My thinking is that the leadership of Nigeria is being either extremely insensitive or totally ignorant to the global trends of the industry, they are busy fighting for who controls majority of the funds from oil and gas unfortunately oil and gas is Nigeria’s predominant revenue earner, Nigeria’s budget is predicated upon almost only earnings from the oil and gas sales, its very amusing to know that the true status of quantity of production of crude oil may actually not be known, suffice it to say we may be surprised to also know that the quantity of stolen crude may be well over alleged estimates stated by the OIC’s and the Nigeria government.
There have been debates upon debates during the reading for the passage of the petroleum industry bill (PIB)on the floor of the Senate Chambers in Nigeria, to the extent that Senators where almost at the point doing physical, they where heavily divided amongst Northern senators and Senators from the Niger delta region of the country .
Nigeria senators and legislators are fighting over passage of the petroleum industry bill, little do they know that the revenue from crude oil may in a short while dwindle so much that it may be impossible to continue to fund budgets premeditated on sales of crude oil.
Severally Nigeria is plagued with war against itself and development is far cry from expectations, for me i think leadership is a major issue, the international press keeps calling Nigeria a land-of-no-tommorow (as amusing as it is, yet so scary), we really need to be worried because revenue from oil in Nigeria accounts for 80% of government revenue and 95% of foreign exchange reserves,
Impending Falling Demand and lower competitiveness:
The international news media Reuters also reported indication of Nigeria’s competitiveness and eventual reduction in demand for Nigeria oil by one of Nigeria’s biggest crude oil buyer The United states of America, i have observed the huge discovery of oil in the US using a technology known as Fracking (or hydraulic fracking), crude oil production in the United States is surging. From a low of 5 million barrels per day in 2008 output has shot up in a hyperbolic curve to 7 million bpd with this level of production, the US is moving to be totally independent on oil imports, It is even rumored that export of crude oil and gas is inevitable and some industry players are applying for export license
The U.S. accounted for 35 percent of oil exports from Nigeria in 2011. But it imported around 40 percent less last year, taking purchases from Nigeria to their lowest in over 20 years, according to data from the Energy Information Administration (EIA), a U.S. government agency. It is also reported that this drop in demand has already resulted in Nigerian barrels selling for around 40 cents lower than its official selling price and left dozens of cargoes unsold and rolled over to future months, according to research by Ecobank, this is obviously not a good news for Nigeria, don’t we need to worry?
A big issue is that the growing East African oil and gas industry will prove to be a serious competitor, especially given its proximity to key Asian markets compared to Nigeria.”
There have been around 70 discoveries in sub-Saharan Africa in the last five years with the majority coming in East African countries like Tanzania, Uganda and Mozambique.
Around 250 trillion cubic feet of natural gas may lie off those three countries alone, the US Geological Survey estimates.
Several East African LNG plants are expected to come online in the next 5 years, while Nigeria with similar gas reserves has stalled a new LNG project (Brass LNG) for the last 8 years, seeing oil major partners Chevron and Conoco give up stakes.
Why are the international Oil companies divesting from Nigeria?
We may have other reasons for the further divestment of the international oil companies from Nigeria ( you may read an account for why they are divesting) but it has continued unabated with the announcement from Brazils Petrobraz trying to sell off $5B of assets hopefully in the next 2 months just few days ago
I have recorded some of those trends for example In 2010, Shell started the selective divestment of some of its Nigerian assets, with its partners, Total and Agip Oil (NAOC) announced the sale of their 45 percent interest in the onshore block OML 40 to Elcrest Nigeria Limited
Sinopec also purchased oil and gas assets from Total for a total sum of 2.5B dollars
Oando have agreed to acquire assets of conoco-phillips in Nigeria for $1.7B
Why Nigeria investment soars both fails to fight poverty and infrastructural development
Have you ever wondered why we are having fiscal growth and this is also failing to fight poverty? i think this may stem from the fact that the government need to give attention to major changes in infrastructure and Agriculture, i may not have the exact figures of what the government have done so far on these sectors, but evidence on ground shouts to the fact that more needs to be done and a time line for results of these efforts should be a major concern.
Nigeria is presently the second largest economy in Africa, a top oil producer comparatively has low debt by international standards and projected growth of around 7 percent for the next four years – a magnet drawing in both foreign direct and portfolio investors.
Nigeria’s economic growth has averaged about 7.4% annually over the past decade, creating a wealthier Nigerian elite with a large spending power. At the same time, however, robust economic growth has not reduced poverty in the country, with about two thirds of its population living on less than N160 per day which translates into less than $1 per day
The international press reports that Oil production continues to attract large inflows. Shares in banks and in firms selling consumer goods to the continent’s most populous nation are outperforming emerging market peers, this clearly is a good story.
I also hear investors are reluctant to put money in value creating and long-term job-creating areas like education, agriculture and manufacturing, until our President makes good his promises to reform properly the power sector, Roads and the food industry, i think investors will begin to care when these sectors are taken care of.
It is interesting to note that agriculture employs around 60 % of Nigeria’s 160 million people, and makes up 45% of the GDP compared with 15% for oil and gas industry which is known to not being able to spread wealth evenly, hence it caters for only a select and corrupt privileged few.
Although severally the presidency refutes the idea that the insurgency and terrorism being experienced in Northern Nigeria is caused by Poverty and years of misrule, i think this is the problem, John Campbel epitomizes Nigeria situation in his write up, “how to undermine Nigeria’s growing islamic threat” he goes on to say “Boko Haram attacks have escalated and grown more sophisticated, drawing on masses of unemployed youth”. Unemployment is a resultant effect of lack of vision and direction of leadership.
I think that we Nigerians really need to worry about what is going on in our land and find a way to recreate the future that we will love our children to inherit ultimately, without sounding too politically naive we may not be getting the best from our current lots in leadership, apparently some things needs to change, maybe the leaders themselves can change strategy and begin to create a country that can rightly become the largest economy in Africa, we do not have to condescend wrongly to the lowly position of the second largest economy in Africa, we have the population, we have the “skilled” man power, maybe we should also have skilled leadership to help the navigation to the top, the world is coming to Africa we need to welcome them.
Recall recent events in some other African countries like Ghana, they are more proactive in making sure that their new discoveries should not be a poison to them on the long run, they have started well and made outstanding progress so far, they are seriously learning from Nigeria’s mistakes of the past and “present,” believe me they are learning from our current mistakes.
Just saw a news today about Uganda’s stride in local content development, please read this article (local firms asked to partner foriegn oil and gas training institutes) for me this is how to start creating capacity locally.