Nov 02 2012


Posted by: Nick Shaxson in: Thoughts

In an earlier life, I spent many years writing and reporting on the oil producing countries of West Africa. I just thought I would point out a very good blog about these issues,, which I’d recommend to anyone interested in how mineral resources do (or don’t) contribute to the development of those nations that produce it.

Take a look at this one, for instance, skewering the big oil companies’ recent wrecking of aspects of the Dodd-Frank bill related to oil company transparency, exposing their positions as examples of cognitive dissonance. Or this one, crunching some interesting numbers (I hadn’t fully appreciated the extent of this before). Or this one, looking at (among other things) contract negotiations.

“One problem with extractives negotiations is that they are a far more serious commitment than other kinds of foreign direct investment. The levels of capital and risk lead to arrangements that last a generation – 20, 30, even 40 years. Compare an offshore gas play in East Africa to, say, building a factory in a Chinese free trade zone. Manufacturing companies build for redundancy, to be able to scale production down and up around the world as demand, local costs and exchange rates fluctuate quarter by quarter. Whereas the sunk capital in most oil projects past the exploration stage are so great that both sides are tied in for the long term. You don’t get to date in extractives, or even go steady. You meet the family, have a couple of chaperoned outings and then bam. It’s more of an arranged marriage.”

Boy, is that true. And the ramifications are colossal.

Anyway, a great blog, if oil and people is your thing.

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