The BP oil spill and Africa’s oil future

CGD’s Todd Moss writes about the likely effects of the BP oil spill fiasco on ‘Africa’s oil future’. He makes four points –

  • Higher costs due to additional safeguards and costs that are likely to be ‘passed through to reduce the governments’ shares rather than trimming company margins’.
  • A scramble for drilling in the Gulf of Guinea if the US bans deep-water drilling.
  • Slightly unlikely, but possible ‘regulation shopping’ – seeking out places with lax regulations to drill in
  • The oil-curse may compound if more money pours into unstable African states

But why should the companies be allowed to pass on these costs to the host governments? The cost of additional safeguards, at the very least, should be shared between the companies and the governments, since the oil majors have clearly been exposed for not having standards they ought to have had all along in the first place.

Also, one should use this opportunity to look beyond the weak governance in African states at how the oil majors could be regulated better and deterred from seeking out weak regulatory regimes and striking deals to the convenience of all. The least one could do is to begin to deal with horrors such as this in Nigeria where oil spills are no big deal any more.


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