Nigerian official sees jobs as key to taming violence

Houston Chronicle: Nigerian official sees jobs as key to taming violence

By KRISTEN HAYS
Copyright 2008 Houston Chronicle
May 8, 2008, 10:53PM

Nigeria’s director of petroleum resources says militant violence that hinders oil production in the Niger Delta may have been avoided had incoming companies paid as much attention to refining when they entered the country in the 1950s as they did to exploration and production.

Tony Chukwueke told a luncheon audience at the Offshore Technology Conference on Thursday that the western African nation is trying to make up for that amid reform efforts that include encouraging investment in refining to provide jobs and increase capacity and efficiency.

Had Nigeria focused more on refining early on, he said, militants who attacked oil pipelines transporting the country’s natural resources elsewhere may have embraced the industry by working at a refinery.

“They would not blow that up because that’s their job,” he said.

According to the U.S. Energy Information Administration, Nigeria has more than 32 billion barrels of proven oil reserves and hopes to expand that to 40 billion barrels by 2010. Much of those reserves are along the Niger River Delta, the site of much militant violence, pipeline vandalism and kidnappings since December 2005 that have led to repeated shutdowns.

Of foreign operators, Royal Dutch Shell has lost the most production since 2005, followed by Chevron and Agip, the EIA said.

Those attacks also have hurt Nigeria’s domestic refining capacity, already hindered by technical problems and lack of feedstocks.

The delta rebel group, Movement for the Emancipation of the Niger Delta, has pledged to continue the attacks unless the government increases sharing of oil wealth, government budget transparency and local control of oil property.

Sebastian Spio-Garbrah, an analyst with New York consultancy Eurasia Group who did not attend the conference, said Thursday that the Nigerian government’s efforts to sign a comprehensive peace agreement with the militia as well as continuing efforts to attract more investment “will do much to spur peace efforts there.”

Shell lost an average of 156,000 barrels a day of production in the first quarter this year, and it said earlier this week that some of that output was still shut after an attack on a Shell facility last week. Chukwueke, a geophysicist who worked for Shell for 28 years before returning to Nigeria to head the government’s petroleum resources division, said Shell’s production is expected to resume by the end of May.

Chukwueke appeared in place of Odein Ajumogobia, Nigeria’s minister of state for energy, because Ajumogobia had to stay home in the aftermath of recent Niger Delta violence and the end of a strike by Nigerian workers in Exxon Mobil’s operations there. The weeklong strike, launched April 24, disrupted 800,000 barrels a day of Exxon Mobil’s production.

Spio-Garbrah said that unlike Shell, most of Exxon Mobil’s Nigeria operations are offshore and less vulnerable to militant attacks.

Chukwueke said Nigeria aims to increase the share of energy jobs that go to its people to 70 percent from 40 percent in two years, while increasing output to 4 million barrels of oil per day from 2.8 million barrels. To that end, the country is aggressively soliciting investment in refining and natural gas production as well as more oil operations onshore and offshore.

“We will try to move away from the errors of the past,” he said.

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