Kuwait Of Africa?

Equatorial Guinea Has Vast Oil Reserves, But Poverty Still Prevalent

With gas prices hitting record levels this summer, and violence in the Middle East unabated, America has been scouring the globe searching for new sources of oil.

And one could be Equatorial Guinea, a tiny nation that's been dubbed the Kuwait of Africa because it has so few people and so much oil.

It used to be called the armpit of Africa because it was so desperately poor. But since the discovery of oil 10 years ago, that has started to change.

In fact, as Correspondent Bob Simon reported last fall, African countries like Equatorial Guinea will provide as much as 25 percent of America's oil in the next decade.

And giants like Exxon-Mobile are pumping out more of it all the time.

The oil workers come in droves, and there are so many that there's now a weekly flight direct from Texas to Equatorial Guinea called the Houston Express.

The country has the third largest reserves in Africa, so the men know what they're here for, even if they're not quite sure where they are.

The men are bussed straight to a compound, and then out to sea – the oil is offshore. Simon visited an offshore platform in the Gulf of Guinea. There is lots of oil a couple of miles under those waters.

The big discoveries began in the '60s in Nigeria, Angola and Cameroon, but remarkably no one could find much of anything in the waters off Equatorial Guinea. The Spanish tried and failed, so did the French, and the giant American companies simply weren't interested.

Then, in 1992, a tiny American firm scraped together some money, bought a concession to explore, and hit the jackpot.

"You know, when they tell you, you don't have anything, you make a deal," says Pierre Atepa, an adviser to the Guinean president. "And they say, 'OK, let's hit a deal. If we find, we take almost everything.' You know, you may as well have a little bit of everything than everything of nothing."

Equatorial Guinea got to keep a mere 12 percent of the oil revenues in the first year of its contract -- not much of a deal considering that other African countries were keeping as much as 60 percent.

ExxonMobil, which struck that first production deal, wouldn't talk to 60 Minutes about it. So we talked to Alex Vines, a senior researcher for Human Rights Watch, who specializes in Equatorial Guinea.

According to Vines, the negotiators were amateurs: "They had no clue and I'm sure that the boys from Texas understood that this was a good one to get in the bag. ...This was not a good deal at all for Equatorial Guinea."

This former Spanish colony is a tiny country, the size of Maryland, with a population of only half a million. It's an exquisite place, a great place to live if you're a butterfly. But not so great if you're not. Most people are dirt poor, earning about $1 a day. Most don't have access to clean water or sanitation, and the malaria is the deadliest on the planet.

But if the oil revenue hasn't helped them, it's done a lot for the country's ruler. From the moment you arrive, you can't avoid the sight of His Excellency, Teodoro Obiang Nguema Mbasogo. And however long you stay, you never lose sight of President Obiang. He is everywhere, even occasionally in person. But he can't be all that confident of his people. His bodyguards are specially imported from Morocco.

60 Minutes was there when President Obiang celebrated the 24th anniversary of the military coup that brought him to power. His predecessor's regime was so brutal that a-third of the nation was either killed or went into exile.

That predecessor was President Obiang's uncle. When he seized power, Obiang threw his uncle into prison, put him on trial and had him executed.

President Obiang has won big since oil was discovered – and now he is bestowing on himself and his family the lifestyle of the rich and famous. The president visits Washington, D.C. A lot. He's bought a couple of mansions in the D.C. area – and he paid $2.6 million in cash for one.

Obiang's first son, Teodoro, Jr., has also been picking up mansions -- even one in his own country, where he doesn't spend much time. When he's not in Hollywood or Rio, you're likely to find him in Paris, where he lives in one of the best hotels, and coasting down the Champs Elysees in his Bentley.

In a film shot by French TV a few years ago, there was a Lamborghini waiting to take him on a shopping spree. He bought more than 30 suits in a shop that day. Everywhere he goes, he's accompanied by his country's ambassador to France.

Not only is he the son of the president, and considered by many a likely successor, he's also the minister of infrastructure. The oil business is in the hands of his brother Gabrial, the president's cousin is inspector general of the Armed Forces, and his brother runs the security services. It's all in the family.

For all others, the president says he'll make sure the oil wealth trickles down. And he's doing his bit, offering handouts to the grateful multitudes on special occasions.

The president is grateful, as he told 60 Minutes when Simon sat down with him in his palace.

"The oil has been for us like the manna that the Jews ate in the desert. And we have to follow the rules to make sure this manna reaches all the people in Equatorial Guinea," says President Obiang.

"Well, I mean theoretically, absolutely the president's right, but you know, 'Where's the beef?'" asks Vines. "Equatorial Guinea is one of these very rare countries - less than half a million people who could really benefit from vast oil wealth. But we're not seeing much evidence of it yet."

There's not much evidence of democracy, either. There are no newspapers or bookstores. Television and radio are controlled by the president and his family. And at the main station, a government official recently announced to the nation that their president is none other than God. That was after the last election, in which the president won 97 percent of the vote. Impressive, perhaps, but this is in fact less than previous years.

Is the president worried that his popularity is slipping?

"My popularity at the moment is not decreasing. In a sense it's actually growing," he says. "It's growing, because if I obtain 97 percent of the elections, it just shows there is no one left in the opposition."

Maybe that's because the opposition's leaders were locked up in the notorious Black Beach Prison when the elections were held. One prisoner, Placido Mico, was released last August after spending more than 400 days behind bars.

"I have been in prison with more than 100 people who were tortured by Obiang's brother, 'El Armengol,' and his cousin Antonio, the people that eat with Obiang every day. His brother, cousins, close relatives, bodyguards have been torturing these men I lived with in prison for 14 months," says Mico, who has been in prison more than eight times.

"The first time they tried to accuse me of slander. Sometimes they don't bother to accuse me of anything. This time they have tried to accuse me of plotting a coup against the president."

John Bennett, a former U.S. Ambassador to Equatorial Guinea, says political show trials are a permanent feature of the regime: "Usually the prisoners, when they're brought in, there are very clear signs of torture. Sometimes they can't walk. Or barely can walk. Because the bottoms of their feet have been beaten off. If you've ever seen a person limp on both legs, you know you're in Equatorial Guinea."

When Ambassador Bennett named one of the torturers and highlighted these abuses in the State Department's annual human rights report, he received a death threat. He's convinced it came from a member of the ruling clan. Not only that, he says American oil executives were not happy with him.
"And one of them [a senior executive of an oil company] just really was irritated. To the point of yelling at me," says Bennett. "Because it interfered with the way they wanted to do business with the government."

But now that there are a lot of U.S. oil men in Equatorial Guinea, does Bennett think this will be an indication of how they will react to the continuing human rights abuses?

"It (hasn't) bothered investments, certainly. Investment has gone up over $5 billion if I understand correctly, from U.S. firms," says Bennett.

And how close are the U.S. firms to the president? Well, for starters, oil company compounds are built on land owned by the president, and leased from him for a princely sum. And when the president comes to the states, the companies entertain him lavishly.

As first reported by the Los Angeles Times, American oil companies have been depositing hundreds of millions of dollars in oil royalties into an account controlled by President Obiang at a branch of the Riggs Bank in Washington, D.C.

"I still believe that this is a state secret -- that is, secret from outsiders and not from the government itself. The government knows very well the amounts we've been given," says President Obiang.

After Sept. 11, it became crystal clear that the United States needed to diversify its oil sources.

"Somewhere like Equatorial Guinea is particularly strategic because I mean, figure it's non-OPEC and it's non-Muslim oil that's very attractive for the U.S.," says Vines. "But if you have greater disenfranchisement and frustration by the local populations who see no benefit from oil, they may become festering zones for other types of individuals who want to manipulate this, including sympathizers to al Qaeda or other groups that may have an anti-American interest involved."

Not only did the executives of the major oil companies operating in Equatorial Guinea refuse to be interviewed by 60 Minutes, they also prohibited their employees in the country from speaking with us while we were there.

UPDATE: Since this story first aired last fall, federal investigators have reportedly been looking into American oil companies and their real estate dealings in Equatorial Guinea -- to determine whether they improperly benefitied President Obiang.

Sources close to the investigation are examining whether the oil companies paid prices so far above market value that they violated the Foreign Corrupt Practices Act.