Nigeria - Part 1 - The Prospects & Geology.

Nigeria's nominally-installed crude oil production capacity is 3m b/d. But about half of this remains shut in as a result of unrest in the oil-rich Niger Delta region. An ambitious plan to boost the capacity to 4.1m b/d by 2011 was in early 2007 scaled back to 3.2m b/d by the previous government. The current government, formed in late July 2007, is yet to establish a credible plan for expansion of Nigeria's crude oil and natural gas production capacities.

Nigerian Petroleum Minister Rilwanu Lukman on July 21, 2009, told a meeting of the ruling Peoples Democratic Party (PDP) National Working Committee in Abuja that, due to the Niger Delta violence, crude oil production had dropped to 1.4-1.5m b/d, against a budget level of 2.2m b/d. Nigeria's OPEC production quota is 1.673m b/d.

Lukman said the crisis had made mincemeat of budget projections as a fall in revenue had affected the implementation of budgets, with many states having to cut spending and sourcing extra funds from the capital market. He added that the Atlas Cove jetty bombed by militants nearly two weeks earlier had resumed operation since July 19. He said adequate security had been put in place to forestall a re-occurrence. He said the federal government was to raise production capacity to 4m b/d.

Lukman noted: "We have [a useable crude oil] production capacity of 2.3m b/d but because of problems in the Niger Delta, we cannot meet our targetso, we are short of a million barrels".

The minister, having held the petroleum portfolio through several administrations, said the policy of the federal government to embark on the deregulation of the downstream sector was inevitable as the budget for subsidy of petroleum products was far above that for capital projects every year. He said the government would not back down on deregulation, even as the National Assembly, National Union of Petroleum and Natural Gas Workers and Petroleum and Natural Gas Senior Staff Association of Nigeria had accepted the deregulation policy only in principle (see down5NigrEnBaseAug3-09).

Addressing a press conference in the capital Abuja in February 2007, the then State Minister for Petroleum Edmund Daukoru said exploration had raised the country's proven oil reserves to about 35 bn barrels from 5 bn barrels in 1999. He said crude oil production capacity then stood at 3m b/d, following the addition of 500,000 b/d in 2005-2006.

Most of Nigeria's crude oil is being produced by five major IOCs - Shell, ExxonMobil, Chevron, Total and Agip. However, these and other producers have been affected by a continuing unrest in the volatile Niger Delta (see Part 2).

Nigeria, usually the biggest producer of crude oil in Africa and a leading member of OPEC, had in previous years been exporting about 2.6m b/d. But more than a quarter of that figure has been lost because of the unrest and thefts (see Part 3). A new government under President Umaru Yar'Adua who was elected on April 21, 2007, and sworn in on May 29 of that year has since been promising to bring about lasting peace in the Niger Delta and security throughout Nigeria. But the situation has been even worse than before, with Yar'Adua's presidency weaker than its predecessor (see who's who in Part 4 from omt8NigrWhoAug24-09).

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