Oil & Gas

Overview of the O & G Sector

The oil and gas sector is of crucial importance to the Nigerian economy. Oil alone accounts for more than 90-95 per cent of the nation’s export revenues, over 90 per cent of foreign exchange earnings and 80 percent of Government revenues. Besides the income, technology development and transfer as well as capacity-building form integral parts of the oil and gas industry and a major area in which the sector contributes to economic development and generates wealth for the society at large. Also in the sense that several industries supply the needed inputs into the sector and also benefit from the value added by oil/gas activities, the effects of the oil and gas sector in the economy are much larger and more expansive than can typically be quantified.

With a current crude oil production capacity of 2.5 million barrels per day, Nigeria ranks as Africa's largest producer of oil and the thirteenth largest oil producing country in the world. . It is the sixth largest exporter and hold crude oil reserves of about Reserves of crude oil stand at 37.2 billion barrels according to the BP 2010 Statistical Review of World Energy. Based on this report, Nigeria has the ninth largest proved oil reserve in the world and second largest in Africa. The country appears to have a greater potential for gas than oil. Natural gas reserves total 165 trillion standard cubic feet (scf), including 75.4 trillion scf of non-associated gas.2

Opportunities continue to abound in the Oil and Gas Sector.  Large deep-water oil discoveries in recent years in Angola, Nigeria and Equatorial Guinea have turned the world’s spotlight on the region as a world leader in oil-production growth.  CAPEX spends in Nigeria on major JV and PSC projects are projected to be $20 billion per annum for the period from 2011 to 2015. Nigeria’s vision is to be the leading Liquefied Natural Gas (LNG) producing nation in the world and to promote sufficiency in the domestic power supply. As part of its Gas Master Plan, Nigeria wants to achieve a balance between selling gas to the domestic market, selling it in the region via pipelines and exporting LNG. An ambitious LNG programme that will result in the construction of two more LNG plants, apart from the Bonny LNG project, coupled with projects for domestic gas utilisation will involve a huge foreign currency outlay in the next several years.

The Government is concerned that oil and gas development should have more significant impact on the development of the overall Nigerian economy so that benefits should accrue to society at large in terms of employment generation and the development of significant linkage industrialisation and manufacturing processes. A key strategy to achieve this is the implementation of a vigorous local content policy under the auspices of the Nigerian Content Development Monitoring Board (NCDMB). The aim is to retain in the country an increasing share of the huge foreign exchange outlays of some $US 8 billion expended in the sector every year.

Oil & Gas Operations

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