Clouds over Nigeria's oil industry
Monday, 24 December 2007
LAGOS, Dec 23 (AFP): Despite being the world's eighth petroleum exporter and sitting on huge gas reserves, Nigeria will not have it easy over the next two years, between persistent unrest in the Niger Delta and strained relations with the major oil companies.
"In view of the current problems, their goal of 4.0 million barrels per day in 2010 seems inaccessible in the current situation," said the head of one multinational company operating in the delta, the oil region where violence and insecurity are endemic.
This absence of security means that Nigeria, which ranks fifth among suppliers of crude oil to the United States, lost one quarter of its production in 2006 and 2007. Production is currently estimated at 2.1 million barrels per day.
Oil from the Niger Delta continues to bring in 90 per cent of Nigeria's foreign currency earnings and, thanks to the recent rise in crude prices, the country's foreign reserves are close on 50 billion dollars.
Oil Minister Odein Ajumogobia said recently that of the 15 billion dollars of projected total investments in the sector in 2008, the government was supposed to shoulder 8.8 billion but that it had in fact allocated only araound 5.0 billion.
The government has asked the oil companies to find the missing 3.8 billion.
Shell, Chevron, Exxon Mobil, Total and ENI/Agip point out that Nigeria's 2008 budget was based on an oil price of 53 dollars per barrel, when it is currently close to 100 dollars and looks set to continue its rise.
This past year Shell Nigeria (SPDC) spent one billion dollars on pipeline maintenance alone. The company had initially been looking at a total budget of 6.6 billion dollars but pruned it drastically, first to 4.5 billion, then to 2.7 billion.
In November the company announced one thousand job cuts.
In 2003 SPDC was producing one million barrels per day. By 2007 that had fallen to 460,000.
Another European operator noted that numerous projects have been postponed or put on hold because of the restructuring at Nigerian National Petroleum Corporation (NNPC), the partner with whom foreign companies are obliged to set up joint ventures if they want to operate in Nigeria.
To complicate matters further Nigeria is now telling the oil companies to stop gas flaring in early 2008, on pain of sanctions.
For Shell, oil-producing zones are one of three colours, depending on the level of risk: red, yellow or green.
"In view of the current problems, their goal of 4.0 million barrels per day in 2010 seems inaccessible in the current situation," said the head of one multinational company operating in the delta, the oil region where violence and insecurity are endemic.
This absence of security means that Nigeria, which ranks fifth among suppliers of crude oil to the United States, lost one quarter of its production in 2006 and 2007. Production is currently estimated at 2.1 million barrels per day.
Oil from the Niger Delta continues to bring in 90 per cent of Nigeria's foreign currency earnings and, thanks to the recent rise in crude prices, the country's foreign reserves are close on 50 billion dollars.
Oil Minister Odein Ajumogobia said recently that of the 15 billion dollars of projected total investments in the sector in 2008, the government was supposed to shoulder 8.8 billion but that it had in fact allocated only araound 5.0 billion.
The government has asked the oil companies to find the missing 3.8 billion.
Shell, Chevron, Exxon Mobil, Total and ENI/Agip point out that Nigeria's 2008 budget was based on an oil price of 53 dollars per barrel, when it is currently close to 100 dollars and looks set to continue its rise.
This past year Shell Nigeria (SPDC) spent one billion dollars on pipeline maintenance alone. The company had initially been looking at a total budget of 6.6 billion dollars but pruned it drastically, first to 4.5 billion, then to 2.7 billion.
In November the company announced one thousand job cuts.
In 2003 SPDC was producing one million barrels per day. By 2007 that had fallen to 460,000.
Another European operator noted that numerous projects have been postponed or put on hold because of the restructuring at Nigerian National Petroleum Corporation (NNPC), the partner with whom foreign companies are obliged to set up joint ventures if they want to operate in Nigeria.
To complicate matters further Nigeria is now telling the oil companies to stop gas flaring in early 2008, on pain of sanctions.
For Shell, oil-producing zones are one of three colours, depending on the level of risk: red, yellow or green.