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Bloomberg: Nigeria Plans to Stop Funding Joint Ventures With Oil Majors

By Julie Ziegler

Nov. 5 (Bloomberg) — Nigeria, Africa’s biggest producer of crude oil, is planning to stop funding joint ventures with major oil companies and instead wants the money raised on international capital markets.

President Umaru Yar’Adua said that money spent by the government to finance partnerships with Royal Dutch Shell Plc, Exxon Mobil Corp., Chevron Corp. and others would be better used for public works and social services.

“Part of the reasons why we are restructuring our oil sector is to free the resources that we pay the oil companies under joint venture agreements for critical areas like power, education and health,” Yar’Adua said Nov. 2 in Wiesbaden, Germany, according to a statement from his office in Abuja, Nigeria.

Joint ventures with companies such as Shell, Total SA and Eni SpA are used to fund about 95 percent of projects of Nigerian National Petroleum Corp., the country’s state-owned oil company. The nation’s 2006 budget called for about $4.2 billion for joint venture funding, or “cash calls.”

Nigeria has more such ventures than other similar oil- producing nations, the country’s Minister of State for Petroleum H. Odein Ajumogobia said in an interview on Sept. 4.

Oil companies such as Shell have complained that the government’s retention of funds may prevent them from meeting an international deadline for ending gas-flaring by 2008.

Nigeria’s oil wealth has so far been unable to translate into prosperity, with a majority of the nation’s 140 million people living on less than $2 a day, according to World Bank data.

“We’ve not officially seen anything from the government so it’s too early to comment” on proposals to halt funding, Caroline Wittgen, a spokeswoman for Shell, said in an interview from Port Harcourt, Nigeria.

Michael Barrett, a spokesman for Chevron, declined to comment. Susan Reeves, a spokeswoman for Exxon, didn’t immediately respond to an e-mail seeking comment.

To contact the reporter on this story: Julie Ziegler in Lagos at [email protected] .

Last Updated: November 5, 2007 11:21 EST

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