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A New Era for Oil
Reforming the industry and ramping up production
The upstream oil industry is the lifeblood of Nigeria’s economy; the country ranks as Africa’s biggest oil producer and eleventh in the world for crude, its economy depending on oil for 80% of its foreign earnings. The country has total oil reserves of 36 billion barrels. After Nigeria joined OPEC in 1971, the Nigerian National Oil Corporation (NNOC) was established, later becoming Nigerian National Petroleum Company (NNPC) in 1977. This giant parastatal, with all its subsidiary companies, currently controls and dominates all sectors of the oil industry, both upstream and downstream.
Production is focussed chiefly in the Niger Delta, one of the world's largest wetlands, in the south of the country, and offshore in the Bight of Benin, Gulf of Guinea and Bight of Bonny. In the Niger Delta, where attacks on oil facilities by militants from the Movement to Emancipate the Niger Delta (MEND) have brought down production for some years, efforts to find a solution to the conflict finally bore fruit in 2009. An amnesty offered in October 2009 saw some 8’000 militants handing in their arms; those who turned in their weapons were offered a regular income and job training. The amnesty, together with new commitments from the government to share the revenues from oil with the people of the Niger Delta, brought about a cessation of violence, which held well into 2010. The programme was stalled by the illness and subsequent death of President Umaru Musa Yar’Adua, but the new president, Goodluck Jonathan, himself a native of the Niger Delta, has promised to renew efforts to implement the provisions of the amnesty. Despite some outbreaks of violence, the relative calm in the Delta has not yet broken down, and production remains much higher in 2010 than in previous years: from 1.75 million barrels per day (bpd) in July 2009, Nigeria’s crude oil production reached 2.08 million bpd of crude oil in May 2010, the highest level of production since December 2007.
In spite of the problems in the region in recent years, Nigeria’s huge wealth of oil makes it singularly attractive to the multinational majors, most of which are represented in Nigeria: Total, Chevron, ExxonMobil, Elf, Shell, ConocoPhillips and Eni, among others, all have operations in the country. More recently, multinational oil companies have been focussing their attention on offshore projects such as the Usan field. They and their likes promise much for the future of oil industry investment, since they allow the oil majors to diversify their investment in the country and bypass the troubles of the Niger Delta region.
