Neither Nigeria nor Angola fits into the stereotype of weak African states being ruthlessly exploited by resource-hungry Asian tigers.
The failure of the oil-for-infrastructure deals in Nigeria was due to the failure of the Obasanjo government to manage the scheme, whereas Angola has been much more successful in managing its relationships with China and its oil companies, as well as the Angolan version of the oil-for-infrastructure scheme.
This is partly explained by politics: President José Eduardo dos Santos celebrates his thirtieth year as President of Angola in 2009; in stark contrast, Nigeria has had eight different leaders during those 30 years. This is about more than predictable politics, however. For some years, Asia has sourced oil from Nigeria and Angola through various contracts or even on the spot market, but from 2004/05, Asian companies have begun to secure oil blocks in both countries.
It is this new development that the report examines, especially the use of oil-for-infrastructure deals – "Angola mode" as the World Bank calls it.
The report maps Asian efforts in both countries in recent years. The introduction and overview looks at recent developments, especially in Nigeria where a change of government in mid-2007 has resulted in reappraisal of contracts awarded under the previous government and especially those awarded using the principle of Right of First Refusal during the 2005 bidding round.
China's Sinopec may have drawn lessons from this experience; it has dug into its deep pockets, acquiring oil blocks by buying out Western IOCs, such as Addax and Devon Energy, or some of their assets, directly or through joint ventures in both 2008 and 2009.
Understanding the intricacies of doing business in Nigeria and Angola, whether in the oil sector or beyond, is critical for the success or failure of any venture. India and Japan both also seem more risk-averse and more cautious about spending public money than China, and South Korea has been badly frustrated in Nigeria and has turned to the courts.
This is an edited extract from the executive summary of Thirst for African Oil, a report published today by Chatham House www.chathamhouse.org.uk
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