Energy Source

Lagos | It was an obvious choice. Urbane, respected in the industry yet steely enough to push tough reforms, Odein Ajumogobia had been tipped for months to step up from deputy to minister and take the helm of Nigeria’s oil industry. His task would be to steer into law the Petroleum Industry Bill, the most ambitious overhaul of sub-Saharan Africa’s biggest energy sector in its 50-year history.

Except that it won’t be. Instead, following acting president Goodluck Jonathan’s unveiling of his cabinet on Tuesday, Mr Ajumogobia will be in charge of burnishing Nigeria’s pummelled image abroad as foreign minister.

For the first time, a woman will be in charge of the most macho of industries in the most macho of countries.

Crude from a recent spill slicks the creeks beside the settlements of the Edagberi clan in the Niger Delta. Villagers say their livelihood - long based on fishing - has been eroded by oil extraction. (Photo: Tom Burgis)

The main militant umbrella group in the Niger Delta has declared an indefinite ceasefire. Amid proposals of shifting a share of oil profits to the regiona and pledges to retain surrendered combatants, the rebels who have suppressed Nigerian oil production for years are waiting for the government to make good on its promise, writes Tom Burgis from the Niger Delta

On October 7, the Movement for the Emancipation of the Niger Delta, an umbrella organisation of the militant groups that have waged an insurgency against Nigeria’s oil industry for most of this decade, issued a statement denouncing a government amnesty that had convinced several top commanders and thousands of footsoldiers to surrender their arms.

“We will fight for our land with the last drop of our blood regardless of how many people the government of Nigeria and the oil companies are successful in bribing,” said the group, giving voice to a hardline faction that demanded full talks on how oil revenues are divided, above and beyond the amnesty.

Ten days ago came another statement declaring a resumption of hostilities against “the Nigerian oil industry, the Nigerian armed forces and its collaborators” following the end of Mend’s ceasefire.

Then, on Sunday, there was a dramatic change of tone. Declaring an “indefinite ceasefire” to allow for talks with the government, Mend, always fond of a biblical citation, wrote: “There is a time for everything, and a season for every activity under heaven … a time to tear and a time to mend.” (Ecclesiastes).

The announcement is a fillip to a government that is losing billions of dollars of revenue after years of attacks that have reduced the output of sub-Saharan Africa’s biggest energy sector by as much as 40 per cent.

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.

Nigeria’s oil sector has long produced uncertainty in prodigious quantities, but the past few days may mark a record. Depending on who you listen to, crude output in Africa’s biggest producer has slipped dramatically.

The latest in a string of worrisome pronouncements came on Wednesday, when Lamido Sanusi, the respected new governor of the central bank, was quoted as telling an audience in Kenya that production had fallen to about 1m barrels of oil a day.

If the governor being quoted correctly (the central bank has been reluctant to issue a copy of his speech), something pretty monumental has happened since the first three months of this year, when the bank’s own official figure was an average of 1.68m b/d of oil, gas and condensates.