Nigeria, the most populous country in OPEC, has a population of roughly 213 million people. Nigeria is a 924 thousand square kilometer country on Africa’s western coast, located on the Gulf of Guinea. Abuja, Nigeria’s capital since 1991, has a population of over a million people. The official language of Nigeria is English, however numerous native languages including as Hausa, Yoruba, Igbo, and Ijaw are widely spoken.
Natural gas, tin, iron ore, coal, limestone, niobium, lead, zinc, and fertile land are among Nigeria’s other natural resources. Petroleum exports make for roughly 86 percent of overall export revenue, while the oil and gas sector accounts for about 10% of GDP. The naira is the country’s currency.
HE Muhammadu Buhari is the President of Nigeria and the Commander-in-Chief of the Armed Forces. In 1971, the country became a member of OPEC.
- According to conservationists, Nigeria’s unique rainforest region is one of Africa’s wealthiest. The Yankari and Kainji national parks, for example, are key game reserves in the country.
How much of Nigeria’s GDP comes from oil?
Nigeria is Africa’s largest oil and gas producer. Crude oil from the Niger delta basin is classified as light or comparatively heavy, with the lighter having a gravity of 36 and the heavier having a gravity of 2025. Both are paraffinic and have a low sulfur content. Since 1960, the petroleum industry has been a major source of income and revenue for Nigeria’s economy and budget. According to statistics from February 2021, Nigeria’s oil sector accounts for around 9% of the country’s GDP. Nigeria is a major exporter of crude oil and petroleum products to the United States of America, being Africa’s largest oil and gas producer. Nigeria shipped approximately one million barrels per day to the United States in 2010, accounting for 9% of total crude oil and petroleum product imports in the United States and over 40% of Nigerian exports.
The Petroleum Industry Bill was introduced by the Goodluck Jonathan administration on July 18, 2008, in response to the need for holistic reforms in the petroleum industry, ease of doing business, and development of local content in the industry.
How much money does oil bring Nigeria?
Nigeria’s oil and gas sector accounts for roughly 65 percent of the country’s earnings. The overall revenue flow to the Federation, other tiers of government, and sub-national entities in 2018 amounts to USD 32.6 billion from all sources (including crude oil sales, taxes, royalties, and other incomes).
Is oil responsible for 10% of Nigeria’s GDP?
Chief Timipre Sylva, Minister of Petroleum Resources, claims that the oil and gas sector accounts for around 10% of Nigeria’s GDP (GDP).
Crude oil exports accounted for around 86 percent of total export revenues, according to Sylva, but government revenue from the sector is only 40 percent.
On Monday in Abuja, the minister mentioned this while presenting the National Defense College Course 29 Graduation Lecture, titled “Enhancing Digital Technology in the Oil and Gas Sector of Nigeria for National Development.”
What is Nigeria’s primary revenue source?
Nigeria is the largest economy in Sub-Saharan Africa, and its foreign exchange earnings and government income are primarily reliant on oil. The banking system was substantially recapitalized and regulation was improved following the global financial crises of 2008-09. Agriculture, telecoms, and services have all contributed to Nigeria’s economic progress since then. Economic diversification and high development have not resulted in a major reduction in poverty levels; over 62 percent of Nigeria’s 180 million people remain impoverished.
Despite its strong fundamentals, oil-rich Nigeria has been hampered by a lack of power, infrastructure, legislative reform delays, an inefficient property registration system, restrictive trade policies, an inconsistent regulatory environment, a slow and ineffective judicial system, unreliable dispute resolution mechanisms, insecurity, and widespread corruption. Nigeria’s oil production had been down every year since 2012, until a minor resurgence in 2017. Regulatory limits and security threats have hampered new investment in oil and natural gas, and Nigeria’s oil production has been declining every year since 2012.
President BUHARI, who was elected in March 2015, has appointed an economic cabinet that includes several technocrats, and he has announced plans to increase transparency, diversify the economy away from oil, and improve fiscal management, but he has taken a primarily protectionist approach that benefits domestic producers at the expense of consumers. President BUHARI ran on an anti-corruption platform and has made some progress in reducing corruption, including the implementation of a Treasury Single Account, which allows the government to better manage its resources, and a more transparent government payroll and personnel system, which eliminated duplicate and “ghost workers.” The government is also aiming to strengthen public-private partnerships in the areas of highways, agriculture, and energy.
Nigeria entered recession in 2016 as a result of decreasing oil prices and production, which were compounded by militant attacks on oil and gas facilities in the Niger Delta region, as well as unfavorable economic policies, such as foreign exchange controls. As oil prices recovered and output steadied, GDP growth turned positive in 2017.
Is Nigeria the world’s sixth-largest oil producer?
Nigeria is Africa’s largest oil producer and the world’s sixth largest oil producer, with a maximum crude oil production capability of 2.5 million barrels per day.
What is the GDP of oil?
Oil is the world’s most important main fuel, and its consumption trajectory is a major source of concern and consequence for economic, political, and, not least, climate change reasons. It is famously difficult to predict oil prices and production from year to year; even simple elements of aggregate demand and supply schedules, such as price or income elasticities, are notoriously difficult to determine. It’s also difficult to model the structure of a market that appears to be extremely cartelized at times and populated by a huge flock of peaceful price takers at other times.
Oil intensity, on the other hand, has been recognized as a surprisingly stable metricand possibly a tool for projecting consumption into the futurein this research. The volume of oil consumed per unit of gross domestic product is referred to as oil intensity (GDP). It is frequently considered as a broad measure of oil efficiency, measured simply in barrels per dollar; it clearly indicates the importance of oil in a culture.
Over the years and decades, the efficiency of oil usage has improved, and the intensity of oil use has decreased. When oil intensity was at its peak in 1973, for example, the globe consumed a little less than one barrel of oil to produce $1,000 worth of GDP (2015 prices). Global oil intensity was 0.43 barrel per $1,000 of global GDP in 2019 (the final data set before Covid), a 56 percent decrease. Oil has lost a lot of its significance, and society has become more efficient at using it.
The pattern by which this progress has been made is worth examining, and it is the focus of this study reporting on oil and gas related research at Columbia University’s Center on Global Energy Policy. Since 1984, the quantity of oil used per dollar of global GDP has decreased in an almost perfect linear fashion: the amount of oil used per dollar of global GDP has decreased by roughly the same amount every year. Wars and revolutions, booms and busts, OPEC achievements and failures, and every other major event in the last 35 years have left their impression on oil markets, but they haven’t changed the steady, declining trend in oil intensity. This level of consistency is quite rare in any long-term trend, whether in economics or energy.
Although oil intensity isn’t a new problem, it’s difficult to find an explanation for its strangely continuous downward trendor even a discussion about itin the literature. Before looking into possible reasons for the linear fall in oil intensity, the authors describe the pattern and cross-validate its predictive ability in this work. Finally, it extrapolates what such a continuous pattern would signify for future oil use and policies. The following are some of the study’s key findings:
- For the previous three and a half decades, the amount of oil required to produce $1,000 worth of global GDP (0.43 barrel in 2019) has decreased by just about 0.01 barrel per year. Running regressions on overlapping windows of at least 20 years of data from 1984 to 2017 was used to examine the predictive power of this linear approximation. When comparing the generated near-term demand estimates to actual demand for years over this time period, the average inaccuracy ranged from 1.7 percent to 5.1 percent, indicating that the forecasts were very accurate, especially over longer time horizons.
- These consistent volumetric gains in the oil intensity metric could be the result of a shift in oil demand composition from intermediate to final consumption. Final-use appliances (such as a car or a new boiler) are often single-fuel, limiting inter-fuel substitutability and price elasticity, whereas intermediate-use appliances (such as a power plant or a petrochemical factory) can allow for more fuel switching. Globalization has aided in the rapid and uniform distribution of efficiency gains in end-user appliances around the globe.
- The temporal trend also illustrates a gradual shift in the global oil market from a supply- to a demand-constrained environment. Oil intensity drops at lower rates than global GDP growth at initially, allowing global oil consumption to climb. Given its linear functional shape, the rate of intensity drop will accelerate over time to outstrip global GDP growth, causing global oil consumption to peak and then decline.
- While relative price changes might potentially interrupt the trend by rearranging the degree of substitutability embedded in the capital stock, neither shale oil (which accelerates oil demand) nor the energy transition (which slows it) have had this effect thus far. For the time being, the linear trend continues.
- The less opportunity for fuel substitution in final goods (the lower the price sensitivity of demand), the higher any implemented carbon tax would have to be to reduce oil usage, which is a major implication for policymakers.
Nigeria exports oil to whom?
The main destinations for Nigerian crude oil are Europe and Asia. Crude oil shipments to Europe totaled roughly 1.48 trillion Naira in the second quarter of 2021, with exports to Asia coming in second with 1.46 trillion Naira.
How has OPEC benefited Nigeria?
For the past 50 years, the histories of OPEC and Nigeria have been intertwined. Nigeria became the 11th member of OPEC on July 12, 1971, when the OPEC Conference unanimously agreed to accept the country’s application for membership.
Looking back on that momentous day in Vienna, it was a watershed event for the country and OPEC, since it was the first country from Sub-Saharan Africa to join the group. Through several talks and landmark agreements, the Giant of Africa and a country in the heart of the continent joined OPEC Member Countries in ensuring their sovereign rights over their natural resources.
It’s been a rollercoaster ride for Nigeria and OPEC, with various market cycles to negotiate and unexpected events such as macroeconomic uncertainty, natural disasters, geopolitics, technological innovations, and, most notably, global health pandemics, threatening to throw OPEC off course in 2020/21.
The ties and synergy between Nigeria and OPEC are much too many to list here, but I believe that part of the reason for their success can be traced back to OPEC’s inception. On September 14, 1960, the Organization was founded in Baghdad’s Al-Shaab Hall in Bab Al-Muaadham. Nigeria declared independence 17 days later, on October 1, 1960, marking the start of a new era. From this moment forward, their fates were inextricably linked.
Nigeria has played a vital role in advancing OPEC’s focus on collaboration, goodwill, a sense of belonging, and unity since joining the Organization just over a decade ago, and in working towards achieving oil market stability, aware of the benefits this offers to both producers and consumers.
Nigerian President Muhammadu Buhari is a leader in this regard. We at OPEC regard President Buhari to be “one of our own.” An OPEC veteran, he has been deeply involved in the Organization’s operations for decades and is currently the world’s only serving Head of State who began his career as a member of the OPEC family.
President Buhari has shown a strong interest in our organization, and we are all inspired by his dedication. His invaluable contributions to the ongoing successful implementation of the Declaration of Cooperation (DoC) and his continued support over the past year or so as participants in the DoC navigated the stormy waters swirling around the oil market as a result of the COVID-19 pandemic have demonstrated this. As a voice of reason and through his integrity and patriotic dedication, he is a great credit to Nigeria.
President Buhari (see page 4) is interviewed by the OPEC Bulletin on Nigeria, OPEC, and the 50th anniversary. His remarks emphasize the relevance of OPEC to the development of Nigeria’s oil industry, as well as the value provided by closer cooperation.
Nigeria has a global reputation as a consensus builder and dealmaker, as it has demonstrated over its five decades in OPEC. From this vantage point, one other figure shines out unmistakably: the late, renowned Dr. Rilwanu Lukman. Dr. Lukman was a vital part of OPEC for decades: the two went hand in hand. Between 1986 and 1989, and again in 2002, he served as President of the OPEC Conference, as well as Secretary General from 1986 to 1988 and 1995 to 2000.
He was a true forerunner. To name a few of his accomplishments, he was instrumental in the growth of OPEC and non-OPEC ties, assisted in the development of the producer-consumer dialogue, and coordinated OPEC’s involvement with Member Countries in the very first United Nations COP meetings on the environment. Dr. Lukman, of blessed memory, was without a doubt the nicest person I’d ever encountered. Despite being the most accomplished oil technocrat of his generation, he was the epitome of integrity and humility. He’s a Nigerian and an OPEC legend; a leader who was also a superb listener, humble, kind, and fair. The OPEC Bulletin takes a look back at Dr. Lukman’s career (see page 52).
Other key stakeholders, such as Timipre Sylva, Nigeria’s Minister of State for Petroleum Resources (see page 18), have offered their perspectives in interviews with the OPEC Bulletin. His tireless work with the industry, as well as his active engagement with fellow ministers and other stakeholders, has seen him become a voice for consensual solutions in helping the Organization and the DoC reach key decisions.
Looking back on Nigeria’s 50-year relationship with OPEC makes me feel both proud and humble. I’m quite proud of how far the connection has progressed and how vital the two have become to one another. Nigeria has a special place in my heart since it is where I was born, but OPEC has also become a part of my DNA. And I’m incredibly humbled to be following in the footsteps of the Nigerian oil industry’s and OPEC’s titans.
The strength and unity of its members have made the whole stronger than the sum of its parts, and the people who have served Nigeria and OPEC have been important to the relationship that has been formed.
Within OPEC Member Countries, and now through the DoC, inclusiveness and cooperation have resulted in a high level of mutual respect. Over the course of its first 50 years as a member, Nigeria has played an important role in the construction of bridges; here’s to another 50 years!
Why is Nigeria impoverished despite its oil wealth?
Countries with considerable oil reserves are typically thought to be wealthy. With a few exceptions, such as Venezuela, Iran, and Nigeria, the majority of oil-producing countries in the globe have booming economies. Venezuela’s economy collapsed due to socialism, whereas Iran has been afflicted by fundamentalist Islam. Nigeria appears to be free of evident difficulties. It has, however, surpassed India as the country with the greatest number of people living in poverty.
How Wealthy Is Nigeria?
To comprehend the magnitude of this conundrum, we must first comprehend Nigeria’s true wealth. To begin, it is important to recognize that Nigeria holds Africa’s greatest oil reserves. It has the world’s 26th largest economy. Its GDP is higher than that of many of its more developed African counterparts, such as South Africa.
Nigeria’s wealth is concentrated in a few hands. The top five wealthiest Nigerians own and control more assets than the rest of the country combined. In addition, the number of Nigerian millionaires has increased by 44% in the last decade.
How Poor Is Nigeria?
Nigeria also boasts some of the world’s highest poverty rates. Out of their 200 million people, 120 million live on less than $1 a day. Subsistence is a big issue in Nigeria’s interior regions. 75% of the youth population (those under the age of 25) are unemployed. Despite having the world’s 26th largest economy, Nigeria’s economy ranks 121st in terms of per capita income. Due to a lack of basic services, 20% of Nigerian youngsters do not live to see their fifth birthday. Water, power, and other essential facilities are unavailable to the majority of Nigerians.
Reasons behind Nigerian Poverty
It’s amazing that a country with so much prosperity and so much poverty coexists. The following are some of the causes for this coexistence.
- Nigeria’s population is extremely large. This population is likewise increasing at a rapid pace. As a result, despite the fact that the government earns a lot of money from oil, relatively little of it reaches the general public. Nigeria has a population of 200 million people and produces approximately 800 million barrels of oil annually. As a result, they generate only 4 barrels of oil per capita, generating less than $200 in revenue. Saudi Arabia, on the other hand, produces over 130 barrels of oil per person, generating over $6000 in money per person. Nigeria can neither raise nor decrease its oil production or population. As a result, it is fully reliant on the price of oil.
- Nigeria’s administration has taken very few initiatives to boost economic development in the country. As previously said, the infrastructure is in shambles. The government, on the other hand, is not making any attempts to enhance its human resources. India, too, was experiencing a population growth. Its people, on the other hand, were educated, and a problem was converted into an opportunity. Nigeria’s administration does not appear to be interested in following India’s lead. This is why it spends only 5% and 3% of its budget on education and healthcare, respectively.
- Negligence: When it comes to other businesses, the Nigerian government has likewise been careless. Before the 1960s, Nigeria had a thriving agricultural and manufacturing economy. Nigeria was, in reality, a net exporter of food to the rest of Africa. The situation has changed dramatically. Nigeria produces insufficiently to be self-sufficient. Every year, it must pay a large import expense. The government can be held liable for this because it paid no attention to any industry other than the oil business. The manufacturing sector was likewise obliterated as money for these industries was transferred to the oil industry.
- Corruption: Apart from a few affluent businesses, Nigerian politicians are also extremely wealthy. This is surprising given that the majority of them do not own any real businesses. Nigeria is recognized for its high levels of corruption. In exchange for payments, public property is sold to private owners for pennies on the dollar. Nigeria is one of the world’s few countries with a regressive tax structure. The government levies indirect taxes on a variety of items that the poor rely on. The Nigerian government, on the other hand, is recognized for granting large tax advantages to the wealthy. The Nigerian government’s taxation policy is a massive wealth transfer program aimed at enriching the “haves” at the expense of the “have-nots.”
Attempts to Diversify
The Nigerian economy has experienced a significant downturn in recent years. This is because oil accounts for more than 75% of the government’s revenue, and oil prices have collapsed. As a result, the government is increasingly diversifying into other industries, such as telecommunications. The government is concentrating its efforts on the service sector because it employs more people and thereby lowers the unemployment rate. The efforts, however, are insufficient and come too late. The Nigerian economy is a wonderful example of how, despite having abundant natural resources, the country remains impoverished.