Nigerian oil workers protest killing of colleagues

Nigeria's oil sector employees have given the government an ultimatum to crack down on those behind the killings of two oil workers in the Niger Delta.

"We have issued a 14-day ultimatum to government and the security agencies to fish out the killers of two of our members," AFP quoted Bayo Olowosile, secretary of the Petroleum and Natural Gas Senior Staff Association (PENGASSAN), as saying on Tuesday.

The workers' bodies were found in Nigeria's volatile oil-rich South a week after unknown gunmen kidnapped them.

"PENGASSAN ...calls for full investigation of this cruel murder and the resultant prosecution of those responsible within 14 days, failing which our association may be compelled to take whatever action deemed appropriate to oblige the government to fish out the culprits," the union's representative added.

Nigeria's oil sector had previously warned of a strike, should the killings by local fighters continue, they said.

The country has been suffering from violence in the Niger Delta where foreign oil companies have been targeted by fighters seeking a fairer share of Africa's largest oil reserves.

Goldman Sachs chief included in Nigeria's new cabinet

Acting president appoints new ministers as he tries to return to a reform agenda

By Daniel Howden, Africa Correspondent

Nigeria's acting president included some surprises in his new cabinet one week after sacking the entire Government in Africa's leading oil producer. Goodluck Jonathan included a newcomer from Goldman Sachs and promoted the junior oil minister in what was seen as an attempt to return to a reform agenda after months of drift and paralysis in the crisis-stricken nation.


Only nine former ministers look set to be reappointed, among them Odein Ajumogobia, previously junior oil minister, who looks likely to be promoted after his former boss Rilwanu Lukman was omitted.

The acting president moved to assert his authority over the fractious Government, which has been paralysed since November, as President Umaru Yar'Adua has been suffering from a mysterious illness and has not been seen in public. Mr Jonathan has had to struggle for control with a cabal surrounding the first lady, Turai Yar'Adua, amid fears that a political crisis could worsen sectarian violence and undermine efforts to extend a ceasefire in the oil-producing Niger Delta.

Mr Jonathan produced a list of 33 names for the Senate to consider, and his only obvious concession to the powerful northern block around Mr Yar'Adua was the naming of his nephew Murtala. Further names are expected to be announced to bring the Government back up to its full complement of 42 ministers. No portfolios have been announced. Senate approval is expected before Easter.

"All of this will be very closely watched by investors," Razia Khan, head of Africa research at Standard Chartered, told Reuters. "Appointments will be key to determining whether the aim is to kickstart reforms ... or whether this is just politics returning to centre stage," she said.

The power struggle between supporters of Mr Yar'Adua, a Muslim northerner and Mr Jonathan, a Christian southerner, has dangerously mirrored north-south sectarian tensions in the country itself. Yesterday's list of names was a reminder of the complexities of balancing interest groups across 36 states and numerous ethnic groups in Africa's most populous country.

In addition to the sop to the Yar'Adua clan, was the inclusion of Sanusi Daggash, a minister of planning in the administration of former president Olusegun Obasanjo – another kingmaker in the background of the power games in the capital, Abuja.

Early interest among analysts focused on the choice of Olusegun Aganga, a London-based managing director at Goldman Sachs. His inclusion appeared to signal the acting president's intent to move ahead with critical banking reforms and bring in new-blood to what was seen as Yar'Adua's failing administration.

The nomination of Mr Agang – who heads up Goldman Sachs' hedge fund consulting services in London – comes as Nigeria is set to test its strength with foreign investors with a planned $500m debut global bond.

The extended power vacuum has seen renewed violence in the Niger Delta where last week car bombs set off by the region's leading militant group MEND signalled the end of a fragile ceasefire. It has also come as sectarian violence in the central city of Jos has claimed the lives of at least 400 people in two bouts of mass killings this year. The central Plateau State has become an explosive fault line in the deeply divided country with Christian and Muslim groups caught in a spiral of violence.

The first head of state from the Niger Delta, Mr Jonathan has attracted strong support from the US and Europe, which are both heavily reliant on Nigerian oil.

With Russia and China stepping up their involvement in Nigeria's massive oil and gas reserves, there is cautious support for the former vice president and Washington has put behind-the-scenes pressure on key figures in the country's political elite to allow Mr Jonathan to govern for the next year ahead of polls, expected in 2011.

However, the ruling PDP Party has called on the acting president not to run in future elections, and he faces strong opposition from the majority of powerful state governors should he be tempted to try.

9

The number of ministers, out of 42, from the old administration that Goodluck Jonathan has retained

OPEC seeks crackdown on speculators

By Alexander Kwiatkowski and Randall Hackley
Bloomberg News / March 23, 2010

"The market must be regulated to avoid excessive price volatility, said Mohamed al-Hamli of the United Arab Emirates"

GENEVA — Oil speculators, including traders at hedge funds and investment banks, intensify crude price volatility and need to be regulated, ministers of the Organization of Petroleum Exporting Countries said yesterday.

“Acute and excessive price speculation’’ is determining oil prices, Germanico Pinto, OPEC’s president and Ecuador’s oil minister, said at a conference in Geneva. “Prices are driven by something totally unrelated to supply and demand.’’

OPEC agreed last week in Vienna to keep production quotas unchanged as ministers expressed contentment with oil at about $80 a barrel. While prices are “not high at all,’’ and at a level that is acceptable to producers, the market must still be regulated to avoid excessive price volatility, according to the United Arab Emirates’ oil minister, Mohamed al-Hamli.

“We always have problems with speculators, especially noncommercial speculators,’’ Hamli told reporters at the conference. “We need some regulation, because we see prices very high and very low and sometimes they attribute this to OPEC.’’

Regulators and politicians blamed speculators for record oil prices in 2008. The Commodity Futures Trading Commission, or CFTC, has proposed rules to prevent investors from holding large amounts of energy futures following oil’s swing from a record $147.27 in July 2008 to almost $30 the following December.

The position limits the CFTC is considering would apply to any investor who owns oil and other energy futures that trade on the New York Mercantile Exchange and the ICE Futures Europe exchange in London. The restrictions, currently in a 90-day public comment period, are designed to control risk and keep a single trader from gaining too much control of the market.

“We welcome recent proposals by the CFTC to regulate energy contracts held by hedge funds, investment banks, and other speculators,’’ Hamli said at the UN Conference on Trade and Development’s inaugural global commodities forum. “We ask for greater regulatory oversight on markets over which we have no control.’’

All markets need speculators to some degree because they bring price stability, Richard Jones, deputy executive director of the International Energy Agency, said at the conference.

Pinto said oil market regulation is a matter for individual countries and Ecuador supplies crude only under term contracts.

Oil prices are in a period of “relative stability,’’ which may last “for the next months during this year,’’ Pinto said. OPEC member countries have a “comfortable cushion of spare capacity,’’ in excess of 6 million barrels a day, he added.

Crude oil for April delivery gained 57 cents, or 0.7 percent, yesterday to settle at $81.25 a barrel on the New York Mercantile Exchange. Futures have climbed 59 percent in the past year.

Nigeria: Why Opec Stopped FG, Others From Above-Quota Production

Adeola Yusuf

Lagos — Organisation of Petroleum Exporting Countries (OPEC) has said that it barred its members from above-quota production following revelations that they have over-supplied the market with over two million barrels of oil per day.

Nigeria and other 11 oil-exporting nations have disregarded their oil quotas, OPEC stated on Wednesday, baring them from further oversupplying the global market.

OPEC rose from its 156th Ordinary meeting in Vienna, admitting that its members, Nigeria inclusive, have over supplied the market with more than 2 million barrels per day.

Nigeria' oil production quota is 1.78 million barrels per day and the Minister of Petroleum Resources, former Dr. Rilwanu Lukman, who was at the meeting, commended OPEC, "for stabilising the price of crude oil at the international market."

He added that this new stand would protect member countries from undue exploitation by the international oil companies.

A delegate at the meeting in Vienna of the 12-nation said the group agreed to keep production targets unchanged while members were asked to curb overproduction, estimated at nearly two million barrels a day.

Fielding questions from the OPEC News Crew in Vienna, Lukman stated that the 50-year old organisation has played a prominent role in ensuring stability of the international crude oil market noting that it has weathered the storm so far in spite of efforts to frustrate it.

"Walking the OPEC memory lane, the body's greatest achievement in its 50 years of operation is survival, despite all the odds and influences to bring it down. The second achievement is the way it has been able to achieve its goals in the last 50 years of its existence and how the organization has also been able to check-mate the international oil companies (IOCs)," Lukman observed.

He said that notwithstanding the pressure from the outside to frustrate the so-called "cartel" as some interest groups would rather call the organisation, OPEC had survived this long and remained resolute in projecting its policies and programmes.

Lukman maintained that OPEC had always ensured that citizens of member-states received a fair deal from the development and production of their hydrocarbon resources by these IOCs.

He also reposed his confidence on the founding fathers of OPEC, saying they have shown sufficient commitment and have been implementing the OPEC mandate faithfully, especially in moderating and stabilising the crude price.

Dr. Lukman said that at some critical times lately, the OPEC conference had intervened in the global oil market to save what could have resulted in catastrophe as crude prices galloped.

The minister said the moderating influence of the OPEC conference had also built some market confidence and sustained investments in oil and gas development in member-states adding that oil consumers have become more receptive about OPEC because they have come to understand its activities better.

OPEC was founded in September 1960 and is billed to celebrate its golden jubilee this year. One major milestone to mark the event is Wednesday's inauguration of the New OPEC Secretariat, built and handed over to the organisation by the Austrian government

Iraqi oil increase could redraw the Gulf map

By Greg Priddy

It might seem premature to address how the world oil market and other regional powers will accommodate rising Iraq oil production capacity -- considering that the outcome of Iraq's recent election remains unresolved, and the process of putting together a governing coalition has barely begun. But some of the broad dilemmas that more Iraqi oil will create are structural in nature, and not terribly dependent on the new government's makeup. One thing's for sure: Both Saudi Arabia and Iran will face major challenges to their interests if this scenario plays out.

The Saudi-Iraq axis is simpler than the Iran-Iraq one. If Iraq's production capacity rises to even half of the clearly unrealistic 12 million bpd by 2020, which was a goal cited by Oil Minister Hussein al Shahristani, it will likely serve to maintain some of the current overhang of spare capacity for longer than would have otherwise been the case. This would prevent a retightening of the world oil market that may have put upward pressure on prices. Saudi policy will have to confront how to deal with this situation -- both in terms of whether to delay investment in their own capacity, and how to accommodate what has the potential to be a much stronger second-place producer within OPEC. At some point, Saudi Arabia may approach the new Iraqi government for a discussion about how to renegotiate the system of OPEC quotas in order to accommodate Iraq's increasing oil production with both countries' interests in mind. But depending on how the bilateral relationship evolves, achieving this sort of cooperation may be problematic. Iraq has already added written provisions into its service contracts with foreign oil companies dealing with government-mandated output cuts. This demonstrates that the Iraqi side is beginning to grapple with the idea that it may at some point be adding capacity to an oversupplied market and need to exercise restraint.

The implications of increasing Iraqi oil are even more complicated when it comes to Iran. US secondary sanctions under the Iran Sanctions Act (ISA) have been reasonably successful at hindering development of additional Iranian oil and gas production capacity. While they haven't stopped activity altogether, they've kept it at a level where the volume of oil available for export is likely to continue its gradual slide over the next decade as production declines and domestic demand continues to grow. In this scenario, an eventual retightening of the world oil market with attendant higher prices would clearly be in Iran's national interest, helping it to maintain revenues even while volumes fall a bit during the next several years. The increase in Iraqi capacity, however, could prevent this from happening -- taking a toll on Iran's government finances, and potentially creating tension between the two Gulf neighbors. Given the substantial amount of Iranian influence within Iraq, and the still-latent disputes about the border and control over the Shatt al Arab waterway, this market-driven tension could potentially spill over into the geopolitical realm.

All of this, of course, is dependent on whether Iraq's internal stability permits large-scale oil development to move at a rapid pace, which remains a big "if" at this point. Still, it's not just a matter for the oil market. This situation has the potential to substantially redraw the map of state finances and national power in the Gulf.

Greg Priddy is an analyst in the Global Energy and Natural Resources practice at Eurasia Group.

Nigeria Leader Close to Finalising Cabinet - Sources

ABUJA (Reuters) - Nigeria's Acting President Goodluck Jonathan held final consultations with senior ruling party officials and state governors on Monday as he decides who should be in his new cabinet, presidency sources said.

Jonathan sacked all government ministers last Wednesday in a bid to assert his authority a month after assuming executive powers and the fast appointment of a new team could do much to alleviate uncertainty in Africa's most populous nation.

Presidency sources have said Jonathan will submit his list of nominees by the end of Tuesday to the Senate for approval and that he is likely to reappoint around half of the outgoing cabinet.

"The nominees have sailed through security screening so the list will definitely go to the Senate by today or tomorrow," one of the presidency sources said, asking not to be identified.

"The Senate has given assurances that they will expedite action on the confirmation of the nominees so we expect the confirmation process also to start this week," the source said.

Jonathan took over as acting head of state in early February, ending months of near-paralysis in government due to the absence of President Umaru Yar'Adua, who was receiving treatment for a heart ailment in a Saudi clinic.

Yar'Adua has since returned to Nigeria but remains too sick to govern. Sources in the presidency say he is in a mobile intensive care unit and Jonathan has been unable to see him.

Choosing a new cabinet which retains a large number of ministers suggests Nigeria's broad policy direction is unlikely to change and could let Jonathan push ahead more authoritatively with his agenda in the 14 months left of this presidential term.

Sources have said former Minister of State for Petroleum Odein Ajumogobia is likely to be nominated as the new oil minister in the OPEC member nation while outgoing Defence Minister Godwin Abbe, who has overseen an amnesty programme in the oil-producing Niger Delta, would likely be re-appointed.

(Writing by Nick Tattersall; Editing by Giles Elgood)

Three Nigerian Oil Workers Killed By Armed Robbers

PORT HARCOURT, Nigeria (Reuters) - Three Nigerian oil workers were found dead in the Niger Delta Saturday after being attacked by armed robbers, a spokesman for the state-run oil firm NNPC said Monday.

Kidnappings for ransom, armed robbery and car jackings are common in the Niger Delta, home to widespread poverty despite its vast oil and gas reserves. But most victims are released unharmed after payment of a ransom.

The three workers, employed by NNPC's National Petroleum Development Company, were attacked while travelling to Abraka in Nigeria's southern Delta state, the police said.

Foreign oil firms are forced to spend millions of dollars a year on security for their staff because of high crime rates in the Niger Delta. Authorities were investigating the incident but no suspects have been arrested.

(Reporting by Austin Ekeinde; Writing by Randy Fabi)