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.