Arab Today, arab today nigerian future oil output in the balance
Last Updated : GMT 14:58:23
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Nigerian future oil output in the balance

Arab Today, arab today

Arab Today, arab today Nigerian future oil output in the balance

Lagos - AFP

Nigerian oil output has rebounded to levels not seen in years, but crucial issues after April elections remain unresolved and could have a major impact on future growth in Africa\'s largest oil producer. The boost in production has occurred thanks to relative calm in the main oil region, the Niger Delta, hit by years of militant attacks before a 2009 amnesty deal. According to OPEC\'s 2010 figures, Nigeria overtook Iran as the cartel\'s second-largest crude exporter. But new investment has stalled over long-delayed reforms, expired leases for major oil firms are yet to be renewed and the relationship between the industry and the country\'s oil minister has been brought into question. At the same time, the calm in the delta is a fragile one, analysts say, since it has been achieved mainly through payouts to ex-militants, with underlying issues of poverty and unemployment unaddressed. \"You\'re back to where you were 10-15 years ago,\" Kayode Akindele of Greengate Strategic Partners financial advisers said of production, adding that it will now be vital to focus on the future. Some industry figures have privately criticised the oil minister, Diezani Alison-Madueke, and President Goodluck Jonathan\'s decision to reappoint her following April elections raised eyebrows. Criticism has ranged from her ministry\'s alleged ineffectiveness to accusations of corruption under her watch and claims that certain companies have been shown favouritism. Some, however, call such criticism unfair and point to alleged misdeeds by her predecessors, questioning whether she would face the same accusations if she were not the first woman to hold the post. A spokesman for the state oil firm, the Nigerian National Petroleum Corporation, called the accusations against Madueke unfounded. \"It will not,\" Levi Ajuonuma said when asked whether the relationship between the minister and major oil companies would be affected. \"She has a job to do.\" It is one of the most important jobs in Africa\'s most populous nation, a country where the oil-and-gas industry accounts for some two-thirds of government revenue and more than 90 percent of export earnings. Production has risen to some 2.3 million barrels per day, according to June figures from the International Energy Agency. One of the first post-election tests for Madueke will be how she resolves issues surrounding leases for US oil giant ExxonMobil\'s Nigeria unit. The three leases -- believed to have a capacity of some 500,000 barrels per day -- were agreed to in 2009 under a previous minister, but were recently ruled invalid, with discussions now ongoing to resolve the matter. Exxon declined to comment in detail. Ajuonuma said he expected a deal in the coming days, and that would be followed by renewals for long-expired leases for other oil majors, including Shell and Chevron. \"It was just that we need to ensure that due process, transparency and accountability are adhered to,\" he said of the Exxon leases. Meanwhile, new investment in oil projects has ground to a halt over uncertainty linked to proposed sweeping reforms to the industry years in the making. Madueke and others have repeatedly given deadlines for when the legislation would be passed -- all of which have come and gone without action. Oil firms cannot be sure how much they will have to pay in taxes and royalties when the new rules take effect. \"Nobody wants to make any further calls and investment decisions until they are sure what the taxes are going to be,\" said Victor Ndukauba of Afrinvest financial advisers. Other moves have begun reshaping aspects of the industry. Shell, historically the largest producer in Nigeria, has been seeking to sell off its share in four onshore oil blocks viewed as marginal. Analysts say the moves appear to indicate a willingness by Shell to move more of its focus offshore, where the risks of militancy are lower. It has also come under pressure to increase local involvement in the oil industry and Shell says it is committed to that goal. Increased local investment is partly aimed at preventing further flare-ups of violence in the delta, but analysts say the risks remain strong. \"The security issue is really not solved,\" said Benjamin Auge, deputy chief editor of Paris-based Africa Energy Intelligence, saying calm has been maintained through payments to militants under the amnesty programme. \"Imagine one day if the price of oil goes down.\" Ajuonuma, the state oil firm spokesman, acknowledged that new investment was stalled, but he pledged changes soon. He also had a warning for traditional investors, saying countries such as China were eager to gain a greater foothold in Nigeria. \"Everybody knows that when the Chinese get involved, you better speak up,\" he said -- though some have speculated that the Nigerians have used the Chinese to gain leverage over traditional Western investors.

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