A Review of the Nigerian Energy Industry

Usan project to commence production next month

21 February 2012, Sweetcrude, ABUJA – French energy major, Total, said on Monday production from its Nigerian Usan offshore oil project would begin next month.

Petroelum Minister, Diezani Allison-Madueke, reconfirmed this at an oil and gas conference in Abuja on Tuesday.

“A major enhancement of deepwater oil production was achieved as a result of the arrival of the FPSO Usan into the Nigerian waters … in a few weeks oil production will increase by about 180,000 barrels per day,” Allison-Madueke said.

Nigeria has for decades milked profits from crude exports rather than investing in local downstream infrastructure. Refining capacity has fallen in the last decade, despite several government promises and missed targets.

Most of its motor fuel is imported, despite the fact that its crude is amongst the sweetest and lightest on the market.

All refineries will be working at 90 percent of their capacity in the next two years after maintenance is completed by the original construction companies, Allison-Madueke said. Currently all operate at below 30 percent.

The minister conceded there were major problems in Nigeria’s oil industry in a question and answer session.

“We are mindful of the challenges still within the sector, mostly characterised by sabotage, financial leakages, lack of structure and other deep-rooted inefficiencies … There is undoubtedly a need for change,” she said.

Chief amongst complaints by Nigerians is the massive corruption in the sector, which siphons off billions of dollars in a country of woefully inadequate infrastructure where the majority live on less than $1 per day.

A week of protests over fuel prices put Nigeria’s government under more pressure than ever to make good on long-unfulfilled promises to reform its corrupt energy sector.

Allison-Madueke said she expected an investigation by the Economic and Financial Crimes Commission that she set up last month in the wake of the protests to deliver results soon.

“They’ve been at it for the past three to four weeks since we invited them in, and I have no doubt they will soon come out with … a final report. But they work as an independent body, therefore I cannot facilitate or fast-track what they do,” she said.

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