UK seeks to play a big role in developing Nigeria’s energy sector

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Britain has offered to help Nigeria overhaul its energy sector as part of Gordon Brown’s attempts to encourage oil exporters to boost production to tame this year’s surge in oil prices.

By Matthew Green in Lagos

Britain has offered to help Nigeria overhaul its energy sector as part of Gordon Brown’s attempts to encourage oil exporters to boost production to tame this year’s surge in oil prices.

Britain sees Nigeria, where attacks by militants and under-investment have cut production to 1.8m b/d from a capacity of roughly 2.5m b/d, as one of the few countries that could potentially provide a significant increase in output.

The UK prime minister angered militants responsible for attacks on Nigerian oil facilities in the Niger Delta last month when he offered UK help to train Nigerian security forces.

But Malcolm Wicks, the UK’s energy minister, emphasised the role Britain could play in helping to reduce resentment against the oil industry by assisting Nigeria to restructure its energy sector to ensure greater benefits for locals.

”Local peoples everywhere need to feel that they are benefiting from massive energy interventions,” Mr Wicks told the Financial Times in an interview in Lagos, Nigeria’s commercial capital, on Thursday. ”If people don’t get that, then they become the bandits, some of them. When people do get that they become key members of local civil society.”

Mr Wicks, who visited a major gas export terminal in the Niger Delta on Wednesday, said Britain could share its expertise in areas such as gas distribution and electricity regulation to help Nigeria realise plans to harness its vast gas reserves to tackle the country’s severe power shortages.

The UK is also keen for British companies to play a greater role in developing Nigeria’s gas sector. Centrica and BG Group are both seeking to build their presence in Nigeria, increasingly a focus for Germany’s Eon and Russia’s Gazprom. Nigeria supplies about eight per cent of the world’s Liquefied Natural Gas (LNG), gas supercooled for easier shipping, and has plans to expand capacity.

Mr Wick’s offer of technical advice on reform contrasted with Mr Brown’s initial offer of security cooperation, although he said the UK was ready to assist in any area the Nigerians requested. ”On all of these things, including security, we’ll help if we can, if we’re asked,” he said.

Mr Wicks said assurances from the Nigerian government that they were committed to raising output gave him cause for optimism. Executives at Western majors have tended to paint a much gloomier picture than Nigerian officials in recent months, complaining of scant improvement in the security or investment situation.

Umaru Yar’Adua, Nigeria’s president, wants to overhaul the Nigerian National Petroleum Corporation, the state-owned oil company, to tackle funding shortfalls in its joint ventures with Western majors such as Royal Dutch Shell and ExxonMobil.

But energy companies complain privately of bureaucratic inertia and a lack of clear decision-making that have slowed development of new projects. Mr Yar’Adua has also yet to convene a promised meeting to start a dialogue to lay the foundations for peace in the Niger Delta.

Mr Brown will invite Mr Yar’Adua, who visited London last month, to an energy conference he is hosting in December. The meeting is planned as a follow-up to a gathering of energy producers and consumers convened in Jeddah in Saudi Arabia in June which sought to find ways to raise production.

The Financial Times

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