By Tom Burgis, FT West Africa correspondent, in Lagos
The talks between a Chinese oil company and Nigeria about wresting some prime oil blocks sitting on 6bn barrels of crude from western energy groups raise some intriguing questions – even if officials warn that the deal is by no means sealed.
Firstly, the price. Oil men in Lagos talk of the Chinese putting $50bn on the table.
Secondly, how would the deal be structured? China has struck some huge bargains – in places such as Angola and the Democratic Republic of Congo – to provide sorely needed infrastructure in return for the commodities on which its fast-industrialising economy runs.
But previous efforts to reach such agreements in Nigeria have ended in acrimony and Chinese oil groups appeared to have switched tack to buying stakes in listed producers such as Addax.
A third conundrum is how the Nigerian government could sell stakes in the two of the 23 blocks under discussion whose leases run until 2019. Similarly, the production-sharing contracts that cover the five offshore blocks end only in 2020. These, though, are meant to be restructured, in any case, under a bill designed to overhaul the Nigerian energy sector that is before the national assembly.
In all 23 blocks – including the 16 that are up for renewal – there is also the small matter of whether the 49 per cent stakes CNOOC is asking would come from the holdings of the western majors or those of their joint-venture partners, Nigeria’s state oil company.
The proposals, which if completed in their entirety would more than double China’s reserves in Africa, throw up countless other posers.
Would the Chinese import their own labour, as they have elsewhere, to the Niger Delta, where the exclusion of locals has triggered rebellion?
Has a government that seemed less than enamoured of the Chinese as a strategic ally changed it mind or is it hoping to use the talks as a negotiating ploy with the western groups over the reform bill and the renewal of licences? Indeed, if it comes to a battle in the courts would such a deal end up making more money for corporate lawyers than for Nigeria?
Most importantly, will the talks lead to the investments – whether from east or west – that will restore sub-Sahara’s biggest energy industry to health? And, amid all the brinkmanship, will anything change for the mass of Nigerians whose lives have scarcely improved in half a century of crude production?