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Analysis: Nigeria oil near all-time low

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by Carmen Gentile
Washington DC (UPI) Feb 19, 2009
Nigerian petroleum officials warn that the recent spike in attacks on oil and gas installations in the Niger Delta may have further hampered production and reduced output below recent lows over the last several years.

With production estimated at 1.88 million barrels per day as recently as mid-January, oil output may have fallen even further, Nigerian energy officials said earlier this week. That reduction could once again place Nigeria behind fellow African oil producer Angola. Nigeria has traditionally been the continent's largest producer but was eclipsed by Angola for several months last year.

Referring to Nigeria's Bonny oil field, one of the country's most productive, officials said this week that oil output has been reduced to 90,000 bpd there. The oil field's previous production capacity had once reached half a million barrels daily, said an official with the state-run Nigerian National Petroleum Corp.

An NNPC official said earlier this week that the agency was hopeful it could increase production levels "to at least 200,000 in the coming days."

Meanwhile, executives at Royal Dutch Shell in Nigeria, the largest foreign petroleum operation in the country, made similar claims.

Last week Shell announced a force majeure, cutting oil exports from Nigeria because of increasing militant attacks on the country's oil installations and pipelines, just the latest of several work stoppages that have halted tens of thousands of barrels of oil production for the company over the last 12 months.

While decreases in production blamed on militants and armed gunmen attacks in the oil-rich Niger Delta are nothing new -- production levels have been down by 25 percent or more since the end of 2005 -- the targets appear to be increasing.

In addition to Shell operations and the oft-targeted Nigerian troops, one militant group, the Movement for the Emancipation of the Niger Delta, recently vowed to include in its attacks Italian interests in the delta, particularly the energy firm Agip.

The militant group said in a statement that it was angered by the Italian government's decision to sell Nigeria two military vessels for use in the delta.

"MEND therefore wishes to put Agip on notice that its (the Italian) government ... has by this action put its workers and Italian companies in the region at serious risk," the statement said.

MEND and other militant groups say they are fighting for a more equitable distribution of the country's oil wealth. However, detractors criticize the group and others for using their professed advocacy as a cover for illegally siphoning oil from pipelines, a practice known as bunkering, and selling it on the international black market.

The ever-present violence and corruption in the delta has prompted some foreign oil operations to pull up stakes entirely and made others question the viability of the operations there in the years to come.

Some question the tactics of successive Nigerian governments in their handling of the militant issue, be it by sending more troops to the delta to crack down on armed groups or efforts to negotiate a peace with the militants proposed by Nigerian President Umaru Yar'Adua.

"When this war ends, what will become of us? When we win the battle for resource control, will there be any resource to control? The time has come to find alternatives to militancy," read a recent editorial in the pages of Nigerian newspaper This Day.

The constant threat of violence in the delta not only affects production but also oil workers who have continued their threat of a wide-ranging strike.

For weeks, two of the country's leading petroleum unions have threatened to strike over unsafe work conditions in the delta.

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Analysis: Mexico to offset oil decline?
Miami (UPI) Feb 18, 2009
Faced with declining oil production at its most reliable source, officials at Mexico's state oil company PEMEX are hopeful that production at new fields both on and offshore -- bolstered by increased investment -- will keep the sector from collapse.







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