07-Jan-2009 21:01:42

OIL INDUSTRY PROFILE

The Oil Industry, is the backbone of the Nigerian economy, accounting for over 90% of total foreign exchange revenue. Estimates of the total crude oil reserves  vary, but are generally accepted to be about 25 billion barrels, although new offshore discoveries are likely to push this figure to about 30 billion barrels. 

Current daily production has been limited by OPEC quota reductions in, to about 1.787 million barrels per day, from an average figure of  2.23 million barrels per day in the first half of 2001. As a member of OPEC, the global oil cartel, oil production in Nigeria fluctuates in line with the cartel's response to world oil supply.

Most of Nigeria’s crude oil production, comprising 10 major crude streams (including condensate), is light sweet crude, API grades 21-45, with a low sulphur content. Nigeria's marker crudes on the International oil market are Bonny Light and Forcados. All of the crude oil in Nigeria comes from numerous, small, producing fields, located in the swamps of the Niger Delta, and product is exported through 7 terminals, and a number of floating production vessels.  There are about 606 fields, most with less than 100 million bbls of extractable reserves. Numerous other fields are known throughout the Niger Delta, and some of the marginal fields have become the focus of a longstanding debate over their possible reallocation to small private local companies.

Current Government policy is to raise total reserves to 30 billion barrels, by the year 2003, while daily production is targeted at 3 million barrels. 

In June 1999, a new democratically elected government, led by President Olusegun Obasanjo, was inaugurated.  After 3 years in office, the new government has done much to restore confidence in the oil sector.  The oil sector is headed by a special adviser in the office of the president, the former OPEC chief Rilwanu Lukman.  Well respected internationally, his appointment was a major boost of confidence for Nigeria's partners.  A new Managing Director was also been appointed for the Nigerian National Petroleum Corporation, (NNPC) in the person of Gaius-Obaseki.  

In 3 years of democracy, there has been a major upsurge in exploration activity in the offshore region of the Niger Delta.  The NNPC now issues reports on operations quarterly, and has commenced a number of initiatives to reduce gas flaring.  The development of major gas projects aimed at ending gas flaring by 2008, has been one of the highlights of the past 3 years in the Nigerian energy sector.  

The industry still has to contend with a number of issues, including community restiveness throughout the Niger Delta.  Despite tha increased revenues to the Niger Delta States, development of infrastructure has been slow, and most of the oil majors have been the targets of continual community unrest.

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