Nigeria needs to review its relations with the International Oil companies as the country still remains poor in spite of being the top supplier of foreign oil to United States.
Nigeria remains extremely poor, in spite of being the largest supplier of foreign oil to the United States due to lack of development and years of corruption. So Rilwanu Lukman, President Umaru Yar'Adua’s energy adviser, suggests, “In order to realize the goal of achieving 40 Billion barrels oil reserve and four million of daily production, we have to review our relation with international oil companies”.
The new government’s plan to reform the Nigerian National Petroleum Corporation (NNPC) was also repeated by Mr. Lukman. There is no transparency in the government’s aim, which has long delayed the target to make the oil production twice as much as the current output of about 2 Million barrels/day. This is thus a hindrance in the progress, reported Financial Times.
Nigeria - Africa’s biggest oil producer - has numerous agreements with many key players like ExxonMobil, Royal Dutch Shell and Chevron. Nigeria’s output is about 2.6 Million barrels/day at peak. However, about a quarter of the output is wasted because of the unrest in the unstable Niger Delta of the country. Also, about a fifth of the output is cut since early 2006 due to the turbulence caused by militants in the Delta, with mismanagement and corruption making the case only worst by staining the energy sector.
Also, Nigeria owes a production-sharing agreement’s renovation which is bargained in lieu of the offshore fields in the early 19990s. This was when majors started switching to deep-water fields. According to these norms, the revenues generated by the oil companies will be shared with the government after recovering the investment cost.
“Development is a long process. Nigeria has been keeping itself aloof from following the example set by nations that have asked for higher revenue and better control from the resources of oil. For instance, in Venezuela, foreign operators have been forcefully charged with unfavorable contract changes by government. However, some changes that are pre-planned would make it difficult for foreign companies to make profits on energy and have booking in the West African nation for crucial crude-oil reserves”, said a Senior Research Analyst at RNCOS.
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