Chinese national oil companies and the economic development of African oil producers

Lead Research Organisation: Open University
Department Name: Faculty of Arts and Social Sci (FASS)

Abstract

After decades of being regarded as 'basket cases' some African economies are experiencing growth rates that are among the fastest in the world. Much of this growth is based on the export of commodities, like oil, to China and other emerging economies. Driving this engagement are Chinese national oil companies (NOCs) that have grown up through China's reform period and, as such, carry with them many key features of the 'China model'. While we hypothesise that the Chinese do things 'differently' to other oil investors in Africa we do not know whether the different corporate strategies of the leading Chinese NOCs and the specificities of African political economies they engage with generates unique forms of development, and if so in whose interests? Crucially it is a mistake to see this as one-way traffic with Chinese firms entirely determining the agenda. Our past ESRC-funded research reveals the importance of African agency in shaping the terms of this engagement and with it the potentials for development. In terms of DFID-ESRC's priorities the project addresses Chinese FDI, resource-based growth models, and infrastructure given that many Chinese oil deals are tied to infrastructure.

This project will be the first to assess whether and how such developmental benefits may be occurring. We will start by investigating the Chinese NOCs and their relationships to key state and semi-private agencies in China, before undertaking field research in Africa. Important here are the complex 'packages' of aid, trade and investment in Africa through Chinese NOCs, banks and ministries. Chinese NOCs are active across Africa but three countries - Ghana, Angola and Sudan - represent different aspects of their engagement with the continent. These countries are also unique so these contextual differences allow us to examine the role that African agency plays in shaping the nature of and benefits from this new investment in their oil sectors. We will also assess their impacts and the extent to which the growth they generate - directly, through oil-backed infrastructure, and via state revenue - trickles down to Africa's poorest.

Data collection will be both quantitative and qualitative; the former being data sets on Chinese FDI and African social indicators, and the latter interviews with key Chinese and African actors. To successfully carry out this data collection in countries and an industrial sector renowned for lacking transparency we will work with partners who have track-records of research in this area, and are embedded in key policy circles which will maximise the impact of our research.

Having established the drivers, dynamics and impacts of these investment flows we will address the needs of various users of knowledge. Academics across a range of disciplines will benefit from new knowledge of the character of these flows and impacts, as well as rethinking debates on the nature of international relations, resource-based development and the role of 'Southern' actors in that. National and international policy-makers will benefit from better information about the nature of these oil-related trade and investment flows, as well as benefitting from the recommendations we make for interventions that could enhance the mutual benefits from these new business relations. International and African business people will benefit through greater knowledge of the opportunities available, but also about how to do business in such complex cross-cultural settings. To achieve this, the research team will deliver bespoke training programmes on Chinese NOCs and local linkages. Finally, the general public will benefit from better-informed debate about the nature of Africa's development, and the real costs and benefits of actors like the Chinese. The Open University, where the core team is based, has wide experience of engaging the public in learning about the world and will produce a MOOC on oil and development in Africa.

Planned Impact

This project will have early impacts, derived from completion of the research, and long-term impacts, accrued from the influence on policies and corporate strategies in China, selected African countries, and some advanced economies.

Early impacts will arise from a detailed understanding of the different motivations, roles, and impacts of Chinese national oil companies (NOCs) in our case study countries, and the role played by Africans in shaping this engagement. The beneficiaries and benefits are:

1. Policy-makers and NGOs in the African case study countries, China, and Europe. The economic and social benefits will be greater awareness of how NOCs operate, their impacts, and the role of African states in brokering these relationships and in using oil revenue for development. This will be achieved through the advisory group that has direct links to policy channels, and targeted workshops and policy briefs during the project's life.
2. African and Chinese NOCs, other international oil companies, and sub-contractors to the sector. The economic benefits will be detailed knowledge of inter-firm linkages and the possibilities for local content in Africa. Through policy briefings, local workshops involving oil industry representatives, and executive training programmes the research will provide greater knowledge of opportunities in the sector and how these can be effectively exploited.
3. The general public. There is much misinformation about Chinese firms, African elites, and resource-based development. The research will create social benefits through informed debate on China's entry into Africa and how it might be best managed for economic development. The researchers, and the OU more generally, have unrivalled experience in engaging publics through diverse media. We will engage publics through blogs, a MOOC, and a communication strategy developed with the OU's media team.
4. Academics working in the fields of development studies, law, management, and international relations. To date we lack detailed knowledge of how Chinese NOCs operate in Africa and with what impacts. We will contribute new empirical evidence about these flows and their implications through presentations, existing networks, and journal papers.

Long-term impacts build on our empirical understanding of changing oil sector dynamics in Africa and their impacts on African economies:

5. Policy-makers and NGOs in the African case study countries, China, and Europe. Building on the short-term impacts we intend to provide longer-term advice to policy makers working in UN organisations (UNIDO, UNCTAD), multilateral agencies (EU, World Bank), national organisations (e.g. DFID, UKTI, CADFund), and NGOs (e.g. The Asia Foundation, China Foundation for International Strategic Studies, Chatham House) by disseminating recommendations for how to maximise the mutual benefits of these important trends.
6. Existing and potential investors in Africa. Our hypothesis is that potential exists for mutual engagement between Chinese NOCs, international oil companies (IOCs), African NOCs and a range of suppliers and service firms. Together, and managed properly, collaboration between these enterprises can benefit African economies. By providing executive training in oil sector dynamics/linkages we hope to assist new investors in Africa's growing number of oil economies. Using the skills of Dundee we will design training programmes aimed at NOCs, IOCs and, critically, African SMEs who might supply the oil sector.
7. Academics working in multiple disciplines. While our early findings will be theoretically driven, they will not explicitly seek to evolve wider framings of international development. Through a monograph published within 2 years of the project's end we will shape emerging debates around resource extraction, new axes of 'South-South' investment, and development. A submission to the UK Data Archive will also ensure that the data is available for future researchers.
 
Description EITI Senegal
Geographic Reach Africa 
Policy Influence Type Influenced training of practitioners or researchers
Impact ACEP produced a report making recommendations for the improvement of local content regulations. EITI of Senegal requested for a short educational document on Ghana's Oil and gas experiences, which highlights local content development successes and challenges. The report has been completed and designed pending a workshop in early 2018 to discuss the content with the Senegal EITI. The Paper will inform ongoing policy discussions on the emerging oil and gas industry in Senegal.
 
Description Engaging Specialists in China
Geographic Reach Asia 
Policy Influence Type Influenced training of practitioners or researchers
 
Description Influencing Local Content Regulations in Ghana
Geographic Reach National 
Policy Influence Type Implementation circular/rapid advice/letter to e.g. Ministry of Health
 
Description ESRC
Amount £45,000 (GBP)
Funding ID ES/N01443X/1 
Organisation Economic and Social Research Council 
Sector Public
Country United Kingdom
Start 03/2017 
End 02/2020
 
Description Effective States and Inclusive Development Research Centre
Amount £5,000 (GBP)
Organisation University of Manchester 
Sector Academic/University
Country United Kingdom
Start 02/2018 
End 09/2018
 
Title Modelling African Agency 
Description In collaboration with the Nigerian partner (Centre for the Study of the Economies of Africa), the Open University team have been developing a framework that will blend political and economic theories to create an innovative method for analysing the data to explore how agency is formed and exercised by, and within, African governments 
Type Of Material Model of mechanisms or symptoms - human 
Year Produced 2017 
Provided To Others? No  
Impact The framework will be used in the coming months to analyse the case study data 
 
Title China fieldwork 
Description There have been several visits to China over the past several years resulting in a number of interviews and a workshop. This data has recently been collated, transcribed and is ready for analysis. 
Type Of Material Database/Collection of data 
Year Produced 2017 
Provided To Others? No  
Impact The team are about to start an intensive period of analysis of the existing project data 
 
Title Chinese national oil companies overseas acquisition 
Description (1) We obtained a small database on Chinese NOCs overseas asset valuation from Thompson Reuters and Wood Mackenzie, and the data is being checked and cross validated. The analysis is currently underway. (2) We are updating the Chinese loans to Africa with some media narratives. (3) We have collected data from the World Bank Enterprise survey and some of the household survey for the relevant case study countries. 
Type Of Material Database/Collection of data 
Provided To Others? No  
Impact Still being analysed 
 
Title Ghana Fieldwork 
Description Over the past year our partners in Ghana (ACEP) and the RA based in Accra have conducted extensive fieldwork in the country leading to a comprehensive data-set of interviews and documented sources. 
Type Of Material Database/Collection of data 
Year Produced 2017 
Provided To Others? No  
Impact None to date - we are about to begin a intensive data analysis period 
 
Title Nigeria Fieldwork 
Description There have been four separate visits to Nigeria in 2017 conducted by a range of members of the team (monopolising on different specialities) leading to a comprehensive data-set of interviews and documented sources. 
Type Of Material Database/Collection of data 
Year Produced 2017 
Provided To Others? No  
Impact The team will soon begin an intensive period of analysis on this data. 
 
Title Sudan fieldwork 
Description A team of researchers are in Sudan to interview policy makers, corporates and civil society organisations involved in oil production. 
Type Of Material Database/Collection of data 
Year Produced 2018 
Provided To Others? No  
Impact None to date as fieldwork is ongoing 
 
Description Changes to Chinese Partnerships 
Organisation Central Party School of the Communist Party of China
PI Contribution CI (Janet Liao) has managed changes in the projects in-country Chinese partner. Due to unforeseen circumstances (change in organisation and position) the original partner fro the Research Institute of Economics and Technology had to withdraw. Prof. Liao used her networks to find a new partner (Prof Xiucheng DONG from the University of International Business and Economics) to join the project and take over the role of the previous partner.
Collaborator Contribution Networking to provide contacts for interview within China but also helping to support the African fieldwork with contacts into the Chinese oil companies.
Impact The Chinese partner helped with some contacts in Nigeria and joined Prof Liao for part of the visit. There are plans to support the upcoming Sudan fieldwork
Start Year 2017
 
Description Exploring African Agency 
Organisation Centre for the Study of the Economies of Africa
PI Contribution The RA (Craig Walker) worked with members of the team in CSEA to develop a research proposal that will help during the data analysis stage to focus and explore the currently under-researched topic of African Agency. This involved developing a multi-disciplinary conceptual framework.
Collaborator Contribution See above - the proposal was developed in collaboration
Impact The development of a joint proposal and a conceptual framework
Start Year 2017
 
Description Support Establishing Partnerships in Sudan 
Organisation Ministry of Energy and Petroleum
PI Contribution ACEP have engaged the Ministry to support the clearance acquisition for field work in Sudan. The Ministry has given ACEP a letter to facilitate visa acquisition at the Sudan embassy. The plan is for ACEP to join the Ministry on a trip to Sudan in January 2018 in order to facilitate in-country partnership for the Sudan fieldwork to be able to take place.
Collaborator Contribution Providing letters of support for visa application and aiding networking within Sudan, supporting finding a suitable partner.
Impact The partnership is in the early stages, looking to conduct a visit to Sudan in the coming weeks that will lead to the key output - formation of a formal partnership with a Sudanese organisation to facilitate fieldwork
Start Year 2016
 
Description Three Periods of Collabortive Fieldwork 
Organisation Centre for the Study of the Economies of Africa
PI Contribution Several members of the ACEP team spent three weeks conducting intensive interviewing in a number of locations across Nigeria in April 2017. The RA from the Open University subsequently worked closely with the CSEA team for two weeks in May and then later two months from Sept - Nov 2017. Key activities included helping to identify relevant stakeholders and conducting the interviews
Collaborator Contribution CSEA were instrumental in conducting early stage stakeholder analysis for the fieldwork, developing relationships with potential interviewees, helping to facilitate interviews and supporting the project team with interviewing where necessary.
Impact The partnership has resulted in over 50 interviews or written responses from key participants as well as an extensive body of complimentary documentary sources to support the data analysis. The partnership will continue over the rest of the life of the project as CSEA will be commissioned to do some additional data collection and will also be involved in the analysis and possibly authoring of some publications.
Start Year 2017
 
Description Appearance on CNBC Africa 
Form Of Engagement Activity A press release, press conference or response to a media enquiry/interview
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Public/other audiences
Results and Impact This was a TV debate on a CNBC Africa programme called 'Beyond Markets'. It coincided with the FOCAC meeting in Johannesburg. There was a lot of Twitter activity around the broadcast.

The amount of social media interest increased and I received a number of LinkedIn requests.
Year(s) Of Engagement Activity 2015
URL http://www.cnbcafrica.com/video/?bctid=4654822347001#
 
Description BOND conference 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Third sector organisations
Results and Impact Chaired a panel discussion at the BOND conference in Westminster. The two day conference is aimed at international development NGOs and we wanted to start a debate around how these NGOs might engage with China as an international development actor. There were three panellists who raised issues around Chinese charities, how other NGOs are contesting Chinese investments, and how the international community might respond.
Year(s) Of Engagement Activity 2016
URL https://www.bond.org.uk/sessions/the-china-effect
 
Description Briefing to the Cabinet Office 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact The UK's Cabinet Office are preparing a policy paper on China in Africa and I was invited to Whitehall as part of a small group of experts to 'stress test' the draft policy paper.
Year(s) Of Engagement Activity 2018
 
Description China's NOCs overseas asset acquisition 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Dundee team member Dr Mu gave a presentation on data he has collected in relation to this project on 'China's NOCs overseas asset acquisition' at the 2017 IAEE (International Association for Energy Economics) North American conference in Houston on 12-15 November 2017.
Year(s) Of Engagement Activity 2017
 
Description Discussant at policy workshop on China-Africa in Johannesburg 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? Yes
Geographic Reach International
Primary Audience Media (as a channel to the public)
Results and Impact The talk sparked discussion and I was asked to appear as an expert on CNBC Africa's Beyond Markets show.

Appeared on a pan-African TV news show.
Year(s) Of Engagement Activity 2015
URL http://degrp.squarespace.com/project-highlights/2015/12/7/china-africa-a-maturing-relationship-growt...
 
Description Discussion Group 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Professional Practitioners
Results and Impact The RA presented on the project to a discussion group that meets once a month, organised by the Nigerian partner. It brings together a range of people from academia, policy and practice who work in the energy sector of Nigeria.
Year(s) Of Engagement Activity 2017
 
Description Dynamism in China Africa business partnership: Insight from Africa's oil sector 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact This was an international conference on Africa-China relations convened by the Yale University and Lagos Business. I was part of a five member panel that gave a talk on various aspects of 'Sino-African Business Models'. Specifically, my talk was on a topic 'dynamism in China African business partnership: insights from Africa's oil sector'. My talk stimulated an extensive discussion which continued even after the time allocated for the discussion, with several people asking me further information on some of the issues I raised during my talk.
Year(s) Of Engagement Activity 2016
URL http://africa-china.yale.edu/africa-china-relations-balance-growth-and-sustainable-future
 
Description Engaging Diplomatic Contacts - Ghana 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Other audiences
Results and Impact ACEP has also engage the diplomatic community on the objectives of the research, including embassy of Norway in Ghana, the British High Commissioner to Ghana in August, visiting British parliamentarians to Ghana in October and Parliamentary delegation from Netherlands in November. They are keen to see the outcomes of the research.
Year(s) Of Engagement Activity 2016,2017
 
Description Interview at an Oil Sector Project Working Group 
Form Of Engagement Activity A broadcast e.g. TV/radio/film/podcast (other than news/press)
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Media (as a channel to the public)
Results and Impact The project RA was interviewed by a national Nigerian news channel while attending a workshop disseminating research findings on the project sponsored by the National Nigerian Resource Charter looking at the effectiveness of governance in the sector. The workshop was an opportunity to engage with key experts, academics and policy-makers to tell them about this project (which was useful for networking). The interview was asking for the RAs views on the effectiveness of the NNRC project but was also a chance to talk about this project, its aims and objectives
Year(s) Of Engagement Activity 2017
 
Description Joint Workshop at the China University of Petroleum, Beijing 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Industry/Business
Results and Impact On 28 November 2016, a one-day workshop was held in Beijing for the DFID-ESRC project, jointly by CEPMLP, Open University and the Centre for Petroleum Industry Development (CPID) of the China University of Petroleum, Beijing (CUPB). In addition to the representatives from host institutions, Prof Giles Mohan, Dr Janet Xuanli Liao, and Professor Xiucheng Dong, a dozen of specialists were invited to speak at the workshop. These included officials and scholars from National Development and Reform Commission, China National Petroleum Corporation, Chinachem, China National Offshore Oil Corporation, State Development Bank, China Central Party's School, and the University of International Business and Economics, etc. Also attending were faculty members from the CPID, as well as a number of masters and PhD students from CUPB.

The aim was to exchange knowledge with industry practitioners from China's oil industry as well as researchers closely allied to these oil companies (e.g. academic geologists). We informed them about our project but used the event to gather insights into our project and its case study firms and countries.
Year(s) Of Engagement Activity 2016
 
Description Ministry of Energy - Ghana 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact ACEP made a presentation to the Petroleum Commission of Ghana and the Ministry of Energy on the recommendations in the report they produced on local content regulations.
Year(s) Of Engagement Activity 2017
 
Description Presented paper at SOAS workshop 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Other academic audiences (collaborators, peers etc.)
Results and Impact The talk was at a workshop on China-Africa relations and involved a number of grant holders of the DFID-ESRC China-Africa programme. The talked sparked a lot of questions around resources and governance.

After the talk I was emailed by participants requesting more information.
Year(s) Of Engagement Activity 2015
URL https://www.soas.ac.uk/cas/events/12nov2015-china-in-africa-workshop.html
 
Description Teaching Local Content Policy 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Postgraduate students
Results and Impact Dr Macatangay from the Dundee team has delivered lectures on local content and linkages issues in CEPMLP graduate modules CP51003 Energy Economics The Tools (semester 1) and CP52002 Energy Economics The Issues (semester 2) in academic year 2015-2016; in CEPMLP graduate module CP52002 Energy Economics The Issues (semester 2) in academic year 2016-2017; and in the lecture "Research Methods & Methodology in Energy Economics" (both semesters) as part of a methodology module in academic years 2015-2016, 2016-2017, and 2017-2018
Year(s) Of Engagement Activity 2015,2016,2017,2018
 
Description Workshop on Chinese National Oil Companies 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Postgraduate students
Results and Impact The workshop was the first to bring together experts on the internationalisation of China's national oil companies. Most of the 2-day workshop was for international researchers and a few invited PhD students. The two-day meeting involved a number of internationally renowned specialists on China's energy strategies towards different regions, including Dr Erica Downs (Eurasia Group headquartered in New York), Prof Mikkal Herberg (The National Bureau of Asian Research, USA), Dr Alex Vines (Chatham House), Dr Susana Moreira (World Bank), Dr Monique Taylor (National University of Singapore), Mr Stephen Macey (Adam Smith International), Dr Tim Steinecke (independent researcher), Dr Bob Wekesa (Univ. of the Witwatersrand, S Africa), etc.

Dozens of CEPMLP students attended the Keynote speech by Dr Eric Downs, and we have also made videos for the workshop, which were uploaded to Youtube which can be accessed by everyone world-wide. session was opened to Masters and PhD students across the University of Dundee and invites went out to a wider Scottish oil network. The workshop produced videos that are housed on one of the partner's websites and will lead to a special issue of the Journal of Contemporary Chinese Affairs.
Year(s) Of Engagement Activity 2016
URL https://www.dundee.ac.uk/cepmlp/research/researchcasestudies/