Nigeria's oil hopes

David Knott
London
[email protected]

On Mar. 1, Nigeria declared Olusegun Obasanjo its new president elect, the country's first democratically chosen leader in 15 years.

The return to democracy in Nigeria after years of sometimes brutal military rule has been welcomed by foreign petroleum companies with investments there.

Whether the new political set-up will lead to an end to the civil unrest, kidnappings, and killings that have caused oil companies to shut in operations remains to be seen.

Press reports from Nigeria since the election increasingly show widespread dissatisfaction with the election process, which suggests that there is no guarantee that protests targeting oil operations will die down.

About 30 million people out of an eligible 50 million voters turned out, with 63% voting for Obasanjo and 37% for his rival, former financial minister Olu Falae.

Immediately after the results were declared, Falae said, "What happened on Saturday was a farce. The degree of fraud was so monumental as to make nonsense of the entire process."

Fraud claims

While you might expect Falae to say that, it appears that his claims are justified and yet that the result was a fair reflection of the voters' wishes.

Former U.S. President Jimmy Carter led a party of 60 United Nations officials overseeing the voting process, and he said afterwards that fraud was so widespread it was impossible to judge whether the results were accurate.

Carter said, "There was a wide disparity between the number of voters observed at the polling stations and the final result that has been reported from several states."

Yet U.K. Foreign Secretary Robin Cook said, "We understand the local and international monitors, including the British and other EU monitors, have judged that the results reflect the views of the Nigerian people."

What Cook's remark implies is that both sides cheated to the same degree. Nigeria's Transition Monitoring group confirmed that both sides cheated and said electoral officers "colluded across the country" to falsify results.

New regime

Obasanjo, himself a former military leader of Nigeria, acknowledged voting irregularities but asked his opponents to "join hands with all of us because, at this point in time, that is what we need."

Obasanjo will be sworn in on May 29, and overseas investors are looking for him to make a quick decision to endorse an International Monetary Fund agreement for aid in return for opening government accounts to scrutiny.

This would lead to the previously murky financial details of the Nigerian National Petroleum Corp. (NNPC) being made public, which in turn should ease the annual row between government and foreign oil companies over investment needs (OGJ, June 22, 1998, p. 32).

Royal Dutch/Shell will be hoping that Obasanjo will also be quick to rubber-stamp a planned investment of $8.5 billion over 5 years, under a proposal that would require 30% of the costs to be met by NNPC (OGJ, Feb. 15, 1999, p. 32).

Even further civil unrest cannot dim Nigeria's allure: with Brent crude selling at only $10/bbl, the country's low-cost oil will be a magnet for cash-conscious foreign oil firms.