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The Petroleum Industry in Nigeria 2023

Stephen Timm | Nigeria | 30 June 2023

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Report Coverage

This report on the petroleum industry in Nigeria includes information on the state and size of the upstream, downstream and gas subsectors, infrastructure, economic contribution, reserves, production, consumption, wholesale, retail and distribution. There is information on new projects, investment, corporate actions and developments. There are profiles of 41 notable companies including state-owned Nigerian National Petroleum Corporation (NNPC), which is a major commercial player, multinational majors such as Chevron, Shell, TotalEnergies and ENI, local downstream companies such as Matrix Energy, Northwest Petroleum & Gas, Swift Oil, Mainland Oil & Gas, Optima Energy Resources, Ashrami Synergy and Pinnacle Oil & Gas, and companies operating in the gas sector such as NIPCO and Techno Oil.

Introduction

• While Nigeria remains one of the biggest oil producers in Africa, crude oil production has declined in recent years due to underinvestment, sabotage and oil theft.
• Nigeria relies on imports for almost all its fuel needs, as all four state-owned refineries remain shut for maintenance.
• The 650,000b/d Dangote refinery, the largest on the continent, was commissioned in May 2023, and is expected to help reduce the country’s reliance on imports once it comes fully online.
• In May 2023, the government removed a fuel subsidy which critics said led to huge wastage and smuggling.
• Despite the sector’s numerous challenges, many remain confident that the Petroleum Industry Act, enacted in 2021, will help deregulate the downstream sector and encourage more investment in oil production.
• The government is also looking to promote natural gas as a transition energy, which could result in liquid natural gas (LNG) production being ramped up.

Strengths

• Nigeria was the biggest oil producer in Africa in 2022 (despite falling to third spot on the continent in some months).
• Nigeria’s oil is one of the most preferred due to its low sulfuric content, and low corrosiveness to refinery infrastructure.
• Presence of several oil majors.
• The Petroleum Industry Act is expected to create investment certainty and lead to deregulation.

Weaknesses

• A lack of gas infrastructure such as pipelines and processing plants.
• Declining production due to lack of investment.
• None of the state’s four refineries are functioning currently.
• Oil production costs are among the highest in the world.

Opportunities

• Development of LNG as a transition fuel to meet local and export demand.
• New onshore production.
• Nigeria could become a new refining centre when the Dangote refinery and four state-owned refineries come online.
• Oil major’s move to exit onshore oil blocks provide Nigerian petroleum companies with more opportunities.
• Setting up modal refineries.
• The scrapping of the fuel subsidy in May 2023 will help deregulate the downstream market and encourage competition.

Threats

• Ageing and underutilised pipelines, which are often targeted by criminals
• Banks and other funders’ reluctance to fund new oil projects because of climate change and other issues.
• Corruption and political risk make the operating environment more difficult.
• Fuel sales could slow as consumers’ battle high unemployment high inflation and higher fuel prices following the removal of the fuel subsidy in May 2023.
• Jetties handling fuel imports are often compromised by the poor maintenance of waterways, while a lack of security has resulted in an increase in piracy.
• Oil majors are pulling out of onshore oil fields because of security concerns.
• Theft, sabotage and other criminal incidents.

Outlook

• Nigeria has experienced years of declining oil production due to theft and sabotage and declining investment.
• Production may improve in 2023 following new offshore drilling activity and the resumption of operations at onshore export terminals.
• Experts are hopeful that the Petroleum Industry Act will help the industry to turn a corner by creating more investment certainty.
• The oil and gas sector could record significant growth in 2023 due to several measures by the government to address oil thefts, pipeline vandalism and illegal refining.
• The planned commencement of the Port Harcourt and Dangote refineries in 2023 are expected to increase domestic processing of crude oil produced by the country.
• The outlook for the downstream sector is positive given the end of the subsidy and coming on stream of the Dangote refinery.

Read More..
The Petroleum Industry in Nigeria
The Petroleum Industry in Nigeria 2023

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Table of Contents

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PAGE
1. INTRODUCTION 1
2. COUNTRY INFORMATION 1
3. DESCRIPTION OF THE INDUSTRY 3
3.1. Industry Value Chain 5
3.2. Geographic Position 7
3.3. Size of the Industry 9
3.4. Key Trends 18
3.5. Key Issues 18
4. LOCAL 19
4.1. State of the Industry 19
4.2. Key Trends 28
4.3. Notable Players 33
4.4. Trade 39
4.5. Corporate Actions 42
4.6. Regulations 44
4.7. Enterprise Development and Social Economic Development 49
5. AFRICA 50
6. INTERNATIONAL 54
7. INFLUENCING FACTORS 56
7.1. Economic Environment 56
7.2. Labour 57
7.3. Environmental Issues 58
7.4. Technology, Research and Development (R&D) and Innovation 60
7.5. Input Costs 62
7.6. Pricing 63
7.7. Local Content 63
7.8. Gas Flaring 65
7.9. Corruption 65
7.10. Theft, Sabotage and Security 66
7.11. Safety 69
8. COMPETITIVE ENVIRONMENT 69
8.1. Competition 69
8.2. Ownership Structure of the Industry 70
8.3. Barriers to Entry 71
9. SWOT ANALYSIS 71
10. OUTLOOK 72
11. INDUSTRY ASSOCIATIONS 72
12. REFERENCES 73
12.1. Publications 73
12.2. Websites 75
APPENDICES 77
Appendix 1 - Summary of Notable Players 77
COMPANY PROFILES 80
11 PLC 80
A. A. Rano Nigeria Ltd 83
A.Y.M. Shafa Holdings Ltd 85
AIPCC Energy Ltd 87
Amni International Petroleum Development Company Ltd 89
Aradel Holdings Plc 91
Ardova PLC 94
Asharami Synergy Plc 96
Azikel Group Ltd 98
BOVAS and Company Ltd 100
Chevron Nigeria Ltd 102
CNOOC Ltd 104
Conoil PLC 106
Danmarna Petroleum Ltd 108
Emadeb Energy Services Ltd 109
Eni SpA 111
Equinor ASA 119
Heyden Petroleum Ltd 125
Mainland Oil & Gas Company Ltd 127
Masters Energy Oil and Gas Ltd 129
Matrix Energy Ltd 131
MRS Oil Nigeria PLC 133
Nepal Energies Ltd 136
Nigeria LNG Ltd 138
Nigerian National Petroleum Company Ltd 141
NIPCO PLC 145
Northwest Petroleum and Gas Nigeria Ltd 148
Omsa Pillar Astex Company Ltd 150
Optima Energy Resources Ltd 151
Oriental Energy Resources Ltd 153
Pinnacle Oil & Gas Ltd 154
Quest Oil Group Ltd 156
Rainoil Ltd 157
Seplat Energy PLC 159
Shell PLC 162
South Atlantic Petroleum Ltd 170
Swift Oil Ltd 172
Techno Oil Ltd 174
TotalEnergies Marketing Nigeria PLC 176
Waltersmith Petroman Oil Ltd 179
West African Exploration and Production Company Ltd 181