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Analysis: Nigeria probes oil block awards

By CARMEN GENTILE, UPI Energy Correspondent   |   Aug. 23, 2007 at 11:20 AM   |   Comments

As part of President Umaru Yar’Adua’s ongoing effort to curb corruption, the Nigerian government is considering revoking licensing blocks for exploration amid accusations they were obtained through bribes.

Some of the companies awarded choice blocks in the last year had close ties to government officials, This Day newspaper reported, citing a government source.

Yar’Adua is reportedly taking his inquiry about the distribution of parcels to top officials in the Nigerian National Petroleum Commission, the federal arm that regulates oil and gas extraction in the West African country.

“The president is determined to reform the energy sector and I am sure some of these companies, at the end of the day, will either lose the blocks or pay commensurate amount for them,” the source told the newspaper.

Yar’Adua’s effort to rein in corruption in the petroleum sector by reviewing licenses is not unprecedented.

In 2006 President Olusegun Obasanjo ordered the review of several licensing agreements, eventually leading to the firing of Tony Chukwueke, director of the Nigerian Department of Petroleum Resources.

However, the new president has tried to distance himself from the Obasanjo administration following an April election that many said was rigged so Yar’Adua, who hails from the same political party, would win.

“Those that know him (Yar’Adua) say he is nobody’s puppet,” Peter Lewis, director of the Africa Studies Program at John Hopkins University, told United Press International Wednesday. “But there’s a sense that Yar’Adua is going to take some time to get out from under Obasanjo’s shadow.”

In his late May inaugural address, the new president said he would "set a worthy personal example" by tackling corruption and violence in the oil-rich Niger Delta, where more than $300 billion worth of crude from the southern delta states has been extracted since the 1970s.

Despite the abundance of petroleum wealth in the region, many of the delta’s inhabitants are poor. High unemployment, environmental degradation due to oil and gas extraction, and a lack of fresh water and electricity have angered the region's youth, who have taken up arms, many times supplied by political leaders.

In recent weeks, gunmen have taken their battles to the streets of Port Harcourt, where more than a dozen people have been killed and several kidnapped.

At the same time, militant groups such as the Movement for the Emancipation of the Niger Delta have stepped up attacks in recent months and pledged more strikes until the oil industry and the Nigerian government acquiesce to its demands for a more equitable distribution of oil wealth.

MEND, along with lesser-known militant groups, has launched attacks on both onshore and offshore oil installations in the delta and kidnapped more than 150 people in the last year.

Corruption, both political and economic, is considered by many to be a source of the violence in the region, which in turn has caused oil production levels to drop by 20 percent -- from 2.5 million bpd to 2 million bpd -- according to government estimates.

Though the largest producer of oil on the continent, Nigeria must now import fuel for domestic consumption. Many refineries have gone offline due to negligence fueled by government corruption, as well as militant attacks on oil installations.

Just how well Yar’Adua can handle Nigeria’s numerous woes remains unclear, said Princeton Lyman, a former U.S. ambassador to Nigeria.

“It's still a little early to tell,” Lyman told UPI. “He’s (Yar’Adua) saying all the right things … trying to tackle the crisis in the delta.”

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(e-mail: energy@upi.com)

© 2007 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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