This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 8/13/2019

  Overview
 

  Unit: USD thousands

 

2015

2016

2017

2018

2019 (Estimates)

Total Market Size

387345

244,917

221,600

0

0

Total Local Production

13,965

9,776

9,971

0

0

Total Exports

0

0

0

0

0

Total Imports

335,915

235,141

211,629

0

0

Imports from the U.S.

144,882

79,636

96,133

63,394

80,000

Exchange Rate: 1 SD

193

246

314

360

361

Total Market Size = (Total Local Production + Total Imports) – (Total Exports)

Data Sources:
                Total Local Production: Industry Operators & trade publications*
                Total Exports: Industry Operators & Trade Associations
                Total Imports: U.S. Census Bureau, Trade Associations (PETAN) **
                Imports from U.S.: U.S. Census Bureau (drilling & oilfield equipment)

*Ministry of Petroleum Resources
**PETAN: Petroleum Technology Association of Nigeria
***Trade Publications: Nigerian Oil & Gas Intelligence, African Oil & Gas Journal, the Oxford Business Group

Nigeria remains one of Africa’s key oil producers producing high-value, low-sulfur content crude oil.  Although the country is currently struggling to cope with depleting revenues, liquidity and convertibility issues, it is vigorously adopting measures to overcome economic recession and exploring various alternative revenue sources, especially through gas commercialization and infrastructure development. 
Albeit the country’s economic outlook in 2016 was viewed as bleak with delays in many projects, industry observers sees a promising outlook for the country’s 2019 to 2020 economic outlook. While a couple of the international oil companies continue to scale down capital expenditure and delay investments in new exploration activities, divestments from onshore and shallow onshore assets, others are continuing their offshore projects and initiating new ones. Industry observers see tremendous opportunities in service contracts from ongoing and upcoming deep-water projects, especially new discoveries such as OPL 245, which is estimated to offer over $13 billion of ancillary service for drilling and production systems if issues regarding the project are resolved.  

Government of Nigeria is continuing its prioritization of gas and is moving ahead on the Nigerian Gas Flare Commercialization Program (NGFCP) policy, offering investor opportunities for gas infrastructure and development equipment and services.  Government of Nigeria has also refocused on reaching financial investment decision (FID) on the 7th train of the 22 million tons per annum (mpta) to 30 mpta Nigerian liquefied natural gas project and has awarded front-end engineering design (FEED) for the project.

Since 2008, Nigeria has been attempting to pass the Petroleum Industry Bill (PIB), which seeks to incorporate and update 16 different laws that regulate the sector and enable the government reform its oil and gas legal framework.  The non-passage of the PIB has continued to create uncertainties that have delayed billions of dollars in potential investment in this sector.  The National Assemble has now split the Bill into five sections and passed it as the Petroleum Industry Governance Bill (PIGB), which is expected to be ratified by the Presidency.  Under the new Bill, a couple of government agencies in the oil industry will be restructured, including the national oil company, the Nigerian National Petroleum Corporation (NNPC), which will become the National Petroleum Company (NPC)  a fully commercial integrated entity, the oil and gas regulator, the Department of Petroleum Resources (DPR), will become the Nigerian Petroleum Regulatory Commission (NPRC) will focus on petroleum regulation, while the Petroleum Products and Pricing Regulatory Agency (PPPRA) will be the National Assets Management Commission (NPAMC). 

In 2016, the Nigerian National Petroleum Corporation (NNPC), was re-organized into seven independent units (five business focused and two services driven) comprising Upstream, Downstream, Gas & Power, Refineries, Ventures, Corporate Planning & Services and Finance & Accounts and Chief Executive Officers were appointed for each unit. Industry observers believe these challenges offer untapped opportunities for stakeholders to devise alternatives modes of operation that are profit driven. The government also hopes to fast track increase output for domestic consumption in addition to the proposed Dangote refinery targeting exports by 2020.  The Nigerian Content Act, which imposes limits on foreign management and the content of the petroleum sector, and the recent Central Bank of Nigeria foreign exchange controls presents significant barriers to foreign participation and imports in the sector, to service companies.

Over the next decade, Nigeria hopes to increase its reserves through field optimization, as well as encouraging investments in the development of marginal fields, deep water offshore and exploitation of bitumen reserves. The Government of Nigeria continues to prioritize investment in natural gas and gas-based industries, as outlined in the Gas Master Plan, a comprehensive gas infrastructure development program which targets new investments in gas processing and pipelines, gas-to-power projects and petrochemical facilities and the Gas Flare Commercialization Program (NGFCP) policy. The government’s ongoing power sector reform and privatization is also in dire need of required concurrent investments in new gas supply for Independent Power Producers (IPPs) and refurbishment of former state-owned generation assets. Several gas commercialization projects include the existing Notore Fertilizer plant, Indorama’s petrochemicals plant, the proposed Dangote’s $10 billion oil and petrochemical refinery expected to come on stream by 2020. The project is expected to cost up to $15 billion in total, with $10 billion invested in the refinery, $2.5 billion in the fertilizer factory, and $2.5 billion in an underwater pipeline infrastructure to connect Nigeria’s Niger Delta to other West Africa markets and will generate gas demands of over 2.5 billion standard cubic feet of gas per day. Investment opportunities range from financial services, gas transmission pipelines, pipe milling and fabrication yards to upstream gas development, Liquefied Natural Gas (LNG) and Liquefied Petroleum Gas (LPG) plants as well as gas processing facility and gas-based manufacturing industries. All these upcoming projects offer tremendous opportunities for foreign firms for sale of equipment and services. Many local companies are gradually getting involved in gas projects and look to the U.S. as a source for expertise, equipment and services.

Nigeria’s oil and gas industry, remains it’s most lucrative and viable investment opportunities as observers believe that the oil and gas sector offers consistent opportunities for marketing essential capital equipment and technology, for both extraction and production. 
Drilling equipment continues to offer the most promise for U.S. exporters as does gas technology and the supply and services sector which is increasingly expanding despite challenging environment. Nigerian government has shown preference to foreign investors willing to invest in Nigeria’s oil and gas industry.  Although American companies continues to maintain some dominance of the market share of imports of high-end oilfield machinery, European and Asian suppliers are also increasing their market share mainly due to the financing model they offer. These companies continue to encroach in various areas of the upstream industry due to their business model (offer of short-term capital equipment and project funds with favorable repayment terms) which is attractive to Nigerian stakeholders.

The Nigerian local content legislation represents a significant barrier to entry, but one that international companies can successfully manage with the right strategy; however, companies are expected to register with the Department of Petroleum Resources (DPR - https://www.dpr.gov.ng/), the regulatory agency for all activities in the oil and gas industry. Key issue worth reiterating, which is relevant for foreign companies interested in operating in Nigeria’s oil and gas industry, is government’s commitment to enforcing Nigerian Content Act and the Nigerian Petroleum Exchange (NipeX) portal for improved procurement processes in the oil and gas industry.  http://www.nipexnig.com/


Leading Sub-Sectors

Oil and gas machinery is key due to its unrivaled potential as a source of investment opportunities for U.S. businesses in Nigeria.  Business observers believe that the oil and gas sector offer consistent opportunities for marketing essential capital equipment and technology, for both extraction and production.  Training services is another area where U.S. service companies have comparative advantage especially in exploration and production, engineering and seismic techniques.

Opportunities

Within the upstream and downstream segments, opportunities abound in exploration and production, drilling and manufacturing equipment, support services, marketing, construction, engineering and consulting services, transportation and storage of crude oil, insurance, legal services, facilities maintenance, and environmental management.  State-owned Nigerian National Petroleum Corporation (NNPC’s) commercialization activities offer opportunities for investment in pipelines and storage depots (tank farms) which are critical for the downstream sector. Additional opportunities exist in the fabrication of pipes for the oil and gas industry and the water services sector. Nigeria’s estimated average demand for steel pipes range between 1 million to 1.2 million tons annually and offer opportunity for partnership for the pipe milling and fabrication services. The Nigerian Government’s prioritization of growing domestic gas sector to support power generation and gas-based industrialization presents a major opportunity for U.S. manufacturers and suppliers of modular gas stripping and treatment plant equipment, LNG, Compressed Natural Gas (CNG), LPG, and methanol and fertilizer plant equipment. 

The various gas gathering, and commercialization projects initiated, some of which are in the developmental stages, offer tremendous opportunity for gas investors ranging from manufacturing, construction and services within the full spectrum of gas development. American firms with advanced scalable technology and associated service experience in the oil and gas industry will be well positioned to meet this requirement.

Other opportunities in the Extractive Industries:
Nigeria offers other excellent investment opportunities for U.S. companies involved in the extractive industries including, mining of solid minerals, especially sales of mining equipment, machinery and associated technology and services. As part of its efforts to diversify its revenue sources and exploit its non-oil sectors, Government of Nigeria has undertaken substantial institutional and legal reforms to address the underutilized potential of its solid mineral wealth and make the sector more attractive for investment. The Ministry of Mines and Steel Development also announced it is secured a World Bank $150 million loan for enhancing mining project and infrastructure development, a 30 billion Naira drawn from the Natural Resource Fund to explore or new minerals and enhance regulatory framework. The government also MOU with the U.S. geological society to accurately map Nigeria’s estimated over 34 potential minerals to open the country for investment. Government of Nigeria hopes to focus on eight sub-sectors: iron ore, gold, copper, coal, tar-sands/bitumen, barite, lead-zinc and dimension stone. Nigeria has proven reserves of coal, which the Nigerian Coal Corporation (NCC) indicate it has a mandate to identify U.S. technical partners for clean coal development and conversion, coal gasification, manufacture of coal briquettes and cement and coal to power generation to help meet government’s proposed national power target of 14,000MW. Several states in Nigeria, especially Ondo State, which has the second largest deposits of Bitumen in the nation, is keen to attract requisite foreign investors and technical partners for its exploitation and development.

Trade Events

  • Sub Saharan Africa International Petroleum Exhibition and Conference (SAIPEC February 25-27, 2020)

  • West African International Petroleum Exhibition and Conference, January 23-24, 2019 (WAIPEC http://waipec.com)

  • Nigeria Oil and Gas Conference & Exhibition (NOG), July 1-4, 2019 (https://www.cwcnog.com/)

  • Nigerian International Petroleum Summit (NIPS), February 9-12, 2020 (https://www.nigeriapetroleumsummit.com/)

  • Offshore West Africa Exhibition & Conference (OWA), June 2020 http://www.offshorewestafrica.com)

  • African Petroleum Congress & Exhibition (APPO), April 1-5, 2019

(http://african-petroleum-congress-exhibition)

  • OTL Africa Downstream Expo, October 27-31, 2019

  • Oil & Gas Supply Value Chain Management Conference and Exhibition, October 22-24, 2019

  • Oil & Gas Upstream & Downstream Conference & Expo, (http://oilandgasexpos.com/ )

  • Society of Petroleum Engineers SPE Nigeria International Conference & Exhibition, August 5-7, 2019

  • The Nigerian Association of Petroleum Explorationists (NAPE) international conference & exhibitions, November 19-23, 2019 - https://nape.org.ng/

  • West Africa Energy Assembly (http://www.oilandgascouncil.com/conference/west-africa), November 25-22, 2019

 

Web Resources

http://www.nnpcgroup.com/

http://www.dprnigeria.com/home.htm
 

Local Event:

USA FAIR 2020: ACCESS NIGERIA (April 28-30, 2020 - TBC)
Eko Convention Center, Victoria Island, Lagos.
Organized by the US Commercial Service exclusively for American exhibitors to meet thousands of prospective Nigerian businesses.
(Please contact Benedicta.Nkwoh@trade.gov for more information)

Email: Benedicta Nkwoh, Commercial Specialist: Benedicta.Nkwoh@trade.gov
 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.


More Information

Nigeria Oil and Gas Trade Development and Promotion