Nigeria is Africa’s largest oil producer and one of the world’s ten largest oil exporters. Almost everything that is pumped up is exported as crude oil. Natural gas reserves are also among the largest in the world, but gas has only recently begun to be extracted. The electricity shortage is a major problem. Residents’ energy needs are largely met by firewood and kerosene.
Nigeria also has plenty of coal, iron ore, tin, uranium, phosphates, limestone and marble. However, the recovery is modest.
COUNTRYAAH: Major exports by Nigeria with a full list of the top products exported by the country. Includes trade value in U.S. dollars and the percentage for each product category.
Crude oil has been mined in the Niger Delta since 1958. Today there are several hundred oil fields. Decades of extraction have caused environmental damage and caused dissatisfaction among the locals who want to share in the revenue. Since the 1990s, the oil companies’ operations have been disturbed by sabotage, strikes and kidnappings of oil workers. Explosive attacks on the pipelines have occurred frequently. From 2006, militant groups in the Niger Delta began to carry out more unified raids against the oil industry. An increasing number of foreign oil workers were kidnapped and then released on high ransoms. The groups became increasingly well organized and politically oriented. The Nigerian military also now hesitated to enter parts of the Delta area.
The disruptions caused production to fall from 2.5 million barrels to 1.5 million barrels in a few years. An amnesty program in 2009 (see Modern history) helped to increase oil recovery thereafter. In early 2016, however, alarming signals came about new attacks and fears were great for a new oil war.
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Concerns in the delta area have increased interest in the oil and gas found beneath the seabed offshore. However, political turmoil and poorly managed oil resources management have caused the big oil companies to act cautiously. Instead, lesser-known companies from China and South Korea, for example, have stepped in. In addition, the Milis groups have shown that with the help of fast motor boats they can also hit oil platforms far out at sea.
Oil theft
Alongside pure sabotage, huge amounts of oil are stolen before it reaches the export terminals in Nigeria. How much is lost in this way is uncertain, but according to estimates in 2015 it is up to $ 6 billion a year. According to a Nigerian study presented in 2012, about 90 percent abroad were shipped to criminal leagues in primarily Ukraine, Serbia, Bulgaria and Singapore.
Nigeria’s oil reserves are expected to last for several decades. In the oil wells there is also natural gas, which follows when the oil is collected. Until the 1980s, all gas was allowed to burn above the boreholes. Billions of dollars of gas are still allowed to burn up. Gas combustion spreads toxic fumes and chemicals around the boreholes. Government and oil companies blame each other, and the companies believe that many more pipelines are needed if the gas is to be recovered. Nevertheless, Nigeria is one of the world’s largest exporters of liquefied natural gas (LNG).
According to a 2009 agreement, Nigeria, Niger and Algeria will build a 400-kilometer gas pipeline through the Sahara. The gas is then supposed to reach Europe via the Mediterranean. Management is estimated to cost $ 20 billion to build and the project has been delayed due to difficulties with funding.
Officially, the state owns all oil and gas assets. The state-owned Nigerian National Petroleum Corporation (NNPC) acts as regulator of the industry, producer and seller. NNPC collaborates on a joint venture basis with foreign companies, including Shell, which has a large part of the market. Corruption is widespread within the NNPC and the entire industry, which means that the state is losing billions of dollars in revenue. Maintenance in the country’s four refineries is neglected, which contributes to the fact that almost 90 percent of the oil products consumed in Nigeria must be purchased from abroad.
Smuggling
The imported oil products, such as gasoline and kerosene, are subsidized by the state. It creates a market for smuggling to neighboring countries with higher fuel prices, which leads to fuel shortages in Nigeria. The government has tried several times to scrap the fuel subsidies. But this is a politically sensitive issue, as many see the low fuel prices as the only benefit the people get from the country’s large oil resources. No promises are made that the increased resources the state would receive if subsidies disappeared would benefit the people. Attempts have also been made to sell the state refineries, but this too is politically sensitive.
One third of the country’s electricity comes from hydropower and the rest from oil and gas-fired thermal power plants. Production does not meet long-term needs. Half the population does not have access to electricity. The other half is used to many and long power outages. In principle, everyone who can afford – both private individuals and companies – stick with their own generators to secure the electricity supply. The shortage of electricity is a major obstacle to growth. The situation is made worse by thieves stealing wires and transformers, and militant groups in the Niger Delta disrupt deliveries to the thermal power plants.
Previously, all electricity generation was done by the state, but in 2013 gas power plants and electricity grids were sold to private interests. Large investments followed, but many of the new owners were forced to realize that the systems were in miserable condition. The power plants are also dependent on natural gas from the state gas company, a subsidiary of NNPC, and deliveries often fail.
Environmental problems
The need for firewood for household needs contributes to problems with logging and soil degradation. However, the country’s most serious environmental problem is, however, the pollution caused by the oil industry in the Niger Delta. In a 2011 report, UN’s UN Environment Program pointed to a disastrous humanitarian situation after decades of recovery. The supply of food has been destroyed as agriculture and fishing have been eliminated, and the drinking water is in many places seriously poisoned. According to Unep, the pollution is so extensive that a decontamination would probably be the largest of its kind in the world. Unep accused both the government and Shell, which jointly commissioned the report, for ignoring environmental regulations and leaving the public behind the light.
Shell agreed in 2015 to pay the equivalent of just over $ 83 million in damages to a municipality and its inhabitants in the Niger Delta for the damage caused by two oil spills.
FACTS – ENERGY AND ENVIRONMENT
Energy use per person
759 kilos of oil equivalent (2014)
Electricity consumption per person
144 kWh, kWh (2014)
Carbon dioxide emissions in total
96 281 thousand tonnes (2014)
Carbon dioxide emissions per inhabitant
0.5 ton (2014)
The share of energy from renewable sources
86.6 percent (2015)
2007
November
No agreement with Cameroon
The Senate rejects a deal to hand over the Bakassi Peninsula to Cameroon.
October
The President resigns
The Speaker of the House of Representatives and her deputy resign under threat of being dismissed due to a corruption scandal involving the renovation of their homes and the purchase of dozens of cars.
September
Threats of broken armistice
Mend threatens to resume its attacks on oil facilities and to kidnap foreign workers, after a high ranking member has been arrested on suspicion of arms smuggling.
June
Armistice in the Niger Delta
The Mend guerrilla unilaterally announces an armistice.
Electoral traps governor
The Supreme Court decides that the newly elected governor of Anambra, which belongs to the ruling party PDP, must resign because of cheating in the elections.
Fuel subsidies remain
Threats to nationwide strikes cause Yar’Adua to withdraw its predecessor Obasanjo’s decision to abolish fuel subsidies.
May
Yar’Adua takes office
The new president promises reconciliation with Mend rebels, hoping that Vice President Goodluck Jonathan will be able to contribute as a negotiator
April
Umaru Yar’Adua elected president
The ruling party PDP’s candidate wins a landslide victory in the presidential election. Foreign observers judge the election characterized by violence and cheating.
