Nigeria is a member of OPEC and is one of the major exporters of crude oil in the world. Nigeria is the 6th largest producer of crude oil and the 5th largest supplier of crude oil to America and Western Europe. Most recently, Asia and India both have an average of 120,000 barrels and 150,000 barrels respectively per day crude oil allocation from Nigeria.
Nigeria’s economy is heavily dependent on the oil sector, which accounts for nearly 80% of government revenues. Nigeria’s estimated proven oil reserves is currently about 36 billion barrels per day with a further 4 billion barrels per day forecast to be added by 2010 when most recently discovered oil wells in the continental oil shelve will have started production. With these findings and proven reserves, Nigeria can conveniently produce more than 3 million barrels per day, but this is grossly limited by OPEC quota, which creates room for surplus stock for refining within Nigeria.
For this reason, the project stands to benefit immensely from the excess crude oil produced, and as such guarantee the supply of feedstock to the refinery. Nigeria’s crude oil gravities range from 210 API to 450 API. The main export crude oil blends are Bonny, Qua, Brass and Forcados sweet crude (low sulphur content) oil.
Major International Oil Company operating in Nigeria include British Gas, BP, Royal Dutch/Shell, Statoil, Chevron Texaco, Exxon Mobile, Petrobras, ENI/Agip, Tenneco, Total Fina Elf, Conoco etc. They have continuously invested in excess of US$6 billion annually in Nigeria. The recent deregulation of the oil and gas sectors of the Nigerian economy has given rise to increased investment opportunities in these sectors. Many Asians and some Eastern European companies are investing extensively in the downstream sector, with their major interests in the gas sector. The construction of three LNG plants, worth over US$12 billion in five years and the investment of US$6 billion by BP (British Petroleum) in 2006 is a plus to our investment climate, and the limitless opportunities Nigeria can offer to credible investors. Nigeria has one of the highest gas reserves in the world, rich in (C1-C5) up to 85% content. This has continued to attract investors to the Nigeria’s virgin gas sector. These investments will also help to reduce gas flaring.
As most African countries are aggressively pursuing transition to democracy and free market economy, there now exist investment and joint venture situations that will not only interest and benefit foreign investors, but will guarantee higher return on investment over a short period of time. Nigeria, with a proven oil reserve of over 36 billion barrels and a population of about 140 million people, will continue to make those natural and human resources available to its clients (investors) that have an interest in seriously considering business initiatives in the country. Nigerian government incentives and tax rebates also serve to encourage investment in the oil and gas sector.
The Nigerian government offers liberalized rules governing market entry, reparation of profit, maintenance of an offshore escrow account by investors, as well as better fiscal incentives to investors. Further aspects include security of tenure, generous tax holidays, guaranteed export earnings, provision of feedstock at fair price, capital allowance, sale of crude oil, and 50% duty reduction on construction materials. These incentives have been actively exploited by multinational oil companies.
The shift of Global FDI is gradually favouring African countries rich in oil and gas reverses, due to new economic reforms in respect of liberalization and privatization policies, adequate supply of raw materials, low cost of production, plentiful supply of skill and semi-skilled manpower, cheap labour, expanding domestic and international market and robust growth opportunities in the world.