•Sad, Nigeria’s oil exploration rates lag behind Angola’s
One of the more interesting ironies of the Nigerian economic situation is the way in which some of the most crucial indicators of growth have actually declined at precisely the time that the country has been trumpeting its emergence as Africa’s largest economy.
A significant example of this contradiction is the stagnation in its oil exploration rates even while it is the continent’s largest oil producer. In contrast, Angola is boosting its own rates to such an extent that it could become Africa’s largest oil producer by 2016.
The figures tell a sobering tale of complacency in an era of rapid change. Nigeria currently produces about 2.15 million barrels of oil per day (bpd), in contrast to Angola’s 1.66 bpd. However, Nigeria’s efforts to expand the upstream sector of its oil industry have been stymied by a toxic combination of regulatory and legislative issues, increasing oil theft and growing insecurity.
The much-talked-about Petroleum Industry Bill (PIB) has certainly contributed to the country’s lamentable situation. Drafted under cloudy circumstances, characterised by inordinate delays, and stoutly opposed by several of the multinational oil companies working in Nigeria, the PIB has caused more problems than it is meant to solve.
Its supporters argue that it will provide root-and-branch reform of the oil sector, enabling the country to enjoy greater benefits from its oil and gas endowments. Those who oppose it believe that it puts too much power in the hands of the Minister of Petroleum Resources and is not transparent enough.
The clash of claim and counter-claim notwithstanding, the delay in passing the PIB since 2008 has caused major stakeholders in the oil industry to adopt an unhelpful wait-and-see approach. The results are disheartening: Nigeria had only nine active drilling rigs in July 2014, compared to 42 for Algeria, 14 for Angola, 96 for Iraq, 35 for the United Arab Emirates, and 104 for Saudi Arabia. Its undiscovered oil and gas resources are estimated as being the largest in sub-Saharan Africa. About U.S. $28 billion has allegedly been lost in deferred and abandoned agreements since 2010. An increasing number of oil companies have chosen to sell off their oil blocks rather than exploit them.
In stark contrast to the lumbering giant that is Nigeria, Angola has consistently demonstrated all the speed, aggressiveness and flexibility of a country which knows where it is going and how it intends to get there. Instead of remaining content with its position as Africa’s second-biggest oil producer after Nigeria, it has sought to build on the successes which caused it to briefly attain the top position in 2009. By offering relatively more attractive terms as well as the obvious benefits of increased security and regulatory stability, Angola has boosted foreign investment in its oil and gas industry. Eight pending offshore projects are expected to raise its output to 2 million barrels of oil per day by 2015. Already, Angola’s 2013 average output of 1.73 bpd was significantly close to Nigeria’s own average of 1.9 bpd for the same period.
Nigeria cannot continue to treat the mainstay of its mono-product economy with such inexplicable complacency. Even without the added pressure of vigorous continental competition and increasing energy self-reliance, there can be no justification for this persistent refusal to resolve the problems confronting the oil sector.
It is obvious that the delay in passing the PIB has been a major cause of the loss of investor interest. The bill’s stagnation in the National Assembly cannot continue; it should either be passed as it currently stands or it should be comprehensively re-drafted. Either measure would be more useful than the stasis to which it has been condemned.
The Federal Government would also do well to consider the injection of new blood at the Ministry of Petroleum Resources. Given the way in which scandal, the absence of accountability and the profusion of incompetence have damaged the credibility of this crucial ministry, it cannot be surprising that the sector it supposedly superintends is in such dire straits.
