Overview of Nigeria,the largest oil producer in Africa

Overview of Nigeria,the largest oil producer in Africa

Nigeria is the largest oil producer in Africa, holds the largest natural gas reserves on the continent, and was the world’s fourth leading exporter of liquefied natural gas (LNG) in 2012. Nigeria became a member of the Organization of the Petroleum Exporting Countries (OPEC) in 1971, more than a decade after oil production began in the oil-rich Bayelsa State in the 1950s. Although Nigeria is the leading oil producer in Africa, production suffers from supply disruptions, which have resulted in unplanned outages as high as 500,000 barrels per day (bbl/d).
The oil and natural gas industries are primarily located in the Niger Delta region, where it has been a source of conflict. Local groups seeking a share of the wealth often attack the oil infrastructure, forcing companies to declare force majeure (a legal clause that allows a party to not satisfy contractual agreements because of circumstances that are beyond their control that prevent them from fulfilling contractual obligations) on oil shipments. At the same time, oil theft, commonly referred to as “bunkering,” leads to pipeline damage that is often severe, causing loss of production, pollution, and forcing companies to shut in production.
Aging infrastructure and poor maintenance have also resulted in oil spills. Also, natural gas flaring, the burning of associated natural gas that is produced with oil, has contributed to environmental pollution. Protest from local groups over environmental damages from oil spills and gas flaring have exacerbated tensions between some local communities and international oil companies (IOCs). The industry has been blamed for pollution that has damaged air, soil, and water, leading to losses in arable land and decreases in fish stock
– Nigeria has the second largest amount of proven crude oil reserves in Africa, but reserve estimates have been stagnant as exploration activity has been low. Rising security problems coupled with regulatory uncertainty have contributed to decreased exploration activity.
– There are several planned oil and gas projects scheduled to come online within the next 10 years. The start-up dates for many of the deepwater oil projects have been pushed back, which has mainly been attributed to regulatory uncertainty. The regulatory uncertainty has also resulted in the decline in deepwater exploration activity since 2007.
– For the past decade, the United States imported between 9% to 11% of its crude oil from Nigeria. However, this share fell to an average of 5% in 2012 and 4% from January to August 2013. As a result, Nigeria has fallen from being the fifth largest foreign oil supplier to the United States in 2011 to eighth in 2013.
– Nigeria has a crude oil distillation capacity of 445,000 bbl/d. Despite having a refinery nameplate capacity that exceeds domestic demand, the country must import petroleum because refinery utilization rates are low.
– Nigeria is the largest holder of natural gas proven reserves in Africa and the ninth largest holder in the world. Nigeria produced 1.2 Tcf of dry natural gas in 2012, ranking it as the world’s 25th largest natural gas producer. Natural gas production is restricted by the lack of infrastructure to monetize natural gas that is currently being flared.
– Nigeria exported 19.8 MMtpa (950 Bcf) of LNG in 2012, accounting for more than 8% of globally traded LNG and making Nigeria the world’s fourth largest LNG exporter. Japan is the largest importer of Nigerian LNG, receiving 24% of the total in 2012. The United States did not import any natural gas from Nigeria in 2012 for the first time in more than 10 years.
Source: eia.gov
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