Cotonou, Benin (Reuters) – Benin’s government said on Thursday it hoped oil production would restart in the West African nation next year in blocks controlled by South Atlantic Petroleum (SAPETRO) from neighbouring Nigeria.
Cotton-dependent Benin Republic, a tiny neighbour to the west of oil-giant Nigeria, started producing oil in the 1970s but output remained low and stopped by the end of the 1990s when funds for operations dried up.
“Talks are under way to secure the final signature so that production can start by July 2014 at the latest,” said Barthelemy Kassa, Benin’s minister for mines and energy.
Speaking after talks with Benin’s President Boni Yayi on Thursday, Daisy Danjuma, vice president of SAPETRO, said the firm was sitting on 87 million barrels of oil in Benin’s onshore Block 1 and output could start at 7,500 barrels per day.
SAPETRO has a further 110 million barrels of oil in the Seme offshore block to the east of Cotonou but production from there would was not be expected before 2015, Kassa added.
SAPETRO was set up by Danjuma’s husband, former Nigerian chief of army staff General T.Y. Danjuma. It owns oilfields in Nigeria in joint ventures with France’s Total and China’s CNOOC.
It also bid last month for Chevron’s stake in three blocks in the Niger Delta, according to sources involved in the sales.
Benin’s economy depends heavily on cotton, which provides a livelihood for some 500,000 families in a country of around 10 million people.
London-listed Tullow Oil is also exploring for oil in Benin, where it has four blocks.
In a sign of the risks of operating in the region, Benin has borne the brunt of the shift west of gangs of pirates that previously operated in Nigeria’s waters.
The government said that hikes in insurance premiums after attacks off Benin in 2011 led to a 70 percent drop in traffic to Cotonou port, which is a key source of cash for the government.