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Problems In The Nigerian Oil Market Get Worse

At a time when the country should literally be rolling in income from the oil industry the signs are not good for short term oil production in Nigeria. While the major oil companies in the country, Shell and ExxonMobil, have enjoyed a comfortable relationship with the local government for some time it seems as though the relationship is becoming more strained.

The government is demanding $2 billion in cost and tax arrears which they claim the two companies owe the state between them. While the companies involved maintain that they have acted in line with the letter of the law the disagreement has caused major problems for the Nigerian oil industry. In part this has been one of the causes of the more recent boost in the oil price, with wild cat strikes and attacks on refineries across the country.

The situation seems to be out of control at the moment with some newspapers suggesting the government are looking for the oil companies to employ the militants involved to actually defend the pipeline. There are also many others who suggest this is a bargaining tactic by the Nigerian authorities after they have seen the price of oil move substantially higher, and the fact that the agreements with the two oil majors are up for renewal very soon.

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