Nigeria, an OPEC member, is important to world energy markets because it is one of the world's largest oil exporters. The country is a major oil supplier to the United States and Western Europe. Nigeria was the fifth largest supplier of oil to the United States in 1996, with average exports of 595,000 barrels per day.

GENERAL BACKGROUND
Since achieving independence, from the United Kingdom in 1960, Nigeria has been under military rule for 26 of its 37 years. The current military regime, under General Sani Abacha came to power in November 1993, after overthrowing an interim civilian government that was appointed by the previous military regime of General Ibrahim Babangida. The elections that occurred in June 1993 were annulled, and Abacha abolished local, state governments and the National Assembly. In June 1994, Moshood Abiola, winner of the elections, was arrested for treason after proclaiming himself president.

On October 31, 1995, death sentences were given to Ken Saro-Wiwa and eight other Ogoni activists for their alleged involvement in the murders of four local government officials in May 1994. The nine were hanged on November 10, 1995 in Port Harcourt. Saro-Wiwa had led campaigns on behalf of his tribe, the Ogoni, to protest environmental, economic and human rights damages inflicted upon Ogoniland. The executions caused another international condemnation of the Abacha regime. South African President Nelson Mandela successfully campaigned for Nigeria's suspension from the Commonwealth. The United States tightened existing sanctions, and considered imposing harsher sanctions including an oil embargo. The EU suspended all development cooperation, and imposed limited sanctions in January 1996. President Mandela pushed for more punitive Commonwealth sanctions, but in September 1996 the Commonwealth decided not to impose them. The Commonwealth, at its heads of government meeting in October 1997, agreed to continue the suspension of Nigeria's membership. The Commonwealth also issued a statement that Nigeria faces expulsion, and sanctions including an oil embargo if civilian rule is not established by Nigeria's own October 1998 deadline.

During his Independence Day speech in October 1995, General Abacha announced timetables for free elections and a return to democratic rule (by October 1998). Strict regulations were set up governing the creation of national political parties. These included required registration by September 1996, and exorbitant registration fees. Five parties-- United Nigerian Congress Party (UNCP), Democratic Party of Nigeria (DPN), Committee for National Consensus (CNC), Grassroots Democratic Movement (GDM) and the National Centre Party of Nigeria (NCPN)-- met the conditions before the scheduled local elections that were held in March and April of 1997. The UNCP and the DPN, the two parties most closely associated with the current regime, won the majority in local elections held in March 1997. Legislative elections (for the 36 state assemblies) are slated for December 1997, and for April 1998 (for the National Assembly). Executive elections (presidential and gubernatorial) are scheduled for August 1998.

Several factions in Nigeria are urging General Abacha to run in the upcoming presidential elections. The leadership of the NCPN and the CNC are unconcerned about Abacha's possible candidacy, while the DPN has invited Abacha to join the party as their Presidential candidate. A group of Catholic bishops in Nigeria have urged Abacha to abstain from the upcoming elections to ensure that the transition from military to civil rule is a credible one.

In March 1997, exiled Nobel Prize winning author Wole Soyinka, and 11 others were charged with treason, including being responsible for a series of bombings in various parts of Nigeria. The United States rejected a request by Nigeria to question Ambassador Walter Carrington and members of the embassy staff about their knowledge of the bombings.

On November 17, 1997, General Abacha dissolved his cabinet. Finance Minister Ani, the foreign minister and the capital territory minister were retained. Oil Minister Dan Etete was originally not re-appointed, and his portfolio was handed over to Salihu Mohammed Jega, the permanent secretary at the ministry. Jega, also a member of the OPEC board of governors, was Nigeria's official representative at the OPEC meeting held in November-December 1997. Genreal Abacha's reconstituted cabinet, announced on December 16, 1997, included 16 former cabinet members including Dan Etete who retained the oil ministry position.

The Nigerian economy has expanded an average 2.3 percent annually since the Abacha regime assumed power in 1993. Real gross domestic product (GDP) grew by 3.3 percent in 1996, and GDP is expected to rise by an additional 3.8 percent in 1997. This growth is being spurred by continuing expansion in the agriculture sector and increased revenues from oil. Inflation, which was 73 percent in 1995, fell to 29 percent in 1996. The decline in inflation is seen as a direct result of the tight fiscal policy implemented by the ruling regime. Finance Minister Anthony Ani stated in July 1997 that foreign reserves have topped $7 billion up from $4.1 billion in December 1996.

Nigeria's public sector debt continues to be a problem. The country's total external debt is estimated to be $34.7 billion in 1997, with over $19 billion owed to the Paris Club of official creditors. There is little hope for a rescheduling of the debt in the near future due to Nigeria's strained relations with many donor nations and multilateral institutions. The World Bank and the International Monetary Fund (IMF) have been critical of Nigeria's decisions to maintain a dual exchange rate and to delay privatization of parastatal entities. In June 1997, the World Bank reduced its budget for Nigeria by 20 percent, and decreased the number of financed projects in Nigeria from 20 to 12.

Nigeria plays a significant role in regional politics. The country is the leading member of the 16-nation Economic Community of West African States (ECOWAS), and General Abacha is the current ECOWAS chairman. The ECOWAS Monitoring Group (ECOMOG), a peacekeeping force composed primarily of Nigerian troops, played an important role in helping to end the seven-year old Liberian civil war. ECOMOG forces, under the command of Nigerian General Victor Malu, have been authorized to enforce an embargo on Sierra Leone similar to the action used against Liberia. The embargo is in response to a collapse of talks between ECOWAS and representatives of the junta that toppled elected President Ahmad Tejan Kabbah in May 1997.

Nigeria is currently involved in a territorial dispute with Cameroon over the oil-rich Bakassi Peninsula. Numerous clashes between armed forces of the two countries have been reported. In September 1996, the United Nations sent a mediation team to the region. Both countries have submitted the case to The International Court of Justice in the Hague (ICJ). Nigeria claims that an 1858 treaty places the Peninsula in its territory. Cameroon contends that Nigeria offered it the region after Cameroon refused to help Biafran rebels during Nigeria's 1967-1970 civil war. More recently, Nigeria has accused Cameroon of siphoning off 130,000 barrels per day (bbl/d) of oil from regional fields. The ICJ is expected to finalize the case in 1998. The court has set March for the hearing and judgement will be delivered in June.

The Nigerian government has questioned Equatorial Guinea's sole ownership of the Zafiro field. At issue is whether Zafiro is a separate field, or is it part of an oil structure that straddles the territorial waters of both countries. U.S.-based Mobil started oil production from the field in September 1996 under a contract with Equatorial Guinea. France's Elf Aquitaine (Elf) holds the lease on the Nigerian block, OML 102, which lies just 3.5 kilometers (2 miles) north of the Zafiro field. Elf and Nigeria claim that seismic data of the field confirms that it extends into Nigerian territory. Nigeria has called for a determination of the boundary between the two nations and for the establishment of joint-field development. Negotiations between Nigeria and Equatorial Guinea have met with little success so far.

OIL
Estimates of Nigeria's oil reserves range from almost 16 billion to just under 22 billion barrels. Almost all of these reserves are found in relatively simple geological structures along the country's coastal Niger River Delta. Most of this oil lies in about 250 small fields, the majority of which hold reserves of less than 50 million barrels each. At least 200 other fields are known to exist and contain undisclosed reserves. The country's crude oil reserves have gravities that range between 21^o API and 45^o API. Nigeria's main export crude blends are Bonny Light (37^o API) and Forcados (31^o API). Nigeria hopes to raise its oil reserves to 25 billion barrels by 2000, but field operators, who mostly are involved in joint-ventures (JVs) majority-controlled by the Nigerian National Petroleum Corporation (NNPC), have postponed exploration and field development because the NNPC has failed to pay its share of capital spending on time.

Exploration and Development (Upstream)
Foreign oil companies are beginning to search actively in deepwater areas off Nigeria. While the main onshore exploration and production activities are undertaken in JVs, deepwater and frontier exploration utilize production sharing agreements (PSAs). In a typical PSA, the operator covers all exploration and development costs. If oil is discovered the operator pays tax and royalties to the government when it starts to produce. The PSA terms in Nigeria are attractive enough to spur deepwater exploration by several major oil companies.

Several private Nigerian firms are involved in the upstream petroleum sector. Early in 1997, Yinka Folawiyo Petroleum confirmed an oil discovery 25 kilometers (15 miles) offshore. Atlas Petroleum began development on the Obe field, located offshore the Niger Delta, in April 1997. Atlas will also decide on a production start-up on its Eleujebe discovery by the end of 1997. Over 20 local firms have been awarded oil mining leases, including three of the coveted deepwater licenses. The local firms of Express Petroleum, Dubri Oil, Consolidated Oil, and Amni Petroleum are currently in production. To increase domestic participation in the upstream sector, the Oil Ministry has issued new guidelines for the development of "marginal" fields in Nigeria. Abandoned or under exploited fields (currently 183) will be recovered from JV partners and production rights will be re-allocated. The fields may be acquired by Nigerian citizens whose company is incorporated in the country. Foreign firms may participate as a technical partner, but they are limited to a maximum of 40 percent equity.

Production
Nigerian crude oil production has averaged 2.21 million bbl/d for the first nine months of 1997. This is nearly half a million bbl/d over the country's 1.865 million bbl/d OPEC quota. Nigeria's OPEC quota will rise to 2.042 million bbl/d in 1998, as a result of the latest OPEC meeting held in late November 1997. Nigeria produced 2.05 million bbl/d in 1996, and 1.88 million bbl/d in 1995.

A JV operated by Shell accounts for nearly half (approximately 925,000 bbl/d) of Nigeria's total oil production. The Shell JV is composed of NNPC (55%), Shell (30%), Elf (10%) and Agip (5%). Shell's production is divided into two regional divisions, each with its own export terminal. The Eastern or Bonny division has production centered in seven groups of oilfields, with the largest being Nembe (production capacity 120,000 bbl/d). The other groups are Cawthorn Channel (70,000 bbl/d), Ekulama (50,000 bbl/d), Imo River (25,000 bbl/d), Kolo Creek (25,000 bbl/d), Adibawa (20,000 bbl/d) and Etelelbou (20,000 bbl/d). The Western or Forcados division has six main groups of oil fields: Estuary South Bank (40,000 bbl/d), Jones Creek (30,000 bbl/d), Olomoro (20,000 bbl/d), Otumara (20,000 bbl/d), Sapele (20,000 bbl/d) and Egwa (15,000 bbl/d).

Ethnic violence and sabotage have hindered Shell's production in Nigeria. In 1993, Shell withdrew from the Ogoni areas of the Rivers State after threats to company personnel. Prior to Shell's departure, the Ogoni region had accounted for about 28,000 bbl/d of production, or about 3 percent of the JV's total output. In May 1996, Shell announced a plan to restart production in Ogoniland if the safety of its workers could be ensured. Shell is offering to clean up oil spills in the area and increase assistance in community and environmental projects. Shell announced in July 1997 that it has recently reopened negotiations with Ogoni representatives, including members of the Movement for the Survival of the Ogoni People (MOSOP), which was founded by Ken Saro-Wiwa in 1990. The leadership of MOSOP, which has been banned by the Nigerian government, stated that Shell has not reopened dialogue with them concerning the situation in Ogoniland. Production in the Western division was shut down several times in early 1997, and Shell had to declare force majeure on several export shipments of crude. In March 1997, six flow stations near the city of Warri were seized by protesters, and 127 Shell employees were held hostage. Shell and the Chevron-led JV suspended operations of their flow stations in the Warri region in April 1997, but operations resumed a month later after negotiations with ethnic leaders. Shell reported that 47,000 barrels of oil were spilled in the first five months of 1997 due to burst pipelines, and it estimated that 95 percent of spills were acts of sabotage. The company refuses to pay compensation for oil spills that have been caused deliberately.

Nigeria's second largest JV involves NNPC (60%) and Chevron (40%). Chevron's current output is around 400,000 bbl/d from approximately 25 producing fields. The fields are located in the Warri region of the Western Niger River Delta. Major fields include Meren (85,000 bbl/d), Okan (50,000 bbl/d), Benin River (30,000 bbl/d), Opuekeba (20,000 bbl/d), Benue River (15,000 bbl/d) and Mefa (15,000 bbl/d). Crude exports are shipped from Chevron's Escravos terminal. About two-thirds of the JV's production is offshore in shallow water. The Chevron JV also has suffered production disruptions due to ethnic unrest, sabotage of facilities and theft. Chevron plans to increase production capacity to 600,000 bbl/d by 2000, but budget constraints by the NNPC may hinder developments.

Another JV, between NNPC (60%) and Mobil (40%), has production capacity of approximately 400,000 bbl/d of crude and an additional 110,000 bbl/d of condensate (which is excluded from the OPEC quota). The majority of Mobil's crude production is located offshore in the Qua (Kwa) Iboe group of fields. Major fields of the Qua Iboe include Edop (160,000 bbl/d), Ubit (110,000 bbl/d) and Asasa (125,000 bbl/d) which came on stream in 1996. The Edop production platform, Nigeria's largest, has the capacity to produce 250,000 bbl/d, and it is expected to reach that level in 2002. Production capacity is expected to reach nearly 530,000 bbl/d in 1997, which will make the Mobil JV Nigeria's second largest crude producer.

An Agip-operated JV consists of nearly 30 small fields, predominantly onshore of the central Niger River Delta, and has current production of about 150,000 bbl/d. Partners in the JV are NNPC (60%), Agip (20%) and Phillips Petroleum (20%).

Texaco is operator of five offshore fields that currently produce about 60,000 bbl/d. The crude is exported through the Pennington terminal. The NNPC holds a 60 percent interest in this JV, and Texaco and Chevron each hold 20 percent shares.

A JV between Elf (40%) and NNPC (60%) currently produces approximately 125,000 bbl/d from 11 onshore and offshore fields. In 1996, Elf and Mobil were in dispute over operational control of an offshore field containing 500-700 million barrels of reserves and a production potential of 90,000 bbl/d. Elf, which has designated it Amenam, argues that over 80 percent of the field's reserves lie in its offshore OML 99 block. Mobil, which calls the field Kpomno, contends that the field's offshore location makes it better suited for development through its facilities. In May 1997, the NNPC suspended negotiations with Elf on the project, and production start-up will now be after the year 2000.

Other foreign oil companies involved in Nigeria (either producing or involved in PSAs or JVs) include Pan Ocean, Tenneco, Total, British Gas, Deminex, Sun Oil and Ashland. In June 1997, Ashland's PSAs were suspended by Oil Minister Dan Etete after Ashland sold its rights to Perenco. A June 16^th statement issued by the Oil Ministry stated that "This termination order has become necessary because Ashland sold its rights and interests in the oil-production licenses without seeking the written consent of the government as required by law." Ashland also is a participant in a JV with Total, that has yet to begin production. Ashland produced nearly 18,000 bbl/d from the blocks of its PSA in 1996. In August 1997, Ashland filed a $60 million breach of contract lawsuit against Total for allegedly violating a confidentiality agreement between the two companies. Ashland contends that the breach led to the loss of its PSAs with the NNPC.

A major problem facing Nigeria's upstream sector has been funding from the government. Funding to the NNPC from the Finance Ministry has been below budgeted levels since 1993. The decrease in funding has led to a growth in arrears owed to foreign JV partners, and to a decrease in their exploration/development activities. In 1997, the government financed only $2.1 billion of the $3.3 billion needed to fund the NNPC's activities. The government also paid nearly $122 million in arrears owed to oil JVs. Shell is still owed nearly $150 million. Finance Minister Ani announced in November 1997 that funding for JVs will be improved in 1998.

Exports
The majority of Nigeria's crude exports are destined for markets in the United States and Western Europe. Asia is increasingly becoming a destination for Nigerian crude. For the first nine months of 1997, Nigeria has exported an average of 699,000 bbl/d of crude to the United States, and it continues to be the fifth largest supplier of crude to the United States.

The exports are primarily shipped from six main terminals: Bonny, Brass River, Escravos, Forcados, Kwa Iboe, Odudu and Pennington. Nigeria has recently signed term export contracts for crude (20,000 bbl/d) with the neighboring countries of Benin, Cote d'Ivoire, Guinea, Mali and Niger. The agreements are seen as helping to strengthen ties among ECOWAS countries. Agreements with Gambia, Ghana and Togo (for 60,000 bbl/d) were signed earlier in 1997.

Refining and Downstream
Nigeria's four refineries have a combined nameplate capacity of over 430,000 bbl/d, but problems including sabotage, fire, poor management and lack of turn-around maintenance (TAM) sharply decrease actual output. Refinery problems have led to massive fuel shortages throughout Nigeria. In May 1997, one such shortage took place after all four of the refineries were either closed or had production cut due to maintenance problems. Shortages of refined products have forced the NNPC to import an average of nearly 90,000 bbl/d annually since 1994, and the government has authorized increases to help ease shortages. Oil Minister Etete announced in September 1997 that TAM would begin at all four refineries in October. Finance Minister Ani stated that government funds allocated to the NNPC for refinery maintenance over the past two years had been diverted elsewhere, and that this diversion had played a significant role in the fuel shortages. Petroleum product smuggling for resale to neighboring countries (Nigerian prices are highly subsidized) has exacerbated the country's fuel shortage.

Nigeria's largest refinery, the 150,000 bbl/d plant located in Port Harcourt, supplies most of Eastern and Northern Nigeria. The Port Harcourt refinery was closed briefly in mid-1996 to debottleneck related transportation facilities. A lack of TAM has resulted in the refinery operating at only 78 percent capacity in 1997. Nigeria's oldest refinery (built in the mid 1960's) is also located in Port Harcourt. Lack of maintenance has shut down the 60,000 bbl/d refinery for most of 1996 and 1997.

The 120,000 bbl/d capacity refinery in Warri is Nigeria's second largest. The refinery, located in the southwest Niger River Delta, was producing only about 75,000 bbl/d by the summer of 1997. The Warri refinery was closed for a scheduled 45-day TAM in February 1994. Due to alleged corruption by maintenance contractors, however, the Warri refinery was closed for over 10 months. In June 1995, a special Nigerian government committee completed a review of the incident. It reported that an estimated $59 million worth of equipment and supplies had been requested by and supplied to contractors, but under $7 million worth of these supplies were actually used in maintenance procedures.

The 110,000 bbl/d refinery in the central Nigerian city of Kaduna supplies north and central Nigeria, including the capital of Abuja, with refined products. An explosion in a cooling unit in May 1997 shut down the refinery operations. Previous fires and explosions at the plant had reduced capacity by nearly 50 percent. In October 1997, Total was awarded a contract to refurbish, conduct TAM, and operate the Kaduna refinery for a 3-year period. Estimated costs for repairs and necessary maintenance range from $100-$220 million. Mobil and Shell each concluded their separate assessments of Nigeria's three remaining refineries in September 1997. The assessments are to determine what steps are necessary to bring the refineries up to normal operation. Total performed a similar assessment on the Kaduna refinery before receiving the repair and operation contract, and there is speculation that Shell and Mobil will be awarded similar agreements for the other refineries.

NNPC is constructing a pipeline link between the country's four refineries in order to provide improved distribution of products to the country's outlying areas. There are over 20 regional storage and distribution depots located throughout Nigeria, and they are connected to the refineries and port terminals by a 3000-kilometer (1800-mile) pipeline network. The majority of fuel delivered to the depots is conducted by a domestic tanker service, which has been the focus of theft and diversion of shipments. Coastal marine vessels, and rail trucks are also utilized in fuel deliveries.

NATURAL GAS
Nigeria contains an estimated 104.7 trillion cubic feet (tcf) of proven natural gas reserves (tenth largest in the world). Ultimate associated and non-associated gas reserves may reach as high as 300 tcf. Associated gas is produced from roughly 170 fields, many of which are located onshore in swampy areas of the Niger River Delta. Due to a lack of gas utilization infrastructure, Nigeria flares 70-75 percent of the gas it produces. Although high, this is significantly below the over 98 percent flared in 1971. Following public concerns over environmental issues in late 1995, Shell announced in September 1996 that it would begin a $250-million gas utilization project to eliminate gas flaring at the company's production facilities in the Niger River Delta. The venture, known as the Odidi Associated Gathering project, is anticipated to come online in 1999 and will gather 80 million cubic feet per day (mmcf/d) of gas now flared at five Shell-operated fields. Chevron's Escravos Gas Project, which saw startup of its first phase in September 1997, will reduce flaring by 40 percent.

The Escravos project is one of a number of projects Nigeria is undertaking in order to better utilize its natural gas reserves. The first phase was completed in six years at a cost of $570 million. It currently processes 185 million cubic feet (mmcf) of associated gas (from the Okan and Mefa fields) into 145 mmcf of dry natural gas, 8,000 bbl/d of LPG (liquefied petroleum gas), and 2,000 bbl/d of condensate. The LPG will be exported, the first shipment left in September 1997 bound for the United States, and the dry gas will be used domestically. The condensate is fed back into the NNPC-Chevron JV's crude oil production. When the second phase is complete, the Escravos project will be able to process 285 mmcf of associated gas.

In January 1995, the government announced plans to build a gas export pipeline to supply Benin, Togo, and Ghana with Nigerian natural gas. The project would consist of 960 kilometers (576 miles) of pipeline, including 390 kilometers (234 miles) of existing pipeline. The gas would be used to generate electricity in the three countries and supply fuel to an aluminum smelting plant in Ghana. World Bank studies have shown that the countries could save about $500 million in primary energy costs over 20 years. The plan is still in its formative stages, however. Chevron and Shell have expressed interest in the pipeline project, and Ghana is said to be considering purchasing the gas from neighboring Cote d'Ivoire.

There is also a plan to collect NGLs (natural gas liquids) from the offshore Oso field. Oso is located 30 miles south of the Qua Iboe terminal. It came online in 1992 and currently produces 110,000 bbl/d of condensate. In February 1995, a Mobil (51%) and NNPC (49%) JV awarded contracts worth $664 million for the Oso Phase II project to recover an estimated 350 million barrels of NGLs from the field. The project includes construction of a production platform capable of producing 50,000 bbl/d of NGLs. The NGLs will be piped via a proposed 42-kilometer (25-mile) line to the Bonny Island export terminal, where the NGL stream will be separated. A final output of 27,000 bbl/d of propane, 14,000 bbl/d of butane, and 9,000 bbl/d of pentane plus is envisioned. At Bonny Island, refrigerated storage facilities will be built that will be capable of holding 700,000 barrels each of propane and butane and 300,000 barrels of pentane plus. The NGLs are destined for the export market. The project is expected to be online by the end of 1998.

Several projects have been proposed to use flared associated gas to produce methanol. A NNPC/ Mobil project entails using gas from the Oso NGL plant as feedstock for a methanol plant with the capacity to produce 900,000 metric tons annually for export. Standard Petrochemical Industries Limited (SPIL), a private Nigerian firm, in conjunction with several foreign firms, has proposed to build combined methanol/MTBE plants utilizing associated gas. SPIL and the NNPC each would hold 30 percent share in the venture with foreign chemical firms holding the remaining 40 percent. Other methanol projects proposed include a NNPC - Penspen (UK) consortium 2,500 metric tons per day plant in the Western Niger Delta, and the Energo Gas Project, which consists of three small methanol plants with total capacity of 250,000 metric tons per year.

Projects are also being developed to increase the amount of associated gas re-injected into fields to help boost oil production. In 1994 78.4 bcf of gas was re-injected. The Mobil/NNPC JV has several projects aimed at increasing oil production by re-injection of associated gas. Gas injection or compression projects are underway at the Mobil-operated Edop, Ekpe and Ubit fields all located offshore.

Nigeria's most ambitious gas project is the $3.5-4 billion LNG (liquefied natural gas) facility being constructed on Bonny Island. When completed in 1999, the facility will be able to process 5.2 million tons per year (mmt/y) of LNG. The consortium developing the project, Nigeria Liquefied Natural Gas Corporation (NLNG) is comprised of the NNPC (49%), Shell (25.6 %), Elf (15%), and Agip (10.4%). The project will consist of a two LNG train liquefaction plant and a pipeline system joining the plant to the supplying gas fields. NLNG anticipates using non-associated gas reserves to supply the plant initially, before linking associated gas fields, which will comprise 65 percent of supply by 2010. Shell is spending $750 million to develop the Soku Gas Project which will gather gas from non-associated and associated gas fields to supply the NLNG project. Non-associated gas reserves will include the Shell-operated Soku (4.4 Tcf) and Bomu (1.1 Tcf) fields, the Agip-operated Oshi and Idu fields (2.5 Tcf total), and Elf's Ibewa, Obagi, and Ubeta fields (2.5 Tcf total). Several customers have signed long-term purchase agreements with NLNG: the Italian electric utility, ENEL (2.5 mmt/y); Spain's Enagas (1.2 mmt/y); Turkey's Botas (0.8 mmt/y); and Gaz de France (0.4 mmt/y). Transgas of Portugal is negotiating with NLNG a 22-year deal for annual deliveries of 0.4 mmt/y. NLNG partners also are considering the possibility of building a third LNG train, assuming that purchase agreements can be secured. Distrigas, one of the main users of imported LNG in the U.S., has cancelled plans to purchase 0.5 mmt/y of gas, because of disagreements over the pricing formula of the LNG and the use of NLNG's tankers to transport the cargoes.

The NLNG project has faced other problems as well. In November 1996, ENEL tried to terminate its contract for the purchase of LNG. ENEL claimed force majeure because political and environmental opposition had blocked the planned construction of the re-gasification terminals on the coast of Italian near Rome. The site near Rome was ENEL's alternative location. The original location of the terminal was to be near the city of Trieste, but ENEL also was unsuccessful in winning approval to build at that location. NLNG rejected the force majeure claim, and in December 1996 initiated arbitration proceedings against ENEL. NLNG and ENEL signed a preliminary agreement in September 1997 to resolve the dispute. Under the new agreement, NLNG is to deliver LNG to a terminal in northern France owned by Gaz de France. The gas would then be conveyed to ENEL's power plants. A new gas pipeline also is planned from northern France to Italy. ENEL said the final agreement will be signed before the end of 1997.

Nigeria is also seeking ways to increase domestic usage of natural gas. The country's current transmission and distribution pipeline network is only 1,000 km (600 miles) in length, and primarily delivers gas from the Delta regions to the Lagos area. Over 75 percent of the estimated 186 bcf of gas consumed in 1996 was used for power generation. The National Electric Power Authority (NEPA) has recently signed an agreement with Shell to begin receiving gas at its Sapele power plant in the Niger Delta. Industry is the other domestic user of gas in Nigeria. The Shell ALSCON Gas Project will supply gas to a government-owned aluminum smelting facility. Shell and the Nigerian Gas Company (NGC), a subsidiary of the NNPC, have also signed an agreement to supply industries in the eastern states of Nigeria with gas from the Imo River field. Chevron also has begun supplying gas to NGC following startup of the Escravos Gas Project.

ELECTRICITY & COAL
Nigeria plans to expand its electric generation, transmission, and distribution systems. Currently only 30 percent of the population has access to electricity, but NEPA plans to boost this share to 85 percent by 2010. NEPA's plan would call for an additional 15,000 kilometers (9,000 miles) of transmission lines and 14 new power plants. To help increase foreign participation in the electric power sector, Nigeria is considering offering Build, Own, Operate (BOO) projects. Negotiations are currently underway between Mobil and the NEPA over construction of a 350 megawatt BOO plant in Rivers State in southern Nigeria.

The Nigerian Coal Corporation (NCC) plans to resume operations at its Owukpa mines by the end of 1997. Nigeria produced 0.11 million short tons (mmst) of coal in 1995 and consumed 0.12 mmst. The three mines at Owukpa have a production capacity of 0.33 mmst annually. The NCC is planning to develop the coal mining sector by offering concessions to local and foreign investors. Investors will be required to finance mine development and pay the equivalent of 10-15 percent of mine output to the NCC in cash or coal.

COUNTRY OVERVIEW
Head of State: General Sani Abacha
Independence: October 1, 1960 (from United Kingdom)
Population (1996E): 125 million
Location/Size: Western Africa, bordering the Atlantic Ocean, between Cameroon and Chad (on the east) ;and Benin and Niger (on the west and north)/923,770 square kilometers (356,700 square miles), slightly more than twice the size of California
Major Cities: Abuja (capital), Lagos, Ibadan, Kano Kaduna, Port Harcourt
Languages: English (official), Hausa Yoruba, Ibo (Igbo), Fulani
Ethnic Groups (1996): Hausa (21%), Fulani (9%), Yoruba (20%), Ibo (17%), other (33%)
Religion (1996E): Islam (50%), Christianity (40%), traditional beliefs
Defense (8/96): Army (62,000), Navy (5,600), Air Force (9,500)

ECONOMIC OVERVIEW
Finance Minister: Anthony Ani
Currency: Naira
Official Exchange Rate (11/97): US$1 = 21.90 Nairas
Market Exchange Rate (11/25/97): US$1 = 78.00 Nairas
Gross Domestic Product (1997E): $35.3 billion
Real GDP Growth Rate (1997E): 3.8%
Inflation Rate (1997E): 22.0%
Current Account Balance (1997E): -$1.4 billion
Major Trading Partners: United States, United Kingdom, France, Germany, Spain, Italy, the Netherlands
Merchandise Exports (1997E): $14.8 billion
Merchandise Imports (1997E): $11.8 billion
Major Export Products: Crude oil, cocoa, rubber, timber, manufactured goods
Major Import Products: Petroleum products, food, machinery and equipment, manufactured goods
Official Oil Export Revenues (1996E): $10.9 billion
Oil Export Revenues/Total Export Revenues (1997E): 90%
Total External Debt (1997E): $34.7 billion

ENERGY OVERVIEW
Oil Minister : Dan Etete
Proven Oil Reserves (1/1/97): 15.5 billion barrels
Crude Oil Production (Jan.-Sep. 1997E): 2.207 million barrels per day (bbl/d)
OPEC Crude Production Quota (1997): 1.865 million bbl/d; On January 1, 1998 the quota will increase to 2.042 million bbl/d
Oil Production Capacity (1996E): 2.4 million bbl/d
Oil Consumption (1996E): 295,000 bbl/d
Crude Refining Capacity (1/1/97): 433,250 bbl/d
Net Oil Exports (1996E): 1.8 million bbl/d
Major Crude Oil Customers (1996): U.S., Western Europe, Asia
Natural Gas Reserves (1/1/97): 104.7 trillion cubic feet (tcf)
Natural Gas Production (1996E): 186 billion cubic feet (bcf)
Natural Gas Consumption (1996E): 186 bcf
Electric Generation Capacity (1/1/96): 5.9 gigawatts
Electricity Generation (1996E): 13.8 billion kilowatthours (bkwh)
Electricity Consumption (1996E): 12.7 bkwh

ENVIRONMENT OVERVIEW
Total Energy Consumption (1995E): 0.78 quadrillion Btu
Energy Consumption per Capita (1995E): 6.1 million Btu (vs. 345.9 million Btu in U.S.)
Energy-related Carbon Emissions (1995E): 26.6 million metric tons (0.4% of world carbon emissions)
Carbon Emissions per Capita (1995E): 0.21 metric tons (vs. 5.4 metric tons in U.S.)
Major Environmental Issues: Deforestation, water pollution soil degradation

OIL AND GAS INDUSTRIES
Organizations: The Nigerian National Petroleum Corporation (NNPC) manages the state-owned oil industry. NNPC controls majority interests (between 55-60 percent) in all joint ventures with foreign oil companies. The NNPC holds 49 percent in the Nigeria Liquefied Natural Gas (NLNG) company.
Major Foreign Oil Company Involvement: Amoco, Ashland, British Gas British Petroleum, Chevron, Conoco, Deminex, Elf Aquitaine, ENI/Agip, Exxon, Mobil, Pan Ocean, Royal Dutch/Shell, Statoil, Sun Oil, Tenneco, Texaco, Total
Major Oil Fields: Cawthorn Channel, Edop, Ekulama, Escravos Beach, Forcados Yorki, Jones Creek, Meren, Nembe, Okan, Oso, Ubit
Refineries (nameplate capacity bbl/d) (1/97): Port Harcourt-Rivers State (150,000), Warri (118,750), Kaduna (104,500), Port Harcourt-Alesa Eleme (60,000),
Major Terminals: Bonny Island, Brass River, Escravos, Forcados, Odudu, Pennington, Qua (Kwa) Iboe

For more information from EIA on Nigeria, please see:
EIA - Country Information on Nigeria

Links to other sites:
CIA 1997 World Factbook - Nigeria
U.S. State Department Consular Information Sheet on Nigeria
Library of Congress country study on Nigeria
U.S. Department of Energy's Office of Fossil Energy's International section - Nigeria

The following links are provided solely as a service to our customers, and therefore should not be construed as advocating or reflecting any position of the Energy Information Administration (EIA) or the United States Government. In addition, EIA does not guarantee the content or accuracy of any information presented in linked sites.

Information on Nigeria from MBendi
Information on Nigeria from the African Studies program at the University of Pennsylvania

If you liked this Country Analysis Brief or any of our many other Country Analysis Briefs, you can be automatically notified via e-mail of updates. Simply click here, put in your e-mail address, and check the box labeled "Country Analysis Briefs" on the list of products. You will then be notified within an hour of any updates to our Country Analysis Briefs.

Return to Country Analysis Briefs home page

File last modified: December 16, 1997

Contact:

Elias Johnson
ejohnson@eia.doe.gov
Phone: (202)586-7277
Fax: (202)586-9753

URL: http://www.eia.doe.gov/emeu/cabs/nigeria.htm