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Nigeria risks losing Africa’s biggest oil producer status

By on July 10, 2013

Nigeria is on the verge of losing its prestigious ‘Africa’s biggest oil producer’ as Angola drew level with it in May, with daily oil production at 1.97 million barrels per day.

Angola also sold its first gas cargo from its $10 billion gas plants after 18 months delay.

The development follows a recent report by Platts survey of the Organisation of the Petroleum Exporting Countries (OPEC), which analysts called ‘worrying’. This is because Nigeria is the OPEC producer most affected by the shale oil boom that has seen its oil sales into the United States (US) slashed.

Meanwhile, a huge cloud of doubt hovers over future investments in Nigeria’s oil industry following huge divestments by International Oil Companies, IOCs, from the country. This has left marginal field operators the herculean task to develop their fields with little financial power and obsolete technologies.

Statistics however, revealed that Nigeria produced about 2.2 million barrels of crude oil per day, making it the fourth world exporter of oil.

Trailing behind Nigeria in oil production is Algeria with about 2.1 million barrels follow by Angola and Libya with 1.9 and 1.7 million barrels respectively.

Industry expert believes that Angola will unseat Nigeria as Africa’s biggest oil producer in 2014, owning to its unfriendly economic terrain, unfair revenue sharing formula, stall of investment in the sector, non discovery of crude oil in commercial quantity and the none passage of the Petroleum Industry Bill, PIB.

Factors militating against Nigeria’s production

Speaking further, our source urged the Federal Government to address factor militating against the country’s oil production.

“For instance, oil companies pay royalties, taxes and other levies to the Federal Government for oil production. That automatically suggests that government is responsible for the up keep of oil producing communities not the oil companies. But you still find these companies taking care of the oil producing communities.

“The Nigerian terrain is not favourable for them to operate any longer and that is why you find some of them divesting. The Petroleum Profit Tax, PPT Act (1959) is still on the high side and not attractive.

“Applicable tax rate is 85 per cent for Joint Venture, JV operations and 59 per cent for deepwater field is the highest in Africa, if not in the world. For new comers, it is 67.5 per cent rate fort first development projects.