Watching the World Change ahead in Nigeria?

Reading recent news reports from Nigeria, it would appear at first that business continues as normal-that is, with an exceptionally large share of problems.

For example, late last year, Italian state electricity utility ENEL canceled a contract to buy liquefied natural gas from Nigeria LNG Ltd. (OGJ, Dec. 30, 1996, p. 28).

The contract was one of the main reasons Nigeria LNG's owners, Royal Dutch/Shell, Elf Aquitaine, and Agip SpA, along with Nigerian National Petroleum Corp., sanctioned the $4.5 billion development plan.

Elsewhere, during the recent holiday, 60 Nigerian workers on an oil storage and offloading barge reportedly took 28 expatriate crew members hostage for 5 days. They were demanding wages comparable to foreigners'.

The barge is apparently one operated by the McDermott-ETPM joint venture for Mobil Oil Nigeria Ltd. The Nigerian navy was called in, storming the barge Dec. 27 to seize control and free the hostages.

Disputes history

The taking of hostages on the barge was the latest in a long string of workers' protests in recent years, some of which have turned ugly.

Among foreign companies, Shell has been most affected. Threats to expatriate and contractors' workers from local communities helped persuade the company to shut in production in the Ogoni region.

Ogoni regional protests reached new heights after Nigeria's government executed nine anti-government campaigners, including Ken Saro-Wiwa (OGJ, Nov. 20, 1995, p. 37).

Shell placed much of the blame for Nigerian peoples' troubles with government, which has not plowed sufficient money from oil production back into local communities (OGJ, Apr. 22, 1996, p. 34).

A major problem for foreign firms in Nigeria has been government's inability to pay its share in oil industry projects. Reduction of government's share in Nigeria LNG was one reason the partners decided to invest at last.

But the government is currently preparing a national budget and was expected to make it public during the week beginning Jan. 6, according to a U.K. Foreign Office official.

Sale planned

In the latest issue of OPEC Bulletin comes evidence that Nigeria's government may recognize it has overstretched itself financially.

The magazine reported that Chief Anthony Ani, Nigeria's finance minister, said the government plans to divest itself of its 57% stake in joint-venture producing operations during 1997-2001.

But Ani told OPEC Bulletin its joint venture partners, Shell, Mobil, Agip, Elf, Chevron Corp., and Texaco Inc. had not been officially notified of the divestment.

These partners will reportedly have the opportunity to strengthen their stakeholdings in their ventures, but Nigerian private companies "could be offered fiscal incentives to bid for an equity share."

Ani also reportedly said that government is considering privatization of the country's four refineries, which have combined crude distillation capacity of more than 430,000 b/d.