Multinational oil exploration and production companies at the weekend, met with the Federal Government to iron out thorny issues relating to their continued operations in the Niger Delta.
The companies have been showing reluctance to assist the government realize some of its objectives in the nation�s oil and gas industry as a result of the restive situation in the Niger Delta region where armed militant groups have perpetrated a reign of terror by attacking oil workers and the companies� operational facilities.
One aspect of the government�s policies that it does not seem to be enjoying the support of the oil majors is towards investment in the development of infrastructures in the downstream sector of the nation�s petroleum industry to check the perennial petroleum products supply crisis in the country.
At the weekend, President Umaru Yar�Adua in his meeting with some of the companies emphasized the need to extract a firm commitment from them to partner with his administration to invest in the downstream sector of the oil industry, particularly in the domestic gas supply facilities capable of feeding and developing the nation�s fertilizer, petrochemical and power sectors of the industry.
This is aimed at helping the nation earn some economic value from the utilization of its huge gas resources as well as realize its ambition to end the flaring of natural gas in the operations of its oil industry.
Apart from changing the provisions of its joint operating agreement with the oil majors, government, last year, commenced negotiations with the companies with a view to reaching a consensus on fresh terms for the development of the nation�s offshore oil exploration
Nigeria�s aspiration is to grow its economy by 6.8 per cent per annum by 2010, a development the World Bank says would demand the provision of more energy infrastructure to meet domestic demand.
As part of the negotiations, the government stressed the need to help realize its objectives of eliminating gas flaring, an arrangement that has failed to be realized as a result of the dearth of the basic operational infrastructures.
But, the multinationals have always rejected claims that they were responsible for the inability to realize this objective, rather they always raise the issue of inadequate funding by government to facilitate the execution of identified joint venture projects.
As part of the ongoing reforms in the petroleum sector, government has indicated its intention to inject more predictability into financing energy projects in the country by enlisting well-capitalized Nigerian banks to join in the syndication of funding packages for interested operators,
Government�s contributions to the annual budget of about $7billion by the joint venture operators for the execution of projects has always ranged between $3billion to $5bllion, a development that has always resulted in the deferment or scaling down on the scope of the projects.
Nigeria, Africa’s largest oil producer, has a production quota of about 2.5 million barrels per day(bpd) allocated to it by the Organization of Petroleum Exporting Countries (OPEC), though indications are that actual output has been cut by at least a quarter as a result of the unrest in the Niger Delta.