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EIA Nigeria Oil Data Analysis and Statistics


Posted on March 11, 2009 – 10:14 am | by oilandgaspress.com

Nigeria is the largest oil producer in Africa, the eleventh largest producer of crude oil in the world and a member of the Organization of Petroleum Exporting Countries (OPEC). In 2006, total Nigerian oil production, including lease condensates, natural gas liquids and refinery gain, averaged 2.45 million bbl/d (of which 2.28 million bbl/d was crude oil). If Nigeria could bring back online all oil currently shut-in, EIA estimates that Nigeria could reach crude oil production capacity of three million bbl/d. With the help of new projects coming online, the Nigerian government hopes to increase oil production capacity to four million bbl/d by 2010.

Exports

Nigeria is the world’s eighth largest exporter of crude oil and the country is a major oil exporter to the United States. In 2006, Nigeria’s total oil exports reached an estimated 2.15 million bbl/d. Nigeria shipped approximately one million bbl/d or 42 percent of its crude exports to the United States in 2006. Additional importers of Nigerian crude oil include Europe (19 percent), South America (7.6 percent), Asia and the Caribbean. Despite shut-in production, major importers of Nigerian crude have experienced little to no decrease in Nigerian crude imports over the past 15 months. The steady exports suggest that the new production capacity additions (approximately 545,000 bbl/d) have mostly offset shut-in production.

Nigeria has six export terminals including Forcados and Bonny (operated by Shell); Escravos and Pennington (Chevron); Qua Iboe (ExxonMobil) and Brass (Agip). According to the International Crude Oil Market Handbook, Nigeria’s export blends are light, sweet crudes, with gravities ranging from API 29 – 36 degrees and low sulfur contents of 0.05 – 0.2 percent. Forcados Blend is considered one of the best gasoline-producing blends in the world.

Refining and Downstream

Nigeria’s refining capacity is currently insufficient to meet domestic demand, forcing the country to import petroleum products. According OGJ, Nigeria’s state-held refineries (Port Harcourt I and II, Warri, and Kaduna) have a combined nameplate capacity of 438,750 bbl/d, but problems including sabotage, fire, poor management and a lack of regular maintenance contribute to the current operating capacity of around 214,000 bbl/d. To increase refining capacity, the Nigerian government is granting permits to build several independently-owned refineries. Oando, a leading petroleum-marketing company in Nigeria, is considering building a refinery in Lagos. The refinery would be built in two phases, with each phase providing 180,000 bbl/d of refining capacity.

Nigeria is trying to privatize state entities by selling NNPC’s four oil refineries, petrochemicals plants, and its Pipelines and Products Marketing Company (PPMC). IOCs have shown little interest in investing in refinery privatization. However, the Nigerian government recently opened negotiations with Libyan, Indian, and Chinese investors. As of March 2007, Mittal Steel of India was looking to purchase a controlling stake in the Port Harcourt Refinery Company (PHRC), although, no deal has officially been signed.

Sector Organization

In 1977, Nigeria created the Nigerian National Petroleum Corporation (NNPC). At that time, the NNPC’s primary function was to oversee the regulation of the Nigerian oil industry, with secondary responsibilities for upstream and downstream developments. In 1988, the Nigerian government divided the NNPC into 12 subsidiary companies in order to better manage the country’s oil industry. The majority of Nigeria’s major oil and natural gas projects (95 percent) are funded through joint ventures (JVs), with the NNPC as the major shareholder. The largest JV is operated by Shell Petroleum Development Company (SPDC). Additional foreign companies operating in JVs with the NNPC include ExxonMobil, Chevron, ConocoPhillips, Total, Agip and Addax Petroleum. The remaining funding arrangements are comprised of production sharing contracts (PSCs), which are mostly confined to Nigeria’s deep offshore development program.

Recent Developments

Since December 2005, Nigeria has experienced increased pipeline vandalism, kidnappings, and militant takeover of oil facilities in the Niger Delta. As of April 2007, an estimated 587,000 bbl/d of crude production is shut-in. The majority of shut-in production is located onshore in the Niger Delta, with the exception of the offshore 115,000 bbl/d EA Platform. Since December 2005, Nigeria has lost an estimated 16 billion dollars in export revenues due to shut-in oil production. Shell has incurred the majority of shut-in oil production (477,000 bbl/d), followed by Chevron (70,000 bbl/d) and Agip (40,000 bbl/d). Militant attacks on oil infrastructure have also crippled Nigeria’s domestic refining capabilities. In February 2006, militant attacks in the western delta region forced the Warri (125,000 bbl/d) and Kaduna (110,000 bbl/d) refineries to shutdown due to a lack of feedstocks. In December 2006, operators shutdown Nigeria’s two Port Harcourt refineries for two months due to technical problems. The Niger Delta rebel group, Movement for the Emancipation of the Niger Delta (MEND) and other militia organizations in search of monetary compensation and/or political leverage are the ones behind the attacks. In addition to abductions, thousands of foreign workers and their families have left the Niger Delta due to continued hostilities. At least three companies, including a private drilling company and pipeline laying company have also left. MEND has stipulated numerous conditions to the Nigerian government that it wants met or else it has vowed to continue the attacks. Chief among the conditions is greater revenue sharing of the oil wealth, increased local control of oil property, the release of tribal prisoners, and transparency of government budgets. International oil companies (IOCs) are not expected to repair damaged oil infrastructure until after the elections are over.
According to Oil and Gas Journal (OGJ), Nigeria had 36.2 billion barrels of proven oil reserves as of January 2007. The Nigerian government plans to expand its proven reserves to 40 billion barrels by 2010. The majority of reserves are found along the country’s Niger River Delta, in southern Nigeria and offshore in the Bight of Benin, Gulf of Guinea and Bight of Bonny. Nigeria has total production capacity (total potential production capacity if all oil currently shut-in came back online) of three million barrels per day (bbl/d) including two million bbl/d onshore and one million bbl/d offshore.

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