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Thursday, 10 January, 2002, 17:50 GMT
Nigeria invites in refinery-builders
Shell's drilling rig at Soku oilfield in Nigeria
Nigeria is Africa's largest oil producer
Nigeria, Africa's largest oil producing country, has taken its biggest step so far towards liberalising its downstream oil industry.

The government on Thursday invited international firms to bid to set up of private oil refineries in Nigeria.

According to the president's adviser on petroleum and energy Rilwanu Lukman, this step removes a major obstacle to investing in the oil sector.

Oil market liberalization is a part of the government's reform, backed by the International Monetary Fund and the World Bank.

The country, a member of the Organisation of Petroleum Exporting Countries cartel (Opec), began deregulation of its oil market at the start of this year.

Promoting quota discipline

In an attempt to attract foreign investors and to smarten up the country's profile, Mr Lukman said on Thursday that Nigeria was planning to stick to its Opec production limits, agreed on 28 December in order to shore up prices.

Opec has been blaming Nigeria for the overproduction of some 300,000 barrels per day above its assigned quota of 1.8 million barrels per day.

Last month's election of Mr. Lukman to president of the cartel is also likely to ensure that the West African country sticks to its quota.

Fuel shortage

Despite Nigeria's substantial crude oil exports, it is also reliant on importing refined fuels.

The demand for fuel is growing quickly, in line with a growing number of car owners and rapid population growth.

The government expects a 10% increase in domestic demand for gasoline in 2002.

But the four state-owned refineries are thought to be in a very bad state of repair and not working to their full capacity.

According to Mr Lukman, the refineries produce 360,000 barrels per day, while having a capacity of 445,000 barrels.

Costly subsidies

Today Nigeria's oil industry is heavily subsided by the state with the official pump price of oil just above $0.23 (0.15).

The government is keen to end the costly subsidies and liberalize the market.

The state-run Nigerian National Petroleum Corporation owns the controlling stake in all the country's oil projects.

International energy firms such as Anglo-Dutch Shell, France's TotalFinaElf and Italy's Agip operate under joint ventures for their exploration and production businesses.

See also:

28 Dec 01 | Business
Nigeria's oil wealth shuns the needy
01 Aug 01 | Business
Nigeria explores new oil contracts
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