Stephen Odoi-Larbi
12 February 2008
Experts in the oil industry have warned that Nigeria stands the risk of losing its credibility as a reliable supplier of crude oil on the world market.
According to them, exports that have been held back because of rebel attacks would seriously affect Nigeria's credibility in the oil industry.
The Wall Street Journal reports that, anxiety over the latest Nigerian disruptions helped to push oil futures above $90 a barrel on Friday.
Nigeria is Africa's biggest oil exporter, and its crude, easy to make into gasoline, is highly prized by refiners. But oil companies have had to endure attacks on installations and kidnappings of staff.
The government "appears to have done little in the last few months to curb the violence in the country's oil-producing region," said Thomas Pearmain, a London-based energy analyst at consultancy Global Insight.
Nigeria was producing less than 2.2 million barrels of oil a day in December, according to the International Energy Agency, which watches oil markets on behalf of industrialized nations. Nigeria estimates it has production capacity of about three million barrels a day. The IEA estimates capacity of 2.47 million barrels a day.
The unrest comes at a time of rising friction between the Nigerian authorities and the international oil companies operating in the West African country. Nigeria's government last year said it wanted to renegotiate production-sharing contracts to give it a bigger share of revenue.
And financing issues have been raising tensions inside Royal Dutch Shell PLC's Nigerian joint venture, Shell Petroleum Development Corp. Shell has criticized the government for failing to abide by its funding obligations to the venture, 55% owned by state-run National Nigerian Petroleum Corp. and 30% owned by Shell.
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This is a showcase of the weakness of the government and outsiders have started noticing that the government demonstrates seriouse ineptitude to safeguard the security of the country. The government does a lot of talking about rule of law but there is no action to show the world it is up to the task of maintaining the security and integrity of the country. At the rate the situation is evolving, the condition in the country will soon, in the limit, be approaching that which is obtaining in the Congo unless the government quickly changes direction. It should be remembered that the longer the situation is allowed to persist like this the more difficult it will be to overcome the inertial and change the course. Strike while the iron is still hot! It is definitely time for tough and effective LEADERSHIP irrespective of whether you are feared or loved by the people as long as the security of the country is maintained, a situation which will definitely make the citizens happy and consequently the leadership will be happy for doing a good job. Present day Russia is a good example!