Despite being the world's eighth-largest 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 oil companies.
"In view of the current problems, their goal of 4 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 US, lost one-quarter of its production last year and this year. Production is currently estimated at 2.1 million barrels per day.
Oil from the Niger Delta continues to bring in 90 percent of Nigeria's foreign currency earnings and thanks to the recent rise in crude prices, the country's foreign reserves are close on US$50 billion.
Nevertheless the government is pleading poverty and is trying to reduce its share in investments in the sector, asking oil majors to look for alternative forms of financing.
"Nigeria is supposed to fund part of the onshore activity but hasn't actually put any money in for three years now," one foreign oil executive said.
Oil Minister Odein Ajumogobia said that of the US$15 billion of projected total investments in the sector next year, the government was supposed to shoulder US$8.8 billion but that it had in fact allocated only around US$5 billion.
The government has asked the oil companies to find the missing US$3.8 billion.
Shell, Chevron, Exxon Mobil, Total and ENI/Agip point out that Nigeria's budget for next year was based on an oil price of US$53 per barrel, when it is close to US$100 and looks set to continue its rise.
The majors are also worried about the Nigerian government's intention to renegotiate the oil revenue sharing agreement.
"Given the massive investments entailed, notably in the deep offshore, our margins are already very narrow," the chairman of one oil group said.
Another complained that when oil was at US$80 a barrel, his company was making a profit of US$3, with the remainder all going to the Nigerian government.
"We were all in difficulty in 2007," said an executive at Shell, Nigeria's biggest producer.
This past year Shell Nigeria (SPDC) spent US$1 billion on pipeline maintenance alone. The company had initially been looking at a total budget of US$6.6 billion but pruned it drastically, first to US$4.5 billion, then to US$2.7 billion.
Last month the company announced 1,000 job cuts.
"We're operating in an extremely difficult environment where production levels have been hard hit by the unrest," director-general Basil Omiyi said.
In 2003 SPDC was producing 1 million barrels per day. By this year, 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 early next year, on pain of sanctions.
"They want everything tomorrow but in this industry we count in decades," one oil executive said.
For Shell, oil-producing zones are one of three colors depending on the level of risk: red, yellow or green.
Most of the Middle East is "red." Nigeria, despite all the difficulties, is still "green". But for how long?
AIR SUPPORT: The Ministry of National Defense thanked the US for the delivery, adding that it was an indicator of the White House’s commitment to the Taiwan Relations Act Deputy Minister of National Defense Po Horng-huei (柏鴻輝) and Representative to the US Alexander Yui on Friday attended a delivery ceremony for the first of Taiwan’s long-awaited 66 F-16C/D Block 70 jets at a Lockheed Martin Corp factory in Greenville, South Carolina. “We are so proud to be the global home of the F-16 and to support Taiwan’s air defense capabilities,” US Representative William Timmons wrote on X, alongside a photograph of Taiwanese and US officials at the event. The F-16C/D Block 70 jets Taiwan ordered have the same capabilities as aircraft that had been upgraded to F-16Vs. The batch of Lockheed Martin
GRIDLOCK: The National Fire Agency’s Special Search and Rescue team is on standby to travel to the countries to help out with the rescue effort A powerful earthquake rocked Myanmar and neighboring Thailand yesterday, killing at least three people in Bangkok and burying dozens when a high-rise building under construction collapsed. Footage shared on social media from Myanmar’s second-largest city showed widespread destruction, raising fears that many were trapped under the rubble or killed. The magnitude 7.7 earthquake, with an epicenter near Mandalay in Myanmar, struck at midday and was followed by a strong magnitude 6.4 aftershock. The extent of death, injury and destruction — especially in Myanmar, which is embroiled in a civil war and where information is tightly controlled at the best of times —
Taiwan was ranked the fourth-safest country in the world with a score of 82.9, trailing only Andorra, the United Arab Emirates and Qatar in Numbeo’s Safety Index by Country report. Taiwan’s score improved by 0.1 points compared with last year’s mid-year report, which had Taiwan fourth with a score of 82.8. However, both scores were lower than in last year’s first review, when Taiwan scored 83.3, and are a long way from when Taiwan was named the second-safest country in the world in 2021, scoring 84.8. Taiwan ranked higher than Singapore in ninth with a score of 77.4 and Japan in 10th with
China's military today said it began joint army, navy and rocket force exercises around Taiwan to "serve as a stern warning and powerful deterrent against Taiwanese independence," calling President William Lai (賴清德) a "parasite." The exercises come after Lai called Beijing a "foreign hostile force" last month. More than 10 Chinese military ships approached close to Taiwan's 24 nautical mile (44.4km) contiguous zone this morning and Taiwan sent its own warships to respond, two senior Taiwanese officials said. Taiwan has not yet detected any live fire by the Chinese military so far, one of the officials said. The drills took place after US Secretary
RSS