WEF 2017: Delta deal could boost output quickly, says Nigeria's VP - African Business Magazine
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WEF 2017: Delta deal could boost output quickly, says Nigeria’s VP

WEF 2017: Delta deal could boost output quickly, says Nigeria’s VP

Nigeria could boost its oil production above 1.8m barrels per day (bpd) “very quickly” if the government is able to come to an agreement with communities in the restive Niger Delta, the country’s vice-president said on Tuesday.

Speaking at the World Economic Forum in Davos a day after his visit to the region, Yemi Osinbajo said that the government had entered into talks with representative groups in the Delta in a bid to hammer out grievances and bring an end to the recurring militancy that has once again plagued the region. 

“We’re close to about 1.7 to 1.8m [bpd], but we think that could improve very quickly once we’re able to sort out all the issues in the Niger Delta,” he said. “Yesterday I was in the Delta and that was possibly the first direct engagement at the level of the presidency with individuals there.”

Nigeria’s oil output tumbled from a peak level of 2.2m bpd before the militant attacks began to around 1.63m bpd in the third quarter of 2016. According to the government, Nigeria has the potential to yield 3m bpd. The Delta, the crucial Southern region which is home to some of the country’s largest oil reserves, has been a source of instability for decades.

Despite its abundant mineral wealth, impoverished communities have long complained that they see little of the economic benefits of an oil industry which has been blamed by NGOs for wreaking substantial environmental damage while ignoring local development. In recent months, militant groups have escalated campaigns against oil infrastructure, including targeting pipelines for demolition and theft.

Against the global backdrop of struggling oil prices, the effect on the industry has been dramatic. A recent monthly financial report from the Nigerian National Petroleum Company revealed that N12.754bn ($40m) was lost to theft across Nigeria in November 2016 alone. Osinbajo blamed the situation in the Niger Delta for a sharp drop in oil revenues last year.   

Osinbajo described this week’s visit as an attempt to reach out to stakeholders in the region, including representative groups such as the Pan-Niger Delta Forum, in a bid to reverse the gloomy prognosis and put an end to the militancy.

“We have spoken earlier to the Pan-Delta forum. The Pan-Delta Forum is a forum of leaders, youths and civil society groups in the Niger Delta including the various ethnicities and they are accredited by practically all the groups,” Osinbajo said. “They presented what they describe as dialogue issues and we think that’s a sensible roadmap as to what to do and what steps to take to resolve issues.”

Yet the vice-president also warned communities in the region that a long-term global shift away from oil meant that time was running short to successfully turn around the fortunes of the industry.

“We’re not always going to have the kind of value oil has today, in 30 or less years it may be less valuable,” Osinbajo said.  “The message to them is let’s take advantage of the window that we have, and we can’t afford the kind of militancy that leads to low oil production, and time is running out. Their response has been very positive – all they are saying is let’s engage, there are issues around justice and resource control. 

“It’s a sobering message and the facts are there for all to see,” he added. “This isn’t to frighten anyone or push anyone to negotiations.”

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Written by African Business Magazine

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