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Nigeria is the 10th largest oil producer in the world, the third largest producer in Africa and the first oil producer in Sub-Saharan Africa. It has an abundance of natural resources, especially hydrocarbons. The upstream oil industry is the most important sector in the economy which provides 95% of foreign exchange earnings and about 80% of budgetary revenues. The country had proven oil reserves of 36.22 billion barrels by 2008, which is 2.92% of the world’s reserves. The Nigerian government plans to expand this amount to 40 billion barrels by end of 2010. Most of its oil is produced from the abundant Niger Delta River and 4 of Nigeria’s sedimentary basins, Anambra, Benue Trough, Chad and Benin. Nigeria’s wealth of oil attracts major oil multinationals most of which are represented in Nigeria, such as Shell. Nigeria is a member of OPEC and its OPEC quota is 1.89 million bbl/day. 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 sulfur content.

The other key sector in Nigeria is its downstream oil industry that includes four privatized refineries that are capable of producing 438,730 bbl/day. However, poor management, fire, sabotage and low maintenance, have been limiting the refineries from operating at their full capacity. This has resulted in shortages of refined product and the need to increase imports to meet domestic demand.

Nigeria has a robust petrochemical industry based on its substantial refining capacity and natural gas resources. The petrochemical industry is focused around the three centers of Kaduna, Warri and Eleme.

According to the 2008 BP Statistical Energy Survey, Nigeria had 2007 proved natural gas reserves of 5.29 trillion cubic meters, 2.98% of the world total. Due, mainly, to the lack of a gas infrastructure, 75% of associated gas is flared and 12% re-injected. Nigeria has set a target of zero flare by 2010 and is providing incentives for the production and use of gas. The government also plans to raise earnings from natural gas exports to 50 percent of oil revenues by 2010. It has been reported in the 2008 BP Statistical Energy Survey that Nigeria had 2007 natural gas production of 34.97 billion cubic metres, 1.18% of the world total.

Petroleum Law & Legislation

The government through its 100% state-owned national oil company, Nigerian National Petroleum Corporation (NNPC) has had an all encompassing control over the industry, both upstream and downstream, through its shareholding in all the companies involved and in the setting of wholesale and retail prices.

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.

Oil & Gas Companies

Some of the notable oil and gas companies in Nigeria are:

Key Figures

  • Oil production:2.169 million bbl/day(2008)
  • Oil Consumption: 286,000 bbl/day(2008)
  • Oil Exports: 2.327 million bbl/day(2007)
  • Oil Imports: 170,000 bbl/day(2007)
  • Oil Proved Reserves: 36.22 billion bbl(2009)
  • Natural Gas Production: 32.82 billion cu m(2008)
  • Natural Gas Consumption: 12.28 billion cu m (2008)
  • Natural Gas Exports: 20.55 billion cu m (2008)
  • Natural Gas Imports: 0 cu m (2008)
  • Natural Gas Proved reserves:5.215 trillion cu m(2009)

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