TEHRAN The Nigerian oil industry needs 40 billion dollars in investment over the next five years if it is to meet increased production targets, AFP quoted a top official as saying Friday.
The Nigerian government aims to increase proven oil reserves from 25 billion to 30 billion barrels and raise production capacity from 2.2 to 3 million barrels per day by 2003, top Nigerian oil official Aboki Zhawa said at the signing of a new accord with multinational companies.
The government also aims to cut out all harmful gas flaring through the implementation of gainful gas utilization projects by 2008, he said.
"For this, there has to be an investment of about eight billion dollars per annum over the next five years in the petroleum sector," Zhawa said.
The new memorandum of understanding (MOU) signed Friday was the result of five years of negotiations, and replaces an agreement signed in 1991.
Ron Van Den Berg, the managing director of Shell Petroleum Development Company (SPDC) said the agreement was "a major win for both government and the oil industry in Nigeria".
"The MOU will provide the fiscal stability that is required to gear the industry toward meeting the growth aspirations of the nation in the oil and gas sectors and will hopefully continue to attract the huge investments required to achieve these goals" he said.
He said the oil industry would support Nigeria's demands for an increase in its quota within the output ceilings set by the Organization of Petroleum Exporting Countries (OPEC) from 7 percent to 10 percent of OPEC's total.
This was "Nigeria's right," he said.
Currently Nigeria's oil production is pegged at 2.03 million barrels per day.
The Shell country managing director said the opening up of a series of deep and ultradeep offshore basins to exploration by international operators this year was "a major milestone that is already yielding very good results." However he said stability in the troubled oil producing region was also important for attracting the vast amounts of investment needed to boost earnings as desired by the government.
Van den Berg said unrest in the region is currently shutting in Shell group production of 250,000 barrels per day.
Some 165 oil workers on two rigs operated by Shell were seized Monday by youths demanding work. Hopes were high Friday for their imminent release.
"Today the SPDC joint venture has shut in some 250,000 barrels per day across the Delta, several of our staff and contractors, including foreigners, are still held hostage," he said.
"Vandalization of our joint venture assets continues to rise," he said, adding "enforcement of law and order and security in the delta is an issue vital to the interests of the oil industry and Nigeria." Zhawa said the government was determined to ensure development in the area to ease the causes of unrest and also said the MOU would allow proper returns to the investing oil companies.
The government was already looking at various "alternative funding options" to "yield appropriate return to the investor and equitable take on the part of government" he said.
Nigeria is currently the largest oil producer in Africa and the sixth largest oil exporter in the world.
Six major foreign oil companies operate in Nigeria: Anglo-Dutch Group Shell, U.S. groups Chevron, and Mobil, France's Totalfina and Elf and Italy's Agip.