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Oil companies cautious about amnesty
« on: October 17, 2009, 08:29:43 PM »
By Elisha Bala-Gbogbo

October 17, 2009 08:50PMT
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Oil companies are reluctant to celebrate the “success” of the Federal Government’s amnesty deal even though output levels from the Niger Delta rose by more than 200,000 barrels per day with the resumption of operations in some fields which were previously closed.

“It is premature to start making specific comments on this subject (Post amnesty),” Femi Odumabo, Chevron’s general manager Policy, Government and Public Affairs said. “However, we are pleased with the progress that we are all witnessing and pray for it to be long lasting through all stakeholders’ continued embracement of peace, dialogue and the rule of law.”

Increased production

But the Federal Government is happy with the progress made through the amnesty as output levels from the oil-rich Niger Delta increased from about 1.6 million barrels in June, to 1.87 million barrels for September loading. The gain was as a result of the stability created by the Movement for the Emancipation of the Niger Delta’s (MEND) ceasefire while the amnesty offer lasted.

The period afforded international oil companies, which control about 90 percent of Nigeria’s oil output, the confidence to lift some of their ‘force majeure’, a legal protective measure used by a company unable to meet contractual deliveries due to actions beyond its control.

Shell lifted the embargo on its 200,000 barrel per day output outage on Bonny Light, and 115, 000 barrels per day facility at the East Area (EA) field in early September. Total also lifted its force majeure on the Amenam field at the end of the same month.

Too early to rejoice

Despite the gains in output levels, the multinationals are not carried away by the peaceful situation just yet.

Although Shell’s Nigerian spokesperson declined to comment on the situation, the company’s chief executive, Peter Voser, on Wednesday lamented that the oil giant’s onshore output currently stands at 120,000 barrels per day, down from about 300,000 barrels per day produced before militant activities escalated in the Niger Delta.

Mr. Voser said Shell’s onshore production in Nigeria had been “heavily curtailed by violence” in the oil-rich region. “We have a huge proportion of onshore production shut in at this stage. I think we are now at 120,000 bpd and we used to be close to 300, 000,”

Movement warns of fresh onslaught

However, in the early hours of last Friday, the foremost militant group in the area, the Movement for the survival of the Niger Delta warned that it is set to “resume its hostilities against the Nigerian oil industry, the Nigerian armed forces and its collaborators with effect from 00:00Hrs, Friday, October 16, 2009.”

This is despite a former senior commander of the militant group, General Boyloaf’s dismissal of movement’s recent threats. He had said the group lacked the capacity to launch new attacks.

Boyloaf, along with other senior commanders, Farah Dagogo, Government Tompolo, and Ateke Tom, are beneficiaries of government’s benevolence after accepting the amnesty offer.

2 million barrels

Using the purported success of the amnesty programme as a yardstick, the federal government believes oil output is on course to reach 2 million barrels per day for the first time since July 2008.

The government expects output to average 2.09 million barrels per day by 2010, 2.28 million barrels by 2011, and 2.5 million by 2012.

Some analysts agree that these expectations are realisable. “I think for the next few months we will see production pick up and 2 million barrels per day next year is definitely achievable,” said Philip Walker, sub-Saharan Africa analyst at the Economic Intelligence Unit. “But if the government can’t deliver on its promises then it will get worse again.”

But others warn of being overly optimistic about the outcome of the amnesty offer. Alex Vines, head of Africa Programme at London-based think tank, Chatham House, said “Let’s be cautiously optimistic. This is an opportunity for Nigeria’s oil industry that shouldn’t be missed. It is the most positive sign we have seen for some time but we will have to see how the Nigerian government reacts if spoilers step in.”