Nigeria to repair pipeline network, boost crude production

Nigeria plans to repair pipelines in the Niger delta, increasing production of crude by the oil-rich country and easing worldwide supply concerns.

While most of the country's 36.2bn barrels of proven oil resources are in the Niger river delta, militant attacks on pipelines and other infrastructure had hit production. "With the decrease in terrorist attacks in the Niger delta, the government will repair the pipeline infrastructure, thereby increasing the present production," Emmanuel Egbogah, special advisor to the Nigerian president on petroleum matters, told Mint during his visit to India on 8 December. Egbogah was in Delhi to attend the second India-Africa hydrocarbons conference.

Nigeria is a member of the Organization of Petroleum Exporting Countries (OPEC) and has the second largest hydrocarbon reserves in Africa after Libya. It is the chief contributor to 15 per cent of overall crude imported by India. India depends on imports to meet its oil needs and is particularly vulnerable to price volatility. As the world's fifth-largest energy consumer, India imports 75 per cent of its requirements and accounts for some 3.5 percent of global consumption. It will become the third-largest oil importer after the US and China before 2025, with energy demands expected to almost double by 2030, the International Energy Agency says.

"We have a capacity to produce 3.67mn bpd. We can increase the oil production to around 2.506 mbpd," Egbogah said. "With no more violent attacks, the pipeline infrastructure is safe and repair of the infrastructure will increase the production." Volatility has marked crude oil prices, which reached a record US$147 per barrel in July last year and have since fallen by about half. New York Mercantile Exchange crude was trading at $72 per barrel on Thursday evening. Nigerian National Petroleum Corporation (NNPC) managing director Mohammed Barkindo told lawmakers that with peace prevailing, oil firms would carry out repairs at facilities that had been vandalised and return to previously no-go areas, PTI reported on 11 December.

The firm has earmarked US$285mn for new oil projects, the agency reported. India and China, both growing economies, need fuel reserves to feed their soaring energy needs. Africa is estimated to have around 10 per cent of the world's oil reserves and a number of Indian hydrocarbon firms are interested in acquiring hydrocarbon blocks in Nigeria. ONGC-Mittal Energy Ltd, (Omel), a venture of state-owned Oil and Natural Gas Corp. Ltd (ONGC) and Mittal Investments Sarl, a firm owned by the family of steel magnate L.N. Mittal, was awarded rights to explore for oil and gas in two blocks in 2006. Some of the oil firms operating in Nigeria through joint ventures with NNPC include Royal Dutch Shell Plc, Chevron Corp, ConocoPhillips Co, ExxonMobil Corp and Total S.A. "The situation in Nigeria is changing with the NGO scrutiny increasing a lot," said Nikhil Hira, a partner at consulting firm Deloitte and Touche and based in Kenya.

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