Nigeria to tackle reform, unrest at oil conference!

By Joe Brock
ABUJA (Reuters) - Stalled oil reform, domestic gas supply shortages and stability in the Niger Delta will be discussed at a key Nigerian oil summit in Abuja this week.

The annual Nigeria Oil & Gas Conference, which begins on Monday, offers the opportunity for the major players in Africa's biggest energy industry to give updates on current operations and contact potential investors.

Investors will be looking for reassurance on the outlook for oil and gas production at a time when Africa's most populous nation is suffering political uncertainty over the health of ailing President Umaru Yar'Adua and who will succeed him.

Nigeria's Acting President Goodluck Jonathan -- who took full executive powers two weeks ago, over two months after Yar'Adua left for medical treatment in Saudi Arabia -- has put peace in the Niger Delta high on his priority list.

Yar'Adua was the driving force behind an amnesty programme in the delta last year under which thousands of gunmen laid down weapons, an initiative which has brought more than six months without any major militant attacks on oil installations.

But Yar'Adua's absence has raised concerns about delays to the programme and militants have threatened to resume attacks unless the government demonstrates it can quickly get the amnesty programme back on track.

"On the one hand (Jonathan) wants to show he has militants' grievances in mind but of course he has to appease the oil majors and assure the security of oil production," said Kissy Agyeman-Togobo, West African analyst at IHS Global Insight.

Attacks on oil and gas installations in the Niger Delta in recent years have prevented the OPEC member from pumping much above two thirds of its 3 million barrels per day (bpd) installed capacity, costing it an estimated $1 billion a month in lost revenues, according to the central bank.

Nigerian crude is favoured by refiners in the United States and Europe because it is light and easy to process into fuel products. The instability helped push world oil prices to record highs near $150 a barrel in 2008.

For a FACTBOX on Nigerian oil output outages click here:

INVESTMENT OUTLOOK

Royal Dutch Shell, Nigeria's oldest foreign oil partner, has been the worst hit by militant attacks and investors will be looking for details on the group's plans for any more divestments of its onshore operations in Nigeria.

Shell announced a month ago it had agreed to sell its stake in three onshore licences and Chief Executive Peter Voser said this month the company would be willing to sell more of its Nigerian assets if it made financial sense.

The Anglo-Dutch giant's regional executive Vice President, Ann Pickard, is due to address the conference, as are executives from U.S. giant Chevron, France's Total, local firm Oando and NNPC officials.

NNPC is the focus of an ambitious Petroleum Industry Bill (PIB), intended to break the state-owned firm into profit-driven units able to tap international capital markets.

But the legislation has been stalled by disputes between the government and foreign oil firms, which have warned the bill could threaten billions of dollars of investment if it goes ahead in its present form.

Under the current version, the government would be allowed to renegotiate old contracts, impose higher costs on oil companies and retake acreage that firms have yet to explore.

Oil Minister Rilwanu Lukman, junior oil minister Odein Ajumogobia and NNPC head Mohammed Barkindo are due to address the conference on the outlook for the country's oil industry and the impact on domestic energy supplies.

Despite sitting on the world's seventh largest natural gas reserves, Nigeria has been unable to meet local fuel needs, with the government often laying the blame at the feet of international oil companies (IOCs).

"Domestic gas supply is going to be high on the agenda at the conference," said Holly Pattenden, Head of Oil and Gas at Business Monitor International

"IOCs are going to become under more and more pressure to give their gas to the domestic market rather than export it through LNG (Liquefied Natural Gas)."

Delegates were due to arrive in Abuja on Monday with speeches, seminars and discussions due on Tuesday and Wednesday.