and current value of slavery

Slave-built infrastructure still creates wealth in US, suggesting reparations should cover past harms and current value of slavery

by | Jun 22, 2021 | Commentary, Headline News, Social Justice |

The Port of Savannah used to export cotton picked by enslaved laborers and brought from Alabama to Georgia on slave-built railways. Cotton is still a top product processed through this port. Joe Sohm/Visions of America/Universal Images Group via Getty Images
Joshua F.J. Inwood, Penn State and Anna Livia Brand, University of California, Berkeley

American cities from Atlanta to New York City still use buildings, roads, ports and rail lines built by enslaved people.

The fact that centuries-old relics of slavery still support the economy of the United States suggests that reparations for slavery would need to go beyond government payments to the ancestors of enslaved people to account for profit-generating, slave-built infrastructure.

Debates about compensating Black Americans for slavery began soon after the Civil War, in the 1860s, with promises of “40 acres and a mule.” A national conversation about reparations has reignited in recent decades. The definition of reparations varies, but most advocates envision it as a two-part reckoning that acknowledges the role slavery played in building the country and directs resources to the communities impacted by slavery.

Through our geographic and urban planning scholarship, we document the contemporary infrastructure created by enslaved Black workers. Our study of what we call the “landscape of race” shows how the globally dominant economy of the United States traces directly back to slavery.

Looking again at railroads

While difficult to calculate, scholars estimate that much of the physical infrastructure built before 1860 in the American South was built with enslaved labor.

Railways were particularly critical infrastructure. According to “The American South,” an in-depth history of the region, railroads “offered solutions to the geographic barriers that segmented the South,” including swamps, mountains and rivers. For inland planters needing to get goods to port, trains were “the elemental precondition to better times.”

Our archival research on Montgomery, Alabama, shows that enslaved workers built and maintained the Montgomery Eufaula Railroad. This 81-mile-long railroad, begun in 1859, connected Montgomery to the Central Georgia Line, which served both Alabama’s fertile cotton-growing region – cotton picked by enslaved hands – and the textile mills of Georgia.

Sepia-toned lithograph of six Black men and women in sunhats and overalls in a cotton field
Picking cotton outside Savannah, Ga., in 1867. Library of Congress

The Eufala Railroad also gave Alabama commercial access to the Port of Savannah. Savannah was a key cotton and rice trading port, and slavery was integral to the growth of the city.

Today, Savannah’s deep-water port remains one of the busiest container ports in the U.S. Among its top exports: cotton.

The Eufala Railroad closed in the 1970s. But the company that funded its construction – Lehman Durr & Co., a prominent Southern cotton brokerage – existed well into the 20th century.

Examining court affidavits and city records located in the Montgomery city archive, we learned the Montgomery Eufaula Railroad Company received US$1.8 million in loans from Lehman Durr & Co. The main backers of Lehman Durr & Co. went on to found Lehman Brothers bank, one of Wall Street’s largest investment banks until it collapsed in 2008, in the U.S. financial crisis.

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Slave-built railroads also gave rise to Georgia’s largest city, Atlanta. In the 1830s, Atlanta was the terminus of a rail line that extended into the Midwest.

Some of these same rail lines still drive Georgia’s economy. According to a 2013 state report, railways that went through Georgia in 2012 carried over US$198 billion in agricultural products and raw materials needed for U.S. industry and manufacturing.

Black and white image of an old train depot
The 1872 Vicksburg & Brunswick Depot, a passenger and freight station in Eufala, served the Eufala and Georgia Central rail lines, among others. Library of Congress

Rethinking reparations

Savannah, Atlanta and Montgomery all show how, far from being an artifact of history, as some critics of reparations suggest, slavery has a tangible presence in the American economy.

And not just in the South. Wall Street, in New York City, is associated with the trading of stocks. But in the 18th century, enslaved people were bought and sold there. Even after New York closed its slave markets, local businesses sold and shipped cotton grown in the slaveholding South.

Black-and-white lithograph of a wide street lined with large buildings
Wall Street around 1850. New York Public Library

Geographic research like ours could inform thinking on monetary reparations by helping to calculate the ongoing financial value of slavery.

Like scholarship drawing the connection between slavery and modern mass incarceration, however, our work also suggests that direct payments to indviduals cannot truly account for the modern legacy of slavery. It points toward a broader concept of reparations that reflects how slavery is built into the American landscape, still generating wealth.

Such reparations might include government investments in aspects of American life where Black people face disparities.

Last year the city council in Asheville, North Carolina, voted for “reparations in the form of community investment.” Priorities could include efforts to increase access to affordable housing and boost minority business ownership. Asheville will also explore strategies to close the racial gap in health care.

It is very difficult, perhaps impossible, to calculate the total contemporary economic impact of slavery. But we see recognizing that enslaved men, women and children built many of the cities, rail lines and ports that fuel the American economy as a necessary part of any such accounting.The Conversation

Joshua F.J. Inwood, Associate Professor of Geography Senior Research Associate in the Rock Ethics Institute, Penn State and Anna Livia Brand, Assistant Professor, University of California, Berkeley

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Foreclosures Hit Churches Hard

by | Jul 11, 2011 | Feature, Headline News |

The gates of hell will not prevail against the work of the church, but what about that massive bank loan?

An April CBN News report on church foreclosures was rebroadcast online last week and got Urban Faith digging into the topic. The report focused on two black churches in Atlanta that were threatened with foreclosure. One church, Higher Ground Empowerment Center (HGEC), renovated (and changed its name) after a 2008 tornado damaged its building, but couldn’t repay its $1 million mortgage when attendance and giving declined during a year-long displacement.

When the story originally ran, the church’s fate was uncertain. Urban Faith tried to contact HGEC both by phone and email to find out what the outcome was, but didn’t get a response. Citi-Data.com lists the church (under its former name) as the owner.

The church’s Facebook page is active and advertises a Financial Fast on the first week of every month in 2011. Congregants are advised to meditate on Scripture verses (Exodus 22:14; Proverbs 22:7; Matthew 25:14-20; Malachi 3:10) and refrain from discretionary spending and credit card dependency. The fast was scheduled to kick off in May with a 4-week Bible Study on Becoming Better Financial Stewards.

“The fast is really about curbing the need to consume. It doesn’t matter whether you’re a good steward or a spendthrift; all of us consume more than we need,” the announcement said.

If any of our Atlanta readers know the fate of this congregation, please let us know. Whatever it is, we applaud its willingness to advocate better financial stewardship.

“More than 90 metro Atlanta churches were posted for prospective foreclosure from 2006 to 2010, according to a review by the Kennesaw-based real estate research firm Equity Depot for The Atlanta Journal-Constitution,”  AJC reported in February. Fifty churches, most of them small African-American congregations, “dominate the foreclosure lists,” AJC reported.

In January, The Wall Street Journal published a story that explored the roots of  the church foreclosure crisis nationwide. The bottom line: Historically, churches have been accustomed to obtaining specialized loans that allow them favorable repayment structures. But after the economic downturn, many of those churches were faced with situations similar to the subprime mortgage crisis that devastated countless homeowners.

“Since 2008, nearly 200 religious facilities have been foreclosed on by banks, up from eight during the previous two years and virtually none in the decade before,” The CoStar Group real estate services firm told the Wall Street Journal. A representative at CoStar told Urban Faith Friday that the group hasn’t updated its church foreclosure data since then, but promised to keep us posted if it does.

In April 2010, Reuters published an in-depth report on the situation, which also noted that African American churches have been hit particularly hard.

“Their congregations have suffered higher unemployment, and often the churches provide more services,” Reuters reported.

Rev. Grainger Browning, senior pastor of Ebenezer AME Church in Fort Washington Maryland told the news wire, “At a recent meeting with the 100 top pastors in the country, it was amazing how all of us were facing some sort of challenge with the banks.”

A historically high rate of church building preceded the most recent economic collapse. According to data from the U.S. Census Bureau, money spent on the construction of religious buildings rose sharply in the late 1990s and peaked at $9 billion in 2003 before leveling off. A study by the Barna Group found that more than half of U.S. churches said they have been hurt by the recession, according to the Reuters report.

Then, on July 8, BusinessWeek published a grim article about the residential housing collapse titled “The Housing Horror Show Is Worse than You Think,” which makes us suspect the crisis is far from over for churches.

“The housing decline will be a long, multiyear process, and the multiplier effect across the economy will be enormous,” Doug Ramsey, an analyst at Minneapolis investment firm Leuthold Group told BW.

“What was real and what was never meant to be?” Ramsey wondered.

It’s a good question for struggling congregations as well. With iconic churches like Robert Schuller’s Crystal Cathedral going bankrupt, perhaps its not only the end of the McMansion era, but also the church expansion one.

The situation leaves us with questions:

What was done in faith and what was bad stewardship?

What do church foreclosures and bankruptcies do to the church’s collective witness?

How do we respond in faith to this crisis?

If your church is being foreclosed upon or facing serious financial hardship and you think your story can help others, we want to hear from you. Email me at [email protected]