Energy
From The Report: Nigeria 2013
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In 2011 Nigeria had the world’s 10th-largest oil reserves, at 37.2bn barrels, and the ninth-largest reserves of associated gas, at 182trn standard cu feet. Yet as the country’s proven reserves of both oil and gas start to decline, the imperative will be to clarify the industry’s long-term legal and fiscal outlooks to encourage more investment in exploration and production. Despite legislative delays, Nigeria is making progress in expanding local firms’ share of production and oil services while also catalysing significant investment in gas-to-power projects. The sector’s positive outlook is contingent on progress in the key areas of energy production and the expansion of investment in more sophisticated offshore projects. Alongside implementation of the Gas Master Plan, enacting the long-awaited Petroleum Industry Bill before the 2015 elections would prove a significant help.

This chapter contains a viewpoint from Diezani Alison Madueke, Minister of Petroleum, and interviews with Austin Avuru, Managing Director, Seplat Petroleum Development Company; and Emeka Ene, Chairman, Petroleum Technology Association of Nigeria.

Articles from this Chapter

Overview

Staying in the lead: Africa’s largest oil producer balances growth, upgrades and oversight
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Nigeria has a well-established track record as the world’s 12th-largest producer of oil and the leading producer in Africa, according to the BP “Statistical Review of World Energy 2013”. Yet as the country’s proven reserves of both oil and gas start to decline, the imperative is to clarify the industry’s long-term legal and fiscal outlooks to encourage more investment in exploration and production (E&P). Despite legislative delays, Nigeria is making progress in expanding local firms’…

Analysis

Going local: Indigenous firms are responsible for a greater volume of services
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Implementation of the 2010 Nigerian Oil and Gas Industry Content Development Act has raised the share of in-country sector spending, contracting and funding. While international oil companies (IOCs) are making efforts to comply with the act, foreign contractors are increasingly establishing local ventures, and local firms are gaining a larger share of investment. The Nigerian Content Development and Monitoring Board (NCDMB), established to monitor compliance and develop local capacity, is…

Analysis

Integrating operations: Developing local onshore assembly and fabrication capacity
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As Nigeria’s upstream mix shifts increasingly offshore, developing onshore assembly and fabrication capacity will be crucial for the floating, production, storage and offloading (FPSO) facilities key to extracting this oil. The local content of FPSOs in Nigeria has gradually increased with FPSOs such as Bonga, Agbami and Usan, yet the Total-operated Egina looks set to become the first FPSO with integration onshore, in compliance with the 2010 Nigerian Content Act. However, the project will…

Viewpoint

Diezani Alison Madueke, Minister of Petroleum, on realising potential
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By 2020 Nigeria hopes to be one of the 20th-largest economies in the world and able to consolidate its leadership role in Africa and establish itself as a significant player in the global economic and political arena. This can be realised through efficient utilisation of our natural resources. After 50 years of oil production, Nigeria is currently in the process of reforming the oil and gas industry with the introduction of policies and legal frameworks that will underpin its energy policies,…

Analysis

Monetising an ocean of gas: New projects help the country to reap the gains of its major resource
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Nigeria’s reserves are often characterised as a drop of oil in an ocean of natural gas. With total proven natural gas reserves ranging between 182trn standard cu ft (scf), according to BP’s “Statistical Review of World Energy 2013”, and 187trn scf, according to the Nigerian National Petroleum Corporation (NNPC) – making it the world’s ninth largest – the potential for monetising these reserves is significant. POTENTIAL: Given that all of this is associated gas (gas found alongside…

Analysis

PIB: the path to certainty: Back and forth on slated reforms
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Following over a decade’s debate on 17 drafts of the long-awaited Petroleum Industry Bill (PIB), authorities hope to enact the reform by year-end 2013. With debate shifting from the federal executive branch to parliament, and the 2015 elections fast approaching, time is of the essence. Despite opposition from international oil companies (IOCs) due to financial concerns and the role of the Federal Ministry of Petroleum Resources (FMPR), certainty on future fiscal terms is crucial to fostering…

Analysis

Bridging the refining gap: Increasing the country’s domestic production capacity
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Although it is Africa’s largest crude exporter, Nigeria remains dependent on imports for some 86% of its refined fuel needs of 35m litres daily, equivalent to 279,000 barrels per day (bpd). Successive rounds of turnaround maintenance (TAM) have failed to expand domestic refining capacity, while the subsidy structure of fuel sales incentivises the import of premium motor spirit (PMS) from EU refineries, which oversupply the European market. A new round of TAM at existing refineries, starting…

Interview

OBG talks to Austin Avuru, Managing Director, Seplat Petroleum Development Company
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Interview:Austin Avuru What factors will drive industry consolidation in the short to medium term? AUSTIN AVURU: Going forward, industry consolidation will be driven mainly by the need to pool financial resources. Just as we saw in previous acquisitions, domestic companies will have to form consortia to acquire assets with substantial reserves. In the end, I predict that there will be four to six consortia that will account for all local production. It remains unclear when the next marginal…

Interview

OBG talks to Emeka Ene, Chairman, Petroleum Technology Association of Nigeria (PETAN)
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Interview:Emeka Ene To what extent do local content laws in the region inhibit international growth and trade? EMEKA ENE: At first glance, local content laws can give the impression of trying to raise barriers. However, we see local content as a successful means to stimulating growth, investment and jobs. The local content drive across the region will encourage reciprocity in many countries, as people will always look for partners wherever they are. It is akin to a ripple effect: for example,…

Analysis

Building capacity: Sector reforms and market changes expand the scope for local players
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With increasing support from the government, local exploration and production (E&P) firms are expanding their share of output and prospects. International oil companies (IOCs) have gradually been retrenching their positions onshore and in shallow waters, selling over $7bn in combined assets over the past three years to both local firms and relatively new entrants from China. “The awarding of marginal fields to indigenous oil companies and the divestment by IOCs from some of their onshore…

Analysis

Competition heats up: Shifting demand and rising supply make for a dynamic downstream market
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Over the past decade, the thirst for fuel in emerging economies has mirrored their spectacular economic rise, shifting growth in demand for energy from the West to the East. The changing dynamics of energy demand have, in turn, affected the downstream petroleum sector, increasing the share of new investment flowing to emerging markets. Four out of five of the largest refinery projects realised over the past five years have been built in countries outside of the Organisation for Economic Cooperation…

Analysis

Competition heats up: Shifting demand and rising supply make for a dynamic downstream market
OBG
plus

Over the past decade, the thirst for fuel in emerging economies has mirrored their spectacular economic rise, shifting growth in demand for energy from the West to the East. The changing dynamics of energy demand have, in turn, affected the downstream petroleum sector, increasing the share of new investment flowing to emerging markets. Four out of five of the largest refinery projects realised over the past five years have been built in countries outside of the Organisation for Economic Cooperation…