Wednesday, July 27, 2011

Nigerian future oil output in the balance

27 July 2011

LAGOS — Nigerian oil output has rebounded to levels not seen in years, but crucial issues after April elections remain unresolved and could have a major impact on future growth in Africa's largest oil producer.

The boost in production has occurred thanks to relative calm in the main oil region, the Niger Delta, hit by years of militant attacks before a 2009 amnesty deal. According to OPEC's 2010 figures, Nigeria overtook Iran as the cartel's second-largest crude exporter.

But new investment has stalled over long-delayed reforms, expired leases for major oil firms are yet to be renewed and the relationship between the industry and the country's oil minister has been brought into question.

At the same time, the calm in the delta is a fragile one, analysts say, since it has been achieved mainly through payouts to ex-militants, with underlying issues of poverty and unemployment unaddressed.

"You're back to where you were 10-15 years ago," Kayode Akindele of Greengate Strategic Partners financial advisers said of production, adding that it will now be vital to focus on the future.

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