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Agriculture

From Rediscover Nigeria desk

  AGRICULTURE   The wealth of a nation is partially measured by its ability to guarantee its citizenry food security.In…

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Manufacturing

From Rediscover Nigeria's Desk

Manufacturing in Nigeria concentrates mainly on the production of consumer goods. With a population estimated today at over 156 million…

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Nigeria! Overview

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Tourism in Nigeria has huge potentials to be a major foreign exchange earner. The Obasanjo administration has created awareness among…

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Nigeria's Resources

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Nigeria's total verified external debts as at December 2010 was US$4.578 billion as against US$3.947 billion in 2009. Total scrutinized…

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Rediscover Nigeria Oil and Gas

Oil and Gas

Nigeria is a country well endowed with Oil and Gas. With proven reserves of over 37billion barrels and a production capacity of 2.5million barrels per day, the country is in the top ten bracket of oil exporting countries.

BASINS

Nigeria has seven main sedimentary basins; the Anambra, Benin, Benue, Bida, Niger Delta, Sokoto and the Chad Basins. The most prolific is the Niger Delta.

Of recent, huge discoveries in the deep waters have created a flurry of activities bringing in some of the biggest oil recovery programmes in Nigeria. Some of the projects include Bonga, Agbami, Erha, Apo, Usan and Bosi Projects all gulping billions of Dollars.

In addition to this, is the rising profile of the Gulf of Guinea as a major area of huge hydrocarbon deposits? Nigeria has entered into agreements with countries sharing maritime boundaries with her to manage the resources through the institution of development projects in the Joint Development Zones.

The discovery of oil in the Republic of Chad and neighbouring Niger has also encouraged a renewed interest in Nigeria's section of the Chad Basin.

EXPLORATION

The world's biggest oil companies notably Shell, Exxon Mobil, Total Fina Elf, Agip, Chevron, Texaco, Conoco-Philips are all active in Nigeria. The oil industry is supervised by the Nigerian National Petroleum Corporation (NNPC) which manages the country's equity with Joint Venture Partners.

There is capital contribution from the government towards Joint Venture Operations. There is however a gradual movement from Joint Venture (JV) operations to Production Sharing Contracts (PSC) because of the drain J.V. operations put on the resources of the nation.

Every year, acreages in offshore and onshore basins are advertised for interested bidders. The new approach of PSC is attracting new companies both indigenous and foreign into Nigeria's oil industry. Average cost of production of crude oil in Nigeria is about $3.50 onshore and $5 offshore per barrel as against the North Sea where the same operation costs $9 - $10 per barrel.

RESERVES

Due to increase pace of activities and review of exploration and exploitation mechanisms, Nigeria's reserves of crude oil and gas have continued to grow. Exploration success is more than 60% in Nigeria and reserves have grown from 24billion barrels in 1998 to over 37billion barrels in 2010.

New discoveries are still being made as new acreages are given out through competitive bidding. The target is to reach a total of 40billion barrels of reserve and a production capacity of 3million barrels per day in 2015.

DOWN STREAM

There are four refineries in Nigeria located in Warri, Kaduna and Port Harcourt (which has two). Their combined installed capacity is 445,000 bpd but all are operating at about 45% capacity due to old age.

The Transformation Agenda envisages the addition of 445,000 BPD refining capacity through new projects by 2015.

The downstream sector has since been deregulated with about 20 companies granted licences to operate private refineries so as to boost the refining capacity of the country. They are progressing and are at various stages of design and commencement of physical development of the refineries. The involvement of Nigerian banks in the funding arrangements for these refineries is an indication of the growing financial strength of the banks and their involvement in the development of the real sector in Nigeria.

PETROLEUM INDUSTRY BILL

The Petroleum Industry Bill currently before Nigeria's parliament aims at creating capacity for Nigerians to participate better in the exploration, exploitation, refining and delivery of crude over a period of time. For more than 50 years that the various oil companies have operated in Nigeria, their impact in terms of manpower development for the sensitive areas of the oil industry has not been very impressive. Many of the preferential contracts which Nigerians have the capability to take on are still being handled and managed by foreigners. The bill therefore aims at creating capacity for Nigerians such that the impact of the exploitation of crude oil can rub off on Nigerians. It is anticipated that it will greatly impact on the Niger Delta and prevent a re-occurrence of the incidence which led to armed uprising in the immediate past.

To prepare for the opportunities the PIB will bring, the Nigerian Government has started training most of the militants who surrendered their arms and keyed into the amnesty programme.

GAS

Nigeria is endowed with about 174 trillion cubic feet of gas. On a daily basis, the country produces about 5.5 billion cubic feet of which a record 2.5 billion cubic feet is flared. This makes Nigeria the highest ranking gas flaring nation in the world. If properly harnessed, the gas flared can generate about 6 GW of electricity.

Some steps have been taken to curb gas flaring in Nigeria but there is still so much to be done which opens a vista of opportunities for prospective investors. Trains 1 and 2 of the Liquefied Natural gas (LNG) project in Bonny became operational in the year 2000. Train 3 came on board in 2002 while trains 4 and 5 were delivered in 2005.

With the commissioning of train 6 in 2007, the combined delivery capacity of the Bonny Liquefied Natural Gas is 22MMT per annum of LNG, 4MMT of LPG and condensate all from about 3.5 billion standard cubic feet of gas intake. The success of this partnership between Nigeria National Petroleum Corporation which owns 49% and other oil majors such as SHELL (25.6%), TOTAL (15%) and ENI (10.4%) points to the growing success of partnerships with Government in Nigeria. By the time train 7 is commissioned, 30 MMT of LNG will be delivered from Bonny to the international market earning over US$1 billion annually in revenue for Government.

Nigeria accounts for just about 10% of World LNG supplies. With more than 40% of Nigeria's gas still being flared; other joint ventures are on stream. The Brass LNG is on track with a commitment by NNPC, ENI, TOTAL and CONOCO PHILIPS to invest US$8.5 billion. This will deliver 10MMT of LNG and 2.5 MMT per year of LPG respectively and some condensates.

The deep water port of Olukola in Ondo state will soon play host to a gigantic LNG project with a capacity of 22 MMT per annum being jointly promoted by SHELL, BRITISH GAS and CHEVRON with a projected investment of about US$7 billion.

Other projects involving the utilisation of Nigeria's gas include the ESCRAVOS Gas-Liquid which is projected to attract US$6 billion in investment with a capacity for 300 million cubic feet per day. Its operational date is 2013 and will bring friendly fuel to Nigeria.

With Europe's LNG demand projected to go up by about 50% and World demand estimated to double by the year 2020, new projects are still being proposed. With Europe keen on the diversification of gas supplies from Russia, Nigeria has become the most attractive bride for investment.

The Trans Sahara Gas pipeline taking energy from Niger Delta across Niger and Algeria to the Europe has become a reality with an estimated commissioning date of 2016 and an investment of about US$20 billion. Spanning a pipeline length of about 2,565km, its effect on providing the energy needs of Europe will boost Nigeria's income from gas and correspondingly reduce flaring.

WEST AFRICAN GAS PIPELINE

The West African Gas Pipeline Project is an initiative to supply clean and cheap energy from Nigeria to some countries in West Africa. They are the Republics of Benin, Togo and Ghana. The project is expected to reduce drastically the energy bills of these countries. It is being pursued at a cost of about US$500million and will significantly help to reduce gas flaring in the Niger Delta.

OPPORTUNITIES

There are still significant opportunities in the Oil and Gas sector in Nigeria in the light of deregulation of the down stream sector.

  • Exploration and production.
  • Engineering of Oil and Gas products.
  • Local fabrication and supply of equipment.
  • Manpower training and skill acquisition.
  • New refineries to satisfy Nigeria's domestic consumption which currently imports about 70% of domestic consumption. Total daily consumption is about 35million litres.
  • Petrochemical plants to meet demand for polyester, PVC and Aromatics.
  • Nitrogenous fertilizer plants from abundant Gas feed stock
  • Supply of Gas to independent power plants considering the upward review of gas tariffs in favour of investors.
  • New LNG and LPG projects to meet projected world demand for clean energy from Gas.
  • New export based refineries in the Oil and Gas Zone at Onne Rivers State.
  • Production of bottles and cylinders to meet domestic requirements.
  • Trans Nigerian gas pipeline to supply gas for domestic and industrial use.
  • Investment in Shipping Crude Oil and Imported Petroleum Products.

 

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