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Nigeria

Corruption, low investment and shrinking markets haunt oil and gas industry

Bitter legacy in the Niger Delta 26 years after the execution of Ken Saro Wiwa and eight others

Just weeks after President Muhammadu Buhari signed into law far-reaching reforms of the oil and gas industry, national production is lagging behind forecasts and revenues are falling short.

Technical glitches and cuts caused by vandalism, oil theft, strikes and outdated infrastructure mean that production has been running 200,000 barrels a day below Nigeria's target of 1.65million b/d set by the Organisation of Petroleum Exporting Countries (OPEC).

Deputy oil minister Timipre Sylva's forecast that Nigeria's production would reach 2 mn b/d by the end of the year looks far-fetched. These shortfalls could undercut the country's allocated production targets to be set by OPEC for next year. The cartel usually cuts the production allocation for a country when it fails to meet its current target.

Nigerian policymakers also have to manage wider changes in the ownership and structure of the oil industry as some major foreign oil companies start to sell their onshore operations. Mostly, their reasons are commercial. Onshore production contracts are less lucrative and more cumbersome to operate than the production-sharing agreements for the offshore deep-water operations.

Political factors, recurring unrest in the Niger Delta and wider pressure from environmental campaigners to cut fossil fuel production, have also encouraged the sales.

Supporters of the writer and minority rights campaigner Ken Saro-Wiwa marked the 26th anniversary of his execution on 10 November. Another eight activists were executed by the regime  on the same day.

The executions ordered by General Sani Abacha's military regime triggered Nigeria's three-year suspension from the Commonwealth and tougher scrutiny for oil company operations in the Niger Delta.

The only international response to date, the UN-mandated clean-up of Ogoniland, is mired in allegations of mismanagement. Some US$360 mn paid into the clean-up by oil companies, including Shell, of a projected billion dollars is unaccounted for (AC Vol 59 No 24, Clean-up gets murky & Vol 62 No 4, Shell retreats from the Delta). The UN and Shell have declined to comment on the position of the much-criticised director for the clean-up operation, Marvin Dekil.

Saro-Wiwa's grass-roots Movement for the Survival of the Ogoni People (MOSOP) has split into factions. Some are negotiating terms with President Buhari's government for oil extraction in Ogoni to resume, perhaps with an eye on rising global prices.

Others staunchly oppose oil companies, even the state oil corporation, resuming production in Ogoniland. They regard addressing the corruption and bureaucratic mismanagement of the UN's $1bn clean-up (less than 1% of what is required to remediate oil despoliation in the Niger Delta) as the first order priority.



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