Energy
From The Report: Nigeria 2017
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As Africa’s largest oil producer, Nigeria is a key member of the Organisation of the Petroleum Exporting Countries (OPEC) and the world’s fourth-largest exporter of liquefied natural gas. Policy moves over the past two decades have enabled young Nigerian companies to acquire and develop oil and gas blocks, build pipelines and distribution networks, and soon, based on the current project pipeline, refineries and power plants as well. There is still ample room for improvement, however. Renewed militant activity in the Niger Delta region – where much of the upstream activity is concentrated – continues to disrupt production, while the country’s regulatory framework is ageing, with a long-awaited overhaul yet to materialise. Nigeria’s energy sector is largely awaiting the passage of the Petroleum Industry Governance Bill – which has been on the cards for roughly a decade – but given the recent momentum in the National Assembly, the next year may finally see that happen, which would bring in significant sector changes.

This chapter contains interviews with Emmanuel Ibe Kachikwu, Minister of State, Petroleum Resources; Femi Otedola, Chairman, Forte Oil; Mohammad Sanusi Barkindo, Secretary-General, OPEC; and Guido d’Aloisio, Central Africa Regional Manager, Saipem.

Articles from this Chapter

Overview

Pipeline project: Government initiatives set to make 2017 a pivotal year
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As Africa’s largest oil producer, Nigeria is a key member of the Organisation of the Petroleum Exporting Countries (OPEC) and the world’s fourth-largest exporter of liquefied natural gas (LNG). In addition to being a traditional heavyweight in terms of output, Nigeria’s energy sector is also notable for its early success in building local content in upstream activity. Policy moves over the past two decades have enabled young Nigerian companies to acquire and develop oil and gas blocks,…

Interview

Major trends: Emmanuel Ibe Kachikwu, Minister of State, Petroleum Resources, on changing perceptions in the sector
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Interview:Emmanuel Ibe Kachikwu How do you expect the Organisation of the Petroleum Exporting Countries (OPEC) agreement from 2016 to impact oil revenues? EMMANUEL IBE KACHIKWU: The OPEC agreement has been instrumental in guaranteeing price stability. In fact, we came from an average of $38-40 per barrel in 2016 to an average of $55 per barrel and growing in 2017. The resurgence in prices is a fundamental driver behind a new push for investments in Nigeria, as international oil companies…

Interview

Industry refinement: Femi Otedola, Chairman, Forte Oil, on developing the downstream sector
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Interview: Femi Otedola What can be done to improve Nigeria’s competitiveness in the downstream sector? FEMI OTEDOLA: A great deal needs to be done to make Nigeria’s downstream sector more competitive. There is no doubt that the sector is in dire need of massive investment, something that has been difficult to encourage previously due, in large part, to the current pricing regime for premium motor spirits and gasoline. These products form the basis of roughly 70% of the country’s total refining…

Analysis

Sweeping reforms: A series of bills stand to transform the future of industry activity
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It was just one step in the right direction, but the Nigerian Senate’s passage of an energy industry bill, the Petroleum Industry Governance Bill (PIGB), in May 2017 felt like a huge leap to many in the country. Nigeria has been waiting for a decade for comprehensive energy sector reform, with the existing regulatory framework showing its age, causing investment inflows to slow as a result. The PIGB is one of several reforms designed to update the legal environment and stimulate fresh…

Interview

Energising the market: Mohammad Sanusi Barkindo, Secretary-General, Organisation of the Petroleum Exporting Countries (OPEC), on managing the global oil industry
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Interview : Mohammad Sanusi Barkindo To what extent has OPEC’s decision to adjust production achieved its intended target? MOHAMMAD SANUSI BARKINDO: Thus far, the results are encouraging. From January 1, 2017 OPEC and a group of 11 leading non-OPEC oil producers began the implementation of production adjustments totalling 1.8m barrels per day (bpd). We have seen a steady rise in conformity. In January 2017 conformity levels were 86%, while in February this improved even further, rising to 94%.…

Interview

Extracting results: Guido d’Aloisio, Central Africa Regional Manager, Saipem, on overcoming challenges in the oil and gas sector
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Interview : Guido d’Aloisio What impact has the drop in oil prices had on Nigeria’s upstream sector? GUIDO D’ALOISIO: The upstream sector of the oil and gas industry has been hit by relative inactivity as a result of the drop in oil prices. This is normal, as it has made investment relatively unattractive. However, there has been a positive effect in the sense that it has led engineering, procurement and construction contractors to reappraise how to deliver projects at lower costs, while…

Analysis

An air of refinement: The government is promoting private sector investment
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When President Muhammadu Buhari took office, he prioritised rehabilitating Nigeria’s ageing refineries with the notion that replacing imported fuels with local production would be an important contribution to solving several pressing problems in the country, including expensive fuel imports. There is plenty of room for the refineries to improve their performance; average capacity utilisation was 20% from 2010 to 2015, according to Dolapo Oni, an analyst for Ecobank. Private Refining There…

Analysis

An exporter’s market: Despite steady demand, achieving domestic stability in the sector is unlikely in the short term
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Long one of the top two crude exporters in Africa, Nigeria’s gas output has also served as a source of increasing revenue. However, changes are afoot in both segments as a result of the shifting global crude trade patterns and the rising levels of domestic consumption, which may in turn have long-term implications for the country. Oil Global crude markets are in a transitional phase as traditional producers grapple with US shale companies for global market share. The US currently imports…

Analysis

Downstream challenges: Price distortions remain an issue despite regulations
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Nigeria’s downstream fuels sector has endured a tumultuous few years, from a nationwide strike over consumer costs to corruption scandals. However, more recently a measure of stability has returned to the market, aided in part by government reforms to the pricing framework for fuels. The sector is a crucial one for the country given that the growing 186m-person population is increasing energy demands. In addition, the sector provides substantial income and vast opportunities for a nation…