Niger’s Oil Boom (?)

Reuters:

Niger’s petroleum industry will provide the West African state $164 million in revenue in 2012, and eliminate the need for costly imports, the government said.

Niger began producing oil and refining it at a plant 900 km (540 miles) east of the capital Niamey last month following a $5 billion joint venture deal with China National Petroleum Corporation. CNPC holds a 60 percent stake.

[…]

Niger, one of the world’s poorest countries, is hoping its oil will eventually provide a major revenue boost and help citizens by lowering retail fuel costs. Protests over high fuel prices marred the refinery’s startup ceremony last month.

The 20,000 barrels per day that Niger expects to refine represent a tiny fraction of global production (neighboring Nigeria is expected to produce 1.9 million bpd this month), but the production and the profit are a big deal for Niger. The oil will go to the local market, at least initially.

As Niger looks around at its fellow African oil producers, the country’s leaders may well feel a mix of excitement and nervousness. For example, a lot of ink has been spilled on the “curse” of oil in neighboring Chad. In 2006, when Chad revised the revenue-distributing formula it had agreed upon with the World Bank, Nancy Birdsall of the Center for Global Development concluded that corruption had increased due to oil production. “The evidence is overwhelming,” she wrote, “that oil and mineral wealth hurts growth in developing countries.” She cited the examples of Nigeria and Angola (Africa’s largest oil producers) as “resource rich” countries that have “failed their poor.”

For a more positive view, Niger can look to Ghana, a recently minted oil producer whose overall economic growth outlook is excellent. But even in Ghana, “economists are warning there remain serious risks the current boom will not be beneficial to most Ghanaians.”

If nothing else, oil will bring change to Niger. Political disputes concerning revenue sharing are already breaking out. The contract with CNPC, signed in 2008, awards 60% of production to the company and 40% to Niger. “Non-governmental bodies have asked [President Mahamadou] Issoufou’s government to review the contract, alleging a lack of transparency.” These groups want to make sure oil wealth benefits the population as a whole. The government will have to manage the wealth carefully if it wants to avoid the problems nearby countries have experienced.

4 thoughts on “Niger’s Oil Boom (?)

  1. There’s also going to be some social change. Workers from other parts of the country and region, services (some more dubious than others) tailored to the workers and whatever displacement might happen from drilling. I’d like to hope for the best but there are plenty of reasons to worry with oil.

  2. i am really happy about the oil discovery in Niger, to prevent conflict, the government should ensure that resources are evenly distributed in the country targeting the poor especially. i pray that the oil becomes a blessing to the people of niger and not a curse.

    Mashud
    Ghana

  3. I am very happy that oil is being produced in Niger. However, having just read Anver Versi’s article in this month (August / September 2012) eddition of African Business magazine, I beleive that China is taking Too Much. If China is genuine about assisting African, it should not be so greedy to request such a large amount of Niger’s oil. After all, Niger should be able to get a better bargain knowing that China, the West (USA etc) and other countries need oil. I strongly oppose China for buying large tracks of land in Africa. This shows clearly that China is merely engaging in economic exploitation to furthering it’s own interest and economy. Niger and All African Countries Must be vigilant and protect their natural resources and land. We can not afford to continue to let Multinational Corporations and foreigners STEAL More that $50,000,000,000, (billions) per year from mother Africa and Africans remain poor. This must end Now.

    Vernon

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