Oil: Uneasy bedfellows.

Author:Thompson, Jato

On the surface, Nigeria's oil and gas exploration and development programme is well on course; however a strong undercurrent of distrust between the government and its multinational partners could yet detail progress. Jato Thompson reports.

Last October Gen. Sani Abacha, announced that Nigeria had hit the 25bn barrels oil reserve targeted for 1998. Production capacity accordingly shot up from 2.0m barrels per day (bpd) to 2.5m. The multinational oil prospecting companies have continued to make impressive strides in their exploration and production (E & P) activities, especially in the deep-water areas.

Recent intensification of drilling at the Ngolo Oil Field by Shell Nigeria Exploration and Production Company (SNEPGO) and on Anwa 1 and 2 off-shore (Akwa Ibom State) by Elf Petroleum, seems to bring Nigeria's 2010 40bn barrel reserve target within reasonable reach. An oil output of over 500,000 b/d is expected from the hitherto unexplored offshore basin.

There have also been clear signs of success in gas development and utilisation. Projects include Chevron's $550m Escravos Gas Project (EGP), the $3.8bn Nigerian Liquefied Natural Gas Project (NLNG), the $400m Obite Gas Project of Elf Petroleum, the $900m Natural Gas Liquids (NGL) by Mobil Producing, and the $1.Obn (N84bn) integrated gas development programme of Shell's Petroleum Development Company of Nigeria.

These accomplishments, among others, have gone some way to achieving the nation's objectives in optimum exploitation of its abundant hydrocarbon resources. However, this success hides a growing rift between the Federal government and its joint-venture (JV) partners.

Over the past three years, this relationship has been uneasy at best, characterised by a lack of trust, arbitrary cuts in operating budgets, and continued defaults in cash call obligations.

In August 1996, Petroleum Resources Minister, Chief Dan Etete, laid into multinational oil prospecting and service companies and accused them of a whole host of sins. These included: (1) evasion of taxes on a massive scale. Chief Jimoh Ibrahim, executive consultant to the Federal government on monitoring the withholding taxes in the petroleum sector, claimed last year that six companies owed a cumulative total of N22.75bn; (2) lack of accountability and transparency in joint ventures; (3) abuse of the expatriate quota; (4) discrimination against Nigerians in key job opportunities and transfer of technological know-how; (5) lack of regard...

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