CHAPTER 4 KEYNOTE ADDRESS
| Jurisdiction | United States |
(Feb 2002)
KEYNOTE ADDRESS
Group General Manager, Corporate Secretariat &
Legal Division / Secretary to the Corporation
Nigerian National Petroleum Corporation
Lagos, Nigeria
Chair-Section on Energy and Natural Resources Law
of the International Bar Association
Ladies and Gentlemen, it is a great pleasure to be here amongst you today to deliver this address to your distinguished gathering.
Although I readily agreed to deliver this address as I never miss an opportunity to talk about oil and gas projects especially as it relates to Nigeria, it took me a long time to decide what I should speak to you about as there is so much to discuss relating to the Energy Industry and I have only twenty minutes within which to say it. Furthermore whatever I may wish to say about Arbitration in West Africa will be covered in tomorrow morning's session. I therefore decided that I would speak to you about the Energy industry in Nigeria which has experienced a phenomenon growth in foreign investment based on the confidence that foreign investors have in the energy sector of the country. Furthermore as in my experience only disaster news on Nigeria gets into the foreign media and very little said about the growth and development of the Energy industry in Nigeria, I believe that this is a golden and rare opportunity to share with you our recent experiences on the development of the Energy industry in Nigeria, a country which is a major player in the Energy Industry of today and will continue to do so in the future.
The Oil and gas industry in Africa in the last few decades has been dynamic. The major participants being Algeria, Nigeria, Lybia, Gabon, Angola with some activities going on in other parts of Africa like Ghana, Cameroon, Chad, South Africa and the Ivory Coast. I will this afternoon prefer to use the Nigerian industry as a case study since it is the industry that I have participated in during the last twenty eight years and it is in my opinion an industry that will continue to be the most dynamic of the Energy Industries in Africa.
My paper will therefore address briefly the following issues:
• The energy industry in Nigeria;
• Energy project documentation and arbitration clauses;
• Recent energy related policies and their consequence on arbitration;
• Concerns relating to arbitration;
• International Bar Association Section on Energy and Natural Resources Law and future activities.
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THE ENERGY INDUSTRY AND NIGERIA
The Country Nigeria: Nigeria is located in the Western part of Africa. It is a former colony of the United Kingdom, obtained its independence on Ist October 1960 and became a Republic in 1963. In times of size, Nigeria is four times the area of Great Britain and equal in the USA to the size of the states of Texas, Alabama, Indiana and Delaware, with a population of about 120 Million people in Nigeria. It is quite often said that one in every five black persons on earth is a Nigerian. In May 1999 Nigeria adopted the American style of democratic Governance with an Executive President heading the Federal Government, 36 States headed by Executive Governors, a Federal legislature consisting of a senate and a house of Assembly, and state legislative houses of Assembly.
The Petroleum Industry in Nigeria: Nigeria is the sixth largest producer of Crude Oil in OPEC, whose current President is Dr Rilwanu Lukman, the Presidential Adviser to the Nigerian President on Petroleum and Energy matters and the defacto chairman of the NNPC Group Board. Nigeria is also the 10th largest producer of oil in the World. Nigeria presently produces about 1.7 million barrels of crude oil per day with current proven reserves of about 30 billion barrels from its onshore, proximal, deep and ultra deep offshore areas. It is pertinent to note that crude oil is the mainstay of the Nigerian economy accounting for 96% of foreign exchange income and 80% of total Government revenue per annum. Foreign investment in crude oil development and gas projects is therefore crucial to the growth of Nigeria.
As regards natural gas, proven natural gas reserves in Nigeria are about 120 trillion cubic feet giving Nigeria the 9th largest gas reserves in the world. This is despite the fact that no company in Nigeria has ever gone in search of natural gas and natural gas finds have until recently been treated as disasters. Nigeria's probable gas reserves are twice the size of its proven reserves.
The gas industry in Nigeria has witnessed a phenomenal growth since 1999 after remaining dormant for so long. In the last two years and within the next few years new and potential investment for the following projects and developments in Nigeria are in the region of $40 billion, viz:
• Chevron Escravos...
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