Multinational oil companies plan $19.2 billion investments in Nigeria and nearby West African countries, but the Nigerian component could be come to a screeching halt if existing oil contracts are broken open to force higher tax rates into them, the head of Shell's Nigerian operation told the Offshore West Africa conference in Abuja on Monday.
The threat of broken contracts looms large on the Nigerian investment horizon, The Punch of Nigeria reported. The latest assault on multinationals follows a series of violent attacks on refineries in the Niger Delta that have killed both American and Nigerian workers, multibillion-dollar fines, demands that 25 percent of their crude be refined in Nigeria, that far more Nigerian nationals be hired on oil projects, and that they pay for expensive independent power plants and multibillion-dollar natural gas processing plants; multinationals oil company executives also face tax evasion charges and threats of arrest, are facing charges that they have built dozens of illegal airstrips, and have lost up to $500 million in single incidents of rampages by ethnic activists; meanwhile, criminal syndicates working from as many as 50 vessels at a time are stealing up to 100,000 barrels of crude per day from refineries, pipelines and flow stations. CIA Director Porter Goss recently warned Congress that Nigeria may become unstable. The strains of ethnic violence, secession movements, widespread corruption and profound poverty have only made the investment situation more perilous.
As a result of the concerted effort to undermine international investment in Nigeria, many companies are avoiding further investment onshore and are looking to trouble-free international waters as a more promising place to plunge their enormous cash reserves, several Nigerian dailies have reported in recent weeks.
As much as $10 billion of that investment could take place in the Gulf of Guinea, where ERHC Energy has substanrtial stakes in the Nigeria-Sao Tome and Principe Joint Development Zone and the Sao Tome and Principe Exclusive Economic Zone, which is estimated to hold some 11 billion barrels of oil. ERHC Energy is entitled to 14 percent of that by right, and has proposed joint ventures with Devon Energy, Peioneer Natural Resources and Noble Energy in three of the five blocks offered in Round 2.
Awards of concessions in five of the JDZ blocks are expected later this week or early next after a 30-day deadline for ExxonMobil to nominate its two 25 percent allotments in any two of the five blocks currently on offer, which like the five allotments ranging from 15 to 30 percent given to ERHC Energy were earned for services performed before the creation of the zone.
Block 1 was recently awarded to a consortium of ChevronTexaco, ExxonMobil and Energy Equity Resources, which has sold part of its 9 percent stake to a Nigerian independent for an undisclosed sum.
An Agence France-Presse report Monday, meanwhile, offered a powerful counterpoint to the Shell executive's statement at the conference. That report is available at
http://story.news.yahoo.com/news?tmpl=story&cid=1519&e=20&u=/afp/nigeriaoilunrest.
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