Reports that French oil giant Total is ready to invest $20 billion in Nigerian oil and gas development spread through energy markets in an unlikely bit of positive news for the beleaguered African producer.
Total, Europe’s third-largest oil company and largest refiner, has its hands full trying to resolve a strike that has paralyzed its refining capacity in France and dampened global oil prices.
Nigeria, Africa’s largest oil producer, is still getting to know an acting president appointed only two weeks ago, Goodluck Ebele Jonathan. It was Jonathan who put the $20 billion figure on Total’s planned investment after a meeting with the French company’s head of exploration and development.
The company itself would only confirm investments of $7 billion, according to news agency reports, saying that the remaining portion would be from partners, who remained unnamed.
Nonetheless, the report was positive for Nigeria, which has been plagued by militant attacks in the Niger Delta that had cut production to nearly one-third. A recent amnesty program has pacified the situation to the extent that production has partially recovered.
It was Jonathan, who is from the southern Nigerian region that is seeking more equitable distribution of oil revenues in the militant actions, who spearheaded government efforts to resolve the situation as vice president.
Jonathan was named acting president by parliament due to President Umaru Yar’Adua’s long illness, which kept him virtually incommunicado in treatment in Saudi Arabia for months. Reports that Yar’Adua returned to Nigeria Wednesday added further piquancy to the situation, though there is reportedly no prospect of him resuming power immediately.
Two of the projects that will receive Total’s investment have been previously announced – the Usan deepwater offshore field, scheduled to go into production in 2012, and exploration in an oil block in the Niger Delta. Two more areas are being studied, according to reports citing a Total spokesman. Total produced 230,000 barrels of oil a day in Nigeria last year, and will increase that volume this year, company officials said.
The Nigerian statement hailed the planned investment as a sign that international companies were regaining confidence in Nigeria, and Total officials did not dispute that. Nigeria is also trying to reorganize its oil industry to make it more profitable, causing concern among foreign partners that the government might seek a larger portion of oil revenues.
By Darrell Delamaide