Industry Overview

Nigeria has an abundance of natural resources, especially hydrocarbons. The petroleum industry in Nigeria is the largest industry and main generator of GDP in the country. 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. An OPEC member since 1972, Nigeria has proved reserves of oil at 36.22 billion barrels. The Nigerian economy is largely dependent on its oil sector which accounts for 95% of its foreign exchange earnings.

Upstream

The upstream oil industry is the single most important sector in the country’s economy, providing over 90% of its total exports. It produces 1.825 million bbl/day. Oil is produced from five of Nigeria’s seven sedimentary basins: the Niger Delta, Anambra, Benue Trough, Chad, and Benin. The Niger Delta, the Onshore and Shallow Offshore basins can be considered to be fairly well explored. Ventures here are low risk and the basins contain about 80% of producing wells drilled in Nigeria.

During the later 1990s 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.

Its crude oils have a gravity between 21·API and 45·API. Its main export crudes are Bonny Light (37·) and Forcados (31·). About 65% of Nigeria’s oil is above 35·API with a very low sulphur content.

Midstream

The increasing need to find alternative, cheaper and cleaner fuel for industrial and economic activities is emerging as a positive development in the country’s energy sector.

Nigeria has the world’s 8th largest proved natural gas reserves at 5.215 trillion cubic meters and is a very important supplier of LNG to European buyers exporting over 20.55 billion cubic meters. The country has currently produced over 32.82 billion cubic meters and consumed over 12.28 billion cubic meters.

The Nigerian government estimates $15bn private investment is required by the end of the year 2010 to meet its development goals.

Downstream

The downstream industry in Nigeria is another key sector in the country’s economy. The country consumes over 286,000 bbl/day. The country has four oil refineries, eight oil companies and about 750 independent petroleum products marketers. Insufficient capacity utilization of the refineries has resulted in shortages of refined product and the need to increase imports to meet domestic demand.

The petroleum industry in Nigeria is regulated by the Ministry of Petroleum Resources with the Government retaining close control over the industry. However, there are various ongoing stakeholder discussions on deregulating the sector.

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