A Review of the Nigerian Energy Industry

Nigeria, Jamaica to resume oil talks

05 August 2012, Sweetcrude, KINGSTON – NIGERIA and Jamaica are to discuss the possibility of reviving the Jamaica-Nigeria oil facility which was suspended under a cloud of controversy in 2007.

This is according to a communique issued after talks between visiting Nigerian president, Goodluck Jonathan, and Jamaica’s Prime Minister, Portia Simpson Miller, on Friday, the Jamaica Observer reports.

“President Jonathan and Prime Minister Simpson Miller expressed concern over the status of Jamaica-Nigeria technical cooperation in oil, as the Jamaica-Nigeria Oil Facility had been suspended,” the communique said, adding: “They agreed that both countries would explore cooperation in this area once more, as well as in the supply of liquefied natural gas (LNG).”

The prime minister refused to add any details at a press conference at Jamaica House Friday, despite being pressed by reporters.

The first oil deal between Jamaica and Nigeria was negotiated in 1978 and was motivated, according to local energy expert Dr Raymond Wright, “by security concerns” and the desire to “lock in a steady supply of crude from a trading partner” which Jamaica considered friendly.

This was seen in the context of the volatility of the oil market in the 1970s, especially with the Arab-Israeli conflict in the Middle East.

That clash of religions over land, led to the curtailing of oil
supplies to the western world in 1973.

According to Dr Wright, oil security was critical and then prime minister, Michael Manley felt that friendly countries like Nigeria could help, so he turned to president Olusegun Obasanjo who was then
seeking to establish Nigeria as a major oil exporter.

The Petroleum Corporation of Jamaica, PCJ, has reported net income of some US$4.6 million over the period of Jamaica’s trading of Nigerian oil. During that period, the PCJ used the services of oil traders, Vitol SA and Trafigura Limited.

Following a change of Government, Nigeria cancelled the deal in December, 1993 and decided that Jamaica and other benefactors would have to negotiate new agreements. PCJ tried to renegotiate the deal for some seven years without success, until Obasanjo returned to power in
1999 and a new deal was concluded a year later.

PCJ immediately sought a new trader, settling with Trafigura for a US7.5 cents per barrel commission, which was later increased to US12 cents. The profit was used by PCJ to finance research on oil exploration, renewable energy, conservation and the possibilities of LNG.

However, the contract with the Dutch firm, Trafigura, ended in controversy in 2007 over a $31 million payment made to the then ruling People’s National Party (PNP). The contract was put to tender and the PCJ selected Glencore as the new trader. But, Jamaica has lifted no oil from Nigeria since the contract was awarded to Glencore Energy Limited.

The communique issued Friday disclosed that a Jamaica-Nigeria commission would be appointed to carry on negotiations on this and a number of other proposals, including for a bilateral air services agreement, which would enable Jamaica to serve as a gateway for Nigeria and the rest of Africa into the wider Caribbean, as well as becoming a hub for Nigerian goods and services. However, Trinidad and Tobago reported similar discussions with Jonathan’s team earlier last week.

There is also interest in resuming the Nigerian Technical Aids Corps Programme, TAC, under which Nigeria had deployed to Jamaica experts in education, nursing and woodcarving, while Jamaica provided training in tourism, as well as an air services bilateral agreement.

President Jonathan left the island Friday, after a two-day visit during which he addressed a joint sitting of both Houses of Parliament at Gordon House on Tuesday. He was accompanied by a 70-man delegation including his wife, Dame Patience Jonathan, Nigeria’s Minister of Foreign Affairs, Ambassador Olugbenga Ashiru, and Minister of Culture and Tourism, Dr Edem Duke.

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  • Nigeria/Jamaica relations cum economic collaboration have been in an on/off mode for as long as we can remember. Let’s hope that this time around it takes off without the usual hitches.