26 April 2007

Nigeria: Oil Prices Up on Nigerian Polls

Lagos — THE controversy trailing last Saturday's presidential election has forced the prices of oil up with London Brent crude rising by $1.66 to $68.15 a barrel and U.S. crude up by $1.78 to $65.89.

However, President Olusegun Obasanjo, speaking yesterday on CNN, saw nothing strange in the controversy because, as he put it, "there is no election result that has not been controversial" in Nigeria since he started taking part actively in elections in 1959.

Reactions from election observers and opposition candidates and the leadership of the Senate over the presidential polls suggest a crisis is in the offing - feeding a spike in global oil prices, Monday.

Nigeria is a major player in the world oil market. It is the world's eighth-biggest exporter and the fifth-largest oil supplier to the United States. When Nigerian fields are operating at top capacity, they can produce between 2.6 million and 3.0 million barrels of oil per day, approximately 3.2 per cent of global consumption.

However, operations accounting for about 600,000 barrels per day the country's output are currently shut down owing to unrest in the Niger Delta.

On Monday, London Brent crude rose $1.66 to $68.15 a barrel, while U.S. crude rose $1.78 to $65.89.

Princeton Lyman, a senior fellow at the Council on Foreign Relations and a former US ambassador to Nigeria thinks winner of the presidential election, Alhaji Umaru Yar'Adua, will probably be able to establish his legitimacy as president, but that it will take a while.

"Over the next year, it's going to be rough. The new government will have to deal with challenges in courts and rerun some of the local elections that were annulled," he said. In the meantime, he said, "there could be continued unrest in the Delta."

Sebastian Spio-Garbrah, an Africa analyst with political risk consultants Eurasia Group, said in recent months, very little violence has been directed at energy companies. He notes that Royal Dutch Shell, the country's biggest foreign oil company, announced two weeks ago that it would reopen its Forcados field by June or July.

Spio-Garbrah sees no reason the company won't go ahead as planned, and if it does, it would return Nigeria to producing around 2.4 million to 2.5 million barrels a day.

He notes that in a country where 60 per cent of the national budget comes from oil revenues, it's in the interest of every leader to keep it flowing.

"Even militias know that there is a symbiotic relationship between themselves and the oil companies," he says. "They need the oil companies to be there so that they can take a little bit of what's flowing through the pipe."

Nigeria's democracy healthy - Obasanjo

However, President Obasanjo in his CNN interview believed that "democracy is very healthy, it is well and kicking" in Nigeria.


CNN: Nigeria's landmark elections have been undermined by allegations of election fraud, both intimidation and poor preparation. If one may ask, how healthy is democracy in Nigeria?

OBASANJO: Well, democracy is very healthy; it is well and kicking. In fact, out of the three points you have made, we are able to make them because we are in a democracy. If there is no democracy, we will not be talking about intimidation, allegation and all that.

Let me put it this way: in some areas, it is not an allegation and because people have spoken to me, political parties, leaders, reporters, civil society groups and observers. And they gave me their concrete experience and in all these, what is my position? My position is that, a week at least before the first election, on April 14, 2007, we had pollsters, American pollsters, who are very objective and they gave what they thought the result would be and the results that we have on ground, both on the 14th and on the 21st were not really too similar from what the pollsters said.

I don't say that all had gone well, but what I am saying is that, the result we have got is not too bad to say that it does not indicate the will of the people of Nigeria.

Are you not concerned about the view of the two main opposition leaders may create a space for crisis to violence? Are you worried about the next five weeks?

How can I be worried about the next five weeks? I have been taking part in elections in this country actively since 1959. There is no election result that has not been controversial.

Let's talk about your time in charge, eight years or may be 29 years ago when you handed over power, let's talk about the progress that has been made, starting with the issue of corruption. How do you think you did?

Pass mark. I will say we are not there yet, but certainly, corruption has stopped to be a way of life, it has stopped to be a thing that you enter a government office and somebody says to you 'go and bring so much or what percentage will you give me' openly and unabashedly. I don't say that corruption has been completely eliminated but we are fighting it and people know that we are fighting it.

The Niger Delta, people around the world know about it now. How do you think you did there?

Before I came, the amount of money going into the Niger Delta from oil produced in that area was less than three per cent. Today, they are getting 13 per cent and you say things have not changed?

Yes, people say there are no schools, there are no hospitals...

(Cuts in) Yes, it is not everywhere that you have schools, it is not everywhere; but, there are more schools in the Niger Delta today than there were eight years ago.

Now, there are more colleges, there are more admissions into schools and universities in the Niger Delta today than they were eight years ago. Let us acknowledge where progress has been made and say yes, we have made progress, but there is need to make more progress and then, we make more.

What would you say has been you biggest achievement?

That there is hope for every Nigerian today. When we came in eight years ago, there was disillusion, there was despair, many Nigerians were out and were not prepared to come back.

After eight years in charge, what advice do you have for the new man waiting in the wings?

I will say, study what we have done and continue to build on the good foundation. I will not expect that the new man will take everything lock, stock and barrel, but there are a lot of cushions on which he can continue to build; if he does that, then we are there.

How do you think the people of Nigeria will look back on your achievement?

The way they looked back at me after I had left government as a military leader. That time, people were more critical than this time, but I would not have been invited back, if people at the end of the day had realised that there was not a lot of good done during that time.

When people look at the eight years in perspective, two, three, five years from now, they would say 'oh, how wrong were some Nigerians when they were criticising me'.

Do you say that with great certainty?

With absolute certainty.

And what next after politics?

I'll go back to my farm. I am a farmer. I was called out of my farm. I will go back to the farm. I am looking forward to going back to farming.

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