Two articles on Nigeria oil issues

Please note also Bayelsa State Oil Fund Commission Proposal here:

Female minister directs Nigeria oil overhaul

By Tom Burgis in Lagos

Published: April 7 2010 17:55 | Last updated: April 7 2010 17:55

Nigeria’s first female oil minister has been in her post barely 24 hours, but already the demands on her allegiances are many and conflicting.

Diezani Allison-Madueke was the surprise choice to take the helm in sub-Saharan Africa’s biggest oil and gas exporter when Goodluck Jonathan, acting president, unveiled his cabinet on Tuesday.

The team has 12 months to make its mark before the next election. The new minister’s principal task is to bring the long-delayed Petroleum Industry Bill – the most ambitious overhaul in the industry’s 50-year history – into law.

At stake are tens of billions of dollars of potential investments, and reforms that could breathe new life into an industry that provides 80 per cent of the government’s income and one in eight barrels of crude that the US imports.

Yet such is the scope for renewed lobbying from foreign companies, including Royal Dutch Shell, Exxon Mobil and Chevron, and opponents of reform that senior industry figures fear more delays.

“The PIB is definitely unlikely to pass [through the national assembly] in its current form before the elections,” Osten Olorunsola, Shell’s regional vice-president for gas, told the Financial Times. “Not passing anything would magnify the overall level of uncertainty.”

Shell’s competitors suggest the Anglo-Dutch group should be feeling smug. Ms Allison-Madueke is the daughter of a Shell employee and spent some 14 years working for its Nigerian joint venture, rising to become head of external relations.

Some industry groups are said to have lobbied for her appointment, reasoning that her background would make her sympathetic to oil companies’ claims that the bill’s tougher terms would jeopardise $50bn of planned investment.

Yet many of Ms Allison-Madueke’s advisers will argue that the country has made enough concessions to the companies already and the proposed law would simply bring Nigeria’s over-generous terms into line with those of other oil producers.

Mr Jonathan’s cabinet changes owe much to the succession struggle sparked by the prolonged illness of Umaru Yar’Adua, who remains the nominal president despite having been incapacitated since November.

Many Yar’Adua allies have been removed, among them the outgoing oil minister, former Opec boss Rilwanu Lukman, and Mohammed Barkindo, erstwhile head of the national oil company that reformers hope to transform from a byword for patronage to a commercially-driven profit-machine.

Her detractors say the Cambridge-educated Ms Allison-Madueke lacks her predecessor’s clout, noting the limited impact she had in two previous ministerial posts. Critics say that she was promoted because she comes from Mr Jonathan’s home state of Bayelsa, in the heart of the delta.

Some in the delta, where militants have long demanded a greater share of the oil revenues, expect a daughter of the region to look after her own.

Dimieari Von Kemedi, a senior Bayelsa official, said activists would push the new minister to go ahead with a proposal to grant 10 per cent of the net profits of petroleum ventures to the delta’s communities.

Foreign oil groups, seeking to renew leases to prime oil blocks, are locked in tough negotiations. A bidding round for oil assets is planned. Cnooc, a Chinese oil group, is seeking swathes of Nigeria’s crude. From Bayelsa to Beijing, Ms Allison-Madueke’s next moves will be closely watched.


Nigeria rejects criticism of new oil policy

By Tom Burgis in Abuja

Published: February 24 2010 16:13 | Last updated: February 24 2010 16:13

Nigeria on Wednesday hit back at claims by Royal Dutch Shell and other foreign groups that planned reforms threaten $50bn of investment and the country’s status as Africa’s biggest energy producer.

Oil companies and the Nigerian government are engaged in an increasingly bitter and public struggle over legislation that would represent the biggest overhaul in the sector’s 50-year history and impose tougher terms on some of the world’s largest energy groups.

Pedro Van Meurs, a veteran designer of fiscal systems for oil producers who is working as an influential consultant to the government on the legislation, warned that dire warnings voiced a day earlier by Ann Pickard, Shell’s outgoing Africa chief, and other executives, should not be heeded.

“Statements were made that investment will go to Angola or Ghana,” Mr van Meurs said, referring to the executives’ warning that Angola, which already vies with Nigeria for the top slot, would streak ahead in coming years, or that Ghana, which plans to start pumping soon, would prove more attractive than its giant neighbour. “Nothing is further from the truth.”

Big foreign oil companies argue that the imposition of tougher terms under the planned legislation would make many of their planned investments – especially in the fast-growing but difficult deepwater fields – unviable.

But Mr van Meurs said that under the latest government proposals – submitted on Monday to the legislators who are weighing the bill – “the fiscal terms…will be better than most of the states of the United States”.

The overall government take from the deepwater fields – which account for some 700,000 barrels a day out of Nigeria’s 2.2m b/d output, a share that is forecast to rise – would increase from about 45 per cent to about 72 per cent, Mr van Meurs said. He echoed the view of officials who say the terms granted in the 1990s were too generous, adding that the new level was still more competitive than that offered by Angola or Norway. Oil groups would also be able to negotiate lower rates if circumstances justified them, he said.

Ms Pickard, whose four-and-a-half year tenure ends in March, said on Tuesday that the stagnation of Nigeria’s investment-starved oil industry could be blamed on “a failure to recognise that we all benefit from taking a fair share of a growing industry rather than an excessive share of a declining one”.

Shell’s long relationship with Nigeria has been as lucrative for the Anglo-Dutch group as it has been fraught. Ms Pickard insisted that the company had no intention of pulling out despite its misgivings.

Her comments came hours before the Nigerian presidency announced that Total of France and its partners would go ahead with long-planned investments worth $20bn over four to five years.

Mark Ward, ExxonMobil’s Nigeria boss, said on Tuesday night that, serious doubts about the reforms notwithstanding, the world’s biggest listed energy group remained “bullish” about Nigeria.

Nigeria relies on oil and gas revenues for 80 per cent of government revenue and almost all its foreign exchange earnings. Officials and ministers argue that the nation is not getting a fair share of industry proceeds – while companies counter that it is graft and mismanagement that has condemned the country to poverty despite its natural riches.


Mr Jonathan has pledged reforms for the remaining year of the presidential term, including addressing chronic electricity shortages and moving to salve the unrest in his native Niger delta, heartland of the oil industry.