A U.S. General Accounting Office report has advised Congress not to press for an embargo on Nigerian oil imports.
The House of Representatives last July passed a resolution condemning Nigeria's military rulers and urging the White House to consider economic sanctions against the country.
Although the resolution did not mention oil by name, that commodity will provide about 96% of Nigeria's projected $10.6 billion in foreign exchange earnings this year.
THE ARMY RULES
The army has controlled Nigeria for most of the country's 34 years of independence. A June 1993 presidential election was held to transfer power to civilian government. But when Moshood Abiola appeared to be winning, the military intervened.
In November 1993, Gen. Sani Abacha took over the government and later declared himself president. Abiola was arrested.
Last July, two oil unions went on strike to pressure the military to cede power. Other opposition groups rallied around the strike, which lasted until early September.
GAO said, "During the strike, oil production declined, but supply was not completely interrupted. The military government survived this challenge and has replaced the leaders of the oil workers' unions."
Since then, the military has consolidated its power, banning some newspapers, declaring itself outside the jurisdiction of courts, and suspending the right of habeas corpus as it continued to arrest political opponents.
The military recently called a constitutional conference to consider steps it could take to return power to civilians. Abacha is to receive the conference's recommendations in january.
GAO warned a unilateral U.S. embargo would be futile because Nigeria could sell the oil else-where.
About 1/10 of 1993 U,S. oil imports, or about 736,000 bid, were from Nigeria. One fourth of the oil refined in Pennsylvania, New Jersey, and Virginia during the first 5 months of 1994 was Nigerian.
GAO said a multinational blockade of Nigeria would remove the country's 1.6 million bid of exports from world markets, but the idea has little international support because Nigeria's turmoil is not a threat to world peace.
It added that experience with economic sanctions indicates they usually have their most significant effect immediately, then taper off as the blockaded country cuts prices and finds ways to slip exports to markets.
EMBARGO BACKFIRE
GAO hinted an embargo would hurt U.S. oil companies more than Nigeria's military dictators.
It said Mobil, Chevron, Ashland, and Texaco have $3.7 billion invested there, and the Nigerian government is about $273 million in arrears to these companies-money that would be further at risk in the event of an embargo.
Further, there are 7,000 U.S. workers in Nigeria, most of whom work for U.S. oil companies. There would be some concern for the safety of those workers in the event of unilateral sanctions.
GAO also said Nigeria might even nationalize oil companies' assets, as it did to British Petroleum Co. plc in 1978 to pressure Britain to stop trading with South Africa.
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
