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Vol 49 No 8

Published 11th April 2008

Big oil, dear oil, new oil

The hundred-dollar barrel has boosted both Africa's national oil companies and ambitious resource nationalists. Algeria, Angola, Egypt and Nigeria see their national oil companies as potential instruments of diplomatic and economic power - as long as the oil and gas markets favour the sellers. Africa's oil producers want more control and money from contracts, and they want more oil to be refined locally.

Present performance varies widely in quality. Nigeria (see Box) has the biggest reserves and a poor record. Its government plans to introduce new rules stipulating that international oil companies must refine at least 25% of their production domestically. However, disruption and danger face oil workers in the Niger Delta, where the federal government struggles to maintain control. Meanwhile, the country's oil refineries barely manage to operate at 30% of capacity. The Nigerian National Petroleum Corporation brings in piles of cash, which it does not invest in repairs and maintenance, while private companies do not want the old refineries because the government, fearing urban riots, keeps local retail prices so low that every litre sold is sold at a loss. Yet war-torn Côte d'Ivoire's refinery has been operating at near its full capacity. Oil policy is inseparable from the political and business climate in which it must work.

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