Political Uncertainty May Hinder Nigerian Oil Output

Nigeria, West Africa
(Click to Enlarge)

Barclays Capital in a Dec. 30 report said that the resumption of political uncertainty and violence may hinder the recent growth in Nigerian oil output, which climbed to a two-year high of 2.3 million b/d after dropping to a low of 1.7 million b/d in mid-2009.

Deadly bombing and shootings over the holiday season served as reminder of the divisions the country faces as it heads into the 2011 elections in April, Barclays noted in a Jan. 6 report. While localized violence occurred prior to the 2003 and 2007 elections, the upcoming presidential election appears to be far more polarizing as there is no single elite consensus candidate and many prominent Northerners are adamantly opposed to the Jonathan presidency, Barclays said.

The Nigerian economy is heavily dependent on the oil sector which, according to the International Monetary Fund, accounts for over 95 percent of export earnings and about 65 percent of government revenues, the U.S. Energy Information Administration (EIA) reported in July of last year.

Since December 2005, Nigeria has experienced problems with increased pipeline vandalism, kidnappings and militant takeovers of oil facilities in the Niger Delta, one of the areas of Nigeria that holds the majority of the nation's oil and gas reserves. The Movement for the Emancipation of the Niger Delta is the main group attacking oil infrastructure for political objectives, claiming to seek a redistribution of oil wealth and great local control of the sector. Oil worker kidnappings have been common, and security concerns have led some oil services firms to pull out of the country and oil workers unions to threaten strikes over security issues.

The instability in the Nigeria Delta has caused significant amounts of shut-in production and several companies to declare force majeure on oil shipments. EIA estimates Nigeria's nameplate oil production capacity to have been around 2.9 million b/d at the end of 2009 but as a result of attacks on oil infrastructure, monthly crude oil production ranged between 1.6 million b/d and 2.0 million b/d.

While the country holds the largest natural gas reserves in Africa, there is limited infrastructure in place to develop this sector. Gas associated with oil production is mostly flared but the development of regional pipelines, the expansion of liquefied natural gas infrastructure and policies to ban gas flaring are expected to accelerate growth in the sector, both for export and domestic use in electricity generation.

The Nigerian government has sought to remedy problems with oil theft, pollution, and limited infrastructure with the Petroleum Industry Bill; however, the bill is still being debated in Congress more than a year and a half after first being introduced.


Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Nwanevu chioma | Jan. 13, 2011
The Insecurity in Nigeria is not only in Niger Delta, but it is also in Northern states especially JOS(Plateau state) so many innocent souls have been killed and it's still on. My advice is that, The Nigerian Govt should look into the affairs of the people, if they do that there will be no more political thugs because the people are happy. Secondly, federal govt should look for other means of the nation's income, not only Oil production there are other natural resources e.g cocoa,rubber,coals & mines even farm crops. The are all means of income & employment. Before people began to notice oil in Nigeria we used to depend on these things, if we can trace our feet far back where we are coming from we can now find our feet to stabilize. Please we can't continue this way


Our Privacy Pledge

Most Popular Articles

From the Career Center
Jobs that may interest you
Staff Engineer / Scientist
Expertise: Environmental Engineer
Location: Los Angeles, CA
Staff Engineer / Scientist
Expertise: Environmental Engineer
Location: Irvine, CA
Logistics Coordinator & Optimization Analyst
Expertise: Logistics Management
Location: Billings, MT
search for more jobs

Brent Crude Oil : $51.78/BBL 0.77%
Light Crude Oil : $50.85/BBL 0.83%
Natural Gas : $2.99/MMBtu 4.77%
Updated in last 24 hours