Modest Recovery In Nigeria

The Nigerian oil sector is currently enjoying a modest reprieve, as the 2009 militant amnesty has had a real impact on oil production in the Niger Delta. Production now averages 2.2m b/d of crude oil and up to 2.5m b/d, when natural gas liquids and other unconventional oil resources are taken into account.

The level of vandalism and attacks on oil and gas sector infrastructure has fallen. However, persistent tensions between the authorities and former militants over the rehabilitation programme continue, for example, in December, when around 1,600 former Niger Delta militants blocked the highway connecting Lokoja (Kogi State) with the capital Abuja for eight hours over various grievances linked to the government’s amnesty scheme, including the non-payment of allowances.

A security consultant operating in the region said: “The IOCs [international oil companies] are still in a difficult situation because of the level of insider activity and because they take the blame for spills. Shell’s reputation in Nigeria is on the floor because of pollution. Yet 70–80% of the pollution is caused by attacks on pipelines, not through negligence. Sometimes it is vandalism, other times oil-thieving operations; other times, it is designed to secure clean-up deals.”

New finds
However, a string of large new oil projects will be developed over the next five years by some of the biggest oil companies in the world, providing between 1.1m and 1.25m b/d of production capacity, meaning that a peaceful Nigeria could produce more than 4m b/d by 2016. Even with continued violence in the Delta, much of this new capacity will be brought into production because it lies in deepwater areas where oil is stored by floating, production, storage and offloading (FPSO) vessels and then transferred on to waiting vessels, avoiding any contact with the mainland.