Nigeria’s worst oil spill in a decade of over 40,000 barrels at its Bonga oil field is set to cost the beleaguered Nigerian economy further billions.
Floating economy?
Bonga was discovered in 1993, first oil in 2004, and cost $3.6 billion constructed by Samsung 120km offshore in deepwater. Bonga’s target was to produce 225,000 barrels of oil and 150 million standard cubic feet of gas per day. It is operated by SNEPCo – 55% on behalf of the Nigeria National Petroleum Corporation (NNPC) under a Production Sharing Contract (PSC). SNEPCo has a Joint Operating Agreement (JOA) with Esso 20%; Nigerian Agip Exploration Limited (NAE) 12.5% and Elf Petroleum Nigeria Limited 12.5%.
Nigeria’s production has fallen at Bonga and a serious of other minor spills including at Shell’s $1.1 billion Nembe Creek Trunkline – mostly attributed to “vandalism” – is causing increased political tension and slimmer government coffers at a time of national angst at fuel subsidy withdrawal compounding the international economic slowdown.
At this time, the total costs are unclear, but there is strong evidence that it is directly impacting fisherman, and has doubled the price of fish at markets. Coupled with other economic turmoil in Nigeria, a tightening of environmental governance is vital to restore belief that the resource curse can be beaten.
Why is the media not all over this story like it was with the Gulf of Mexico oil spill – here an entire nation will be going without protein owing to the lower fishing effort – people could even starve! World help Nigeria! Once again.
Maria D, Victoria Island, Lagos
Thanks for your comment. There remains little doubt that Africa remains a parochial concern for too much global media. The increasing flexing of muscles of African governments over their rights to determine and manage access to their natural resources is bringing global best practice to the oil and gas industry offshore and onshore. I know most Nigerians would settle for greater anonymity coupled with a safer oil industry … Especially if it could also be demonstrably fairer. Maria, maybe I am expecting too much!
Our oil industry is a mess. Chevron are sinking a rig on fire right now with explosives. They say no fire, no oil spill, no worry. People have died and the water in oil.
Winston Or.
Thanks Winston.
Little doubt the NNPC needs to increase its governance!
Yet in these increasingly global world, incidents like this fire are impacting confidence in IOCs. Chevron shares hit by 1 per cent: http://www.thestreet.com/story/11379092/1/chevron-slides-on-nigeria-fire-incident.html.
But the failings of NNPC to project confidence in their governance and leadership contributes to risk taking:
http://www.osundefender.org/?p=25633. Imagine how much harder hit IOC shares could be with a stronger governing body?
SlickEconomist
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