The good news on the Nigerian economy came on the heels of local newspaper reports claiming that the government of President Olusegun Obasanjo had launched a review of the Joint Operating Agreements (JOA) with its multinational oil partners aimed at restructuring the nation's upstream oil sector. The JOA is being reviewed to re-negotiate most of the contractual terms in the agreements that have, with time, become unfavourable to Nigeria's interest.
The JOA is the standard agreement between the government, represented by the Nigerian National Petroleum Corporation (NNPC), and operators of the joint ventures, and sets the guidelines and modalities for their operations. The review is long overdue and well beyond the mandatory 10-year period, having been last reviewed in 1991. The NNPC holds an average 57% equity in six joint ventures with Shell, Mobil Producing Nigeria Unlimited, Chevron Nigeria Limited, Nigeria Agip Oil Company, Elf Petroleum Nigeria Limited, and Texaco Overseas Petroleum.
Shell has set a Nigerian production target of 1.5 million barrels per day (bpd) by the end of 2004, with an operating cost of US$1.50 per barrel and gas sales of 1,251 million standard cubic feet per day.
Chris Finlayson, managing director of Shell (Nigeria), said his company would be re-designed this year "for efficiency with resource fragmentation and asset silos eliminated".
Performance, according to him, will be a critical index for recruitment and retention of both Nigerian and expatriate staff. "Shell [Nigeria] will also consolidate to a single corporate centre," Finlayson revealed. "These changes will come into effect by the end of the year. 2004 is the year we step into our future. With all the talent I see, we certainly can be the lowest cost, most attractive and best performing company in Nigeria and a powerful force in exploration and production in Africa." The group managing director of the NNPC, Funso Kupolokun, said the corporation was working hard to cut down on fuel importation by improving local...