By Sarah Kent
Firefighters try to contain a fire at an informal diesel fuel depot in Lagos, Nigeria, a region long seen as a trouble spot in the oil industry
 
Associated Press
Nigeria is something of a trouble spot for the oil industry.
Though Africa’s largest oil producer, blessed with ample hydrocarbon resources and a large infrastructure network, security problems in the country’s oil-rich Niger Delta plague companies operating in the region, causing frequent supply disruptions.
The earnings reports of Europe’s oil majors this quarter were littered with references to the difficult operating environment in the country and the impact oil theft and sabotage has had on companies’ production.
However, a quick run-down of the figures suggest things aren’t actually that bad.
Italian oil major Eni SPA (E) lost just 30,000 barrels a day of oil equivalent in the first half of the year as a result of oil theft and flooding in Nigeria, that’s equivalent to 2% of the company’s overall production in the period. France’s Total SA (TOT) said increased incidences of theft and sabotage in Nigeria had offset an increase in production as a result of better security in Yemen in the second quarter of the year, but at the same time, the restart of the country’s Ibewa field helped boost output by 2%.
Even Royal Dutch Shell PLC (RDSB.LN), which said it lost 100,000 barrels of oil equivalent a day in the second quarter due to the deteriorating security situation in Nigeria, only took a $250 million hit to its earnings as a result of the disruptions. That’s peanuts when compared with the $2 billion write-down it took on the value of its shale assets in North America.
Meanwhile, even as companies loudly publicize the difficulties of operating in Nigeria, they’re sinking more money into the country.
In June, Total said it had got final approval to develop Egina, an oil field in deep water offshore Nigeria that the company predicts will produce 200,000 barrels a day.
Shell, which has sold off several of its assets onshore Nigeria in recent years, has also made fresh commitments to the country. The company’s planning on spending $1.5 billion to build a new and more secure loopline for a major pipeline in the Niger Delta and a further $2.4 billion on five new gas projects in the country. It has also expressed interest in buying several oil licenses Chevron Corp. (CVX) has put up for sale.
So despite the various difficulties, the European oil majors aren’t jumping ship. But they are looking to move their money into assets less easily targeted by oil  thieves and saboteurs.

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