Unlike in other parts of Africa, China’s economic push into Nigeria, sub-Saharan Africa’s leading crude producer, hasn’t made much headway.
In 2006, Chinese companies won four oil-drilling licenses in an oil-for-infrastructure deal that would have had Beijing building a hydroelectric power plant, a railway and a refinery in Nigeria. But the plug was pulled on that deal when Nigeria’s government changed and found some murkiness in the way it was put together. Then last November, Nigeria’s Chinese-built communications satellite had to be switched it off after a faulty power supply put it at risk of space collisions.
The FT now brings news of what could be a game changer: a possible $30 billion-50 billion deal with state-owned energy giant CNOOC covering as much as one sixth of Nigeria’s proven reserves. Sixteen production licenses, mostly held by Shell, Chevron, Total and ExxonMobil in joint ventures with the Nigerian state oil company, are up for renewal, and a handful of new licenses are also available. Negotiations have been underway for some months seemingly but how far they have got or even their scope is far from clear. The Nigerian government has had an uneasy relationship with Shell, the dominant western oil major operating in the country, and would welcome some competition for it.
Should CNOOC land some leases, they will be stepping into the political unrest and kidnappings that have crimped output by 500,000 barrels a day, the International Energy Agency estimates, in the oil-producing Niger Delta. But Chinese companies are getting used to being not so warmly welcomed on the continent.