Oil sector in nigeria
Nigeria has a population of over million people and an abundance of natural resources, especially hydrocarbons. It is the 10th largest oil producer in the world, the third largest in Africa and the most prolific oil producer in Sub-Saharan Africa. The civilian government of Obasanjo has committed itself to sorting out the problems within the oil industry. The upstream oil industry is the single most important sector in the economy.
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Nigeria has a population of over million people and an abundance of natural resources, especially hydrocarbons. It is the 10th largest oil producer in the world, the third largest in Africa and the most prolific oil producer in Sub-Saharan Africa.
The civilian government of Obasanjo has committed itself to sorting out the problems within the oil industry. The upstream oil industry is the single most important sector in the economy. Nigeria contains estimated proven oil reserves of Most of this is produced from the prolific Niger River Delta. Nigeria also contains an estimated Tcf of proven natural gas reserves mainly from onshore fields and the swampy areas of the Niger River Delta.
Nigeria has set a target of zero flare by and is providing incentives for the production and use of gas. This has resulted in shortages of refined product and the need to increase imports to meet domestic demand.
Nigeria has a robust petrochemicals industry based on its substantial refining capacity and natural gas resources. The petrochemical industry is focussed around the three centres of Kaduna, Warri and Eleme.
Until , government participation in the oil industry was limited to the regulation and administration of fiscal policies. This giant parastatal, with all its subsidiary companies, controls and dominates all sectors of the oil industry, both upstream and downstream. In April , the Nigerian government set up a new committee on oil and gas reform to deal with the deregulation and privatisation of NNPC.
Nigeria is a member of OPEC and is its 12th largest producer. The petroleum industry in Nigeria is regulated by the Ministry of Petroleum Resources. The government retains close control over the industry and the activities of the NNPC, whose senior executives are appointed by the ruling government.
The Niger Delta, the Onshore and Shallow Offshore basins can be considered fairly well to well explored. During the later s exploration focus turned to high risk ventures in the frontier basins of the deep water offshore with encouraging success. These ventures are becoming increasingly attractive with developments in deepwater exploration and production technology. Nigeria is a member of OPEC. The country has four oil refineries and There are eight oil companies and independents all active in the marketing petroleum products.
Cross-border smuggling is an ongoing problem and there are frequent reports of large scale corruption in the distribution and marketing chain. In April , the Nigerian government set up a committee to investigate reform in the oil and gas sector with a focus on the deregulation and privatisation of the NNPC. Under the privatisation programme seven subsidiaries are to be sold.
Deregulation of the downstream energy sector remains a stated government aim. But this is likely to depend on the still heavily subsidised prices being allowed to rise to international levels. Many Nigerians regard oil as a gift from God and their natural right to enjoy on the cheap, a sentiment that will make any government rethink its commitment to more realistic prices by risking its future. In November , Obasanjo announced that the market for petroleum prices would be deregulated which would offer the country debt relief.
He noted that all petroleum prices would be fully deregulated and domestic crude allocation to the NNPC would be paid for at export parity with immediate effect. This would have an immediate effect on pump prices. Outcries by the National Labour Congress and the public have led the government in December to state that it had no immediate plans to end the fuel subsidy and to defer price increases.
There are risks associated with investment in Nigeria. These can be grouped into three main categories, political activity and civil unrest, border disputes and government underfunding. There is also the continuing problem of corruption within the system.
Although all multinationals have been targeted in the disputes, Shell has been the main target. The situation is exacerbated by corruption within the industry and the government. Abasanjo has committed his government to resolving the problems and cleaning up the industry and the government in terms of corruption.
In the complex boundary delimitations of the Niger Delta area, border disputes are common. Nigeria is currently in dispute with both Cameroon and Equatorial Guinea over borders relating to oil finds in the Gulf of Guinea. Cameroon and Nigeria each claim the Bakassi Peninsula located in the Gulf of Guinea and which is believed to contain significant reserves of oil. The ICJ began formal hearings in March but no decision had been reached by mid Elf holds the concession OML in Nigeria, just 3.
Nigeria and Elf contend that the seismic evidence indicates that Zafiro is part of an oilfield that straddles the international boundary between the two countries. Equatorial Guinea claims that the wells were drilled in their territorial waters in Block B. Nigeria has called for a determination of the boundary and the establishment of a joint field operation. Negotiations have met with little success so far. Since , budgetary constraints on the NNPC have resulted in it being unable to meet its JV commitments leading to cut backs in exploration and production.
Nigeria: Oil And Gas Industry. Overview Nigeria has a population of over million people and an abundance of natural resources, especially hydrocarbons. Risks There are risks associated with investment in Nigeria. Political activity and civil unrest. Border disputes In the complex boundary delimitations of the Niger Delta area, border disputes are common.
Government underfunding A recurring problem in the upstream sector is the inability of the NNPC to meet its funding obligations to the JVs.
Nigeria is the largest oil and gas producer in Africa. Crude oil from the Niger delta basin comes in two types: light, and comparatively heavy – the lighter around. The oil and gas sector accounts for about 10 per cent of gross domestic product, and petroleum exports revenue represents around 86 per cent of total exports.
Please contact customerservices lexology. Further, its average production capacity is 2 million barrels of crude oil per day bpd and 7. How does domestic energy consumption break down with respect to oil and gas, as well as imports and exports? Of this amount, an average of:. The report also states that,
The petroleum industry is the backbone of the Nigerian economy.
The Nigerian Oil and Gas Update provides information on current developments on regulatory, accounting and tax matters affecting the industry. This had impacted the ability of the IOCs to continue to invest in oil field development in the country. The IJVs will operate as independent entities with the ability to raise capital through equity or debt to finance cash call obligations.
Nigeria: Oil And Gas Industry
The crude oil production in Nigeria is estimated to witness a decline of approximately 7. Oil and gas production had been hampered in Nigeria in the past few years, due to the attack on oil and gas infrastructure by militants. Report scope can be customized per your requirements. Click here. We are always looking to hire talented individuals with equal and extraordinary proportions of industry expertise, problem solving ability and inclination.
Petroleum industry in Nigeria
Subscribe Bronze Sign-up Member Login. Before the amendments, royalties ranged from 0pc to 12pc based on the water depth of the field. The new law eliminates the 0pc rate and royalties are calculated on a basis dependent on the chargeable volume of the crude and condensates produced per field. The new rates are 10pc for offshore in water deeper than m and 7. Under the old Act there was a flat 10pc rate. Other amendments that came with the new Act include a stipulation that all PSCs will be reviewed every eight years. It has proved popular with many people in Nigeria; advocacy groups and union leaders have hailed the law as commendable. As the law increases operating costs for oil and gas companies operating under PSC arrangements, analysts, as well as sector advocacy groups, say that local players will struggle to cover the costs as they lack the balance sheet capacity of international players. The conditions for an amendment had been met.
The Nigerian oil and gas outlook looks promising on one side and on the other hand not too good as the government might to take certain step to curtail encroachment into her traditional trading territories by the United States of America. However, given the number of activities that took place last year and some policy pronouncements made by government officials the industry looks promising.
We also gaze into our crystal ball to see what we can expect in Health warning: we do not profess to be genuine clairvoyants.
Nigeria’s Upstream Petroleum Sector: Looking Back At 2019 And Looking Ahead In 2020
It's been a chaotic couple of months for the global commodities markets, and the oil sector has been Your registration is complete and your account is active. An email confirming your password has been sent. If you have any questions or concerns please contact support platts. If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team. If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password. Lagos — Nigeria's oil sector may not get a much-needed revamp in as President Muhammadu Buhari's state-led economic model will likely throttle reform and blunt efforts to increase oil production in the near term and further out. President Buhari's radical move in November to hike taxes on companies operating in its lucrative deepwater blocks may have raised the government's share of the revenue from oil but could backfire by deterring international oil companies from Africa's largest producer and hindering output growth. Buhari's shift comes as other producers in the region, like Angola and Gabon, sweeten fiscal terms to attract foreign investment into their beleaguered oil sectors. Militancy in the Niger Delta remained largely dormant in , which helped keep production at elevated levels. But the security situation in the Niger Delta remains fraught as history has shown the region is just a few sparks away from a conflict. Buhari has been managing militancy in the restive Niger Delta by continuing amnesty payments, and this will continue into , according to the country's budget.
Nigeria's energy sector faces slowdown on lack of reforms
Nigeria is the largest oil and gas producer in Africa. Crude oil from the Niger delta basin comes in two types: light, and comparatively heavy — the lighter around 36 gravity and the heavier, 20—25 gravity. Both types are paraffinic and low in sulfur. The history of oil exploration in Nigeria dates back to when Nigerian Bitumen Corporation conducted exploratory work in the country, at the onset of World War I the firm's operation were stopped. Due to the lack of technological and financial resources by small oil companies, large oil companies took over the exploration of commercial oil in the country. Thereafter, licenses were given to D'Arcy Exploration Company and Whitehall Petroleum but neither company found oil of commercial value and they returned their licenses in
