China has not given up on its attempt to become a player in the Nigerian oil industry. Consequently, the $50 billion offer to the Federal Government to enable it acquire 49 per cent stake is still on the table. This translates to some six billion barrels in oil reserves.

Several state-run Chinese oil firms, including the China National Offshore Oil Corporation (CNOOC) are currently in talks with the government to advance the Asian country's interests. Their business proposals include incursions into some oil blocks held by Royal Dutch Shell.

The Presidential Adviser on Energy Matters, Mr. Emmanuel Egbogah, said the deal which was proposed in June could help the country fund its joint ventures with oil majors. "Chinese people are not buying fields ... they want to acquire reserves in Nigeria. Specifically the application was to acquire reserves of six billion barrels which we are currently discussing," Egbogah explained on the sidelines of an energy conference in New Delhi, India. "They are prepared to spend as much as $50 billion," he told Reuters.

He also said that the country's inability to fund its joint ventures with International Oil Companies (IOCs) had negatively impacted capital expenditure requirements for increasing production levels from the existing joint venture fields. He disclosed that Nigeria's funding shortfall had steadily increased to $6 billion from a few million dollars when joint venture arrangements were created in the early 1970s. The funding shortfall has forced Nigeria to consider alternative ways to bridge the gap. Shell, ExxonMobil and Total have all had to provide billions of dollars in bridge financing to the Nigerian National Petr-oleum Corporation (NNPC) to plug funding shortfalls.

Egbogah however affirmed that the Petroleum Industry Bill (PIB), expected to be passed into law this month, would address a lot of problems faced by the industry. Reuters quoted unnamed industry executives as saying that Nigeria is using the spectre of a Chinese bid for its oil as leverage in difficult contract renewal negotiations with its existing Western oil partners. Minister of State for Petroleum, Mr. Odein Ajum-ogobia, had in September stated that China would not be given all the reserves it was seeking. But the NNPC could sell stakes in joint ventures with existing oil partners if Beijing offered the right price.

THISDAY had reported that CNOOC recently made a $50 billion offer to the Federal Government under the auspices of Sunrise Consortium. The report was being given consideration as instructions had gone out for the data on the blocks to be released to Sunrise by the Department of Petroleum Resources (DPR). A negotiating committee was said to have been set up in NNPC to handle discussions with the company. The committee is to consider the request and determine an optimum price for the reserves in the blocks.

The IOCs had expected the automatic renewal of licences that expired last year. But the Federal Government stalled that move, preferring to renew them for only one year in order to take into account the realities of the present times with the passage of the PIB.

After intense horse-trading, the Federal Government last month renewed three shallow water oil licences jointly operated by the NNPC and ExxonMobil, granting the US energy giant leases a further 20 years with the option to renew again. Other western oil companies including Shell, Chevron and Total have commenced negotiation on their oil licences as well as new deals ahead of the passage of the PIB.

In a related development, a pipeline feeding the Nigerian crude grade Qua Iboe has ruptured, according to West African crude trading sources. The unnamed pipeline, according to a source, is able to feed between 120 -140,000 b/d to the crude grade. He said the cause was unknown but was "apparently not sabotage." Qua Iboe is one of Nigeria 's key crude grades and produces around 400,000 b/d, according to Qua Iboe terminal operator ExxonMobil.