Nigeria needs to review its relations with the International Oil companies as the country still remains poor in spite of being the top supplier of foreign oil to United States.

Nigeriaremains extremely poor, in spite of being the largest supplier of foreign oilto the United States due to lack of development and years of corruption. SoRilwanuLukman, President Umaru Yar'Adua’s energy adviser, suggests, “In order torealize the goal of achieving 40 Billion barrels oil reserve and four millionof daily production, we have to review our relation with international oilcompanies”.

The newgovernment’s plan to reform the Nigerian National Petroleum Corporation (NNPC)was also repeated by Mr. Lukman. There is no transparency in the government’saim, which has long delayed the target to make the oil production twice as muchas the current output of about 2 Million barrels/day. This is thus a hindrancein the progress, reported Financial Times.

Nigeria -Africa’s biggest oil producer - has numerous agreements with many key playerslike ExxonMobil, Royal Dutch Shell and Chevron. Nigeria’s output is about 2.6Million barrels/day at peak. However, about a quarter of the output is wastedbecause of the unrest in the unstable Niger Delta of the country. Also, about afifth of the output is cut since early 2006 due to the turbulence caused bymilitants in the Delta, with mismanagement and corruption making the case onlyworst by staining the energy sector.

Also,Nigeria owes a production-sharing agreement’s renovation which is bargained inlieu of the offshore fields in the early 19990s. This was when majors startedswitching to deep-water fields. According to these norms, the revenuesgenerated by the oil companies will be shared with the government afterrecovering the investment cost.

“Developmentis a long process. Nigeria has been keeping itself aloof from following theexample set by nations that have asked for higher revenue and better controlfrom the resources of oil. For instance, in Venezuela, foreign operators havebeen forcefully charged with unfavorable contract changes by government.However, some changes that are pre-planned would make it difficult for foreigncompanies to make profits on energy and have booking in the West African nationfor crucial crude-oil reserves”, said a Senior Research Analyst at RNCOS  .

Related Market Research Reports:
Russian Oil and Gas Industry Analysis
Indian Coal Industry Outlook till 2012
Spain Energy Sector Outlook