Five Things To Know About Nigeria's Oil Sector
Nigeria's Dangote Refinery says that the plan will boost efficiency by cutting down on intermediaries while providing more competitive options for consumers and retailers such as petrol stations.
Owned by the country's richest man, Aliko Dangote, the 650,000 barrel-per-day capacity refinery launched in 2023, helping knock down prices after a steep hike following the removal of fuel subsidies by the government.
Here are some things to know about Nigeria's oil industry:
Crude was first discovered in Nigeria in 1956 in the southern Niger Delta region. The west African oil giant pumps an average of 1.5 million barrels per day, according to OPEC, but it is still short of its two million bpd target.
Oil accounts for around 62 percent of Nigeria's export earnings and forms a huge chunk of government revenue.
The industry has for decades been plagued by problems, amongst them high crude oil production costs due to ageing infrastructure, oil theft, corruption and environmental pollution.
Producing crude in Nigeria costs around $30 per barrel, according to the Nigerian National Petroleum Corporation Limited, compared to around $10 in Saudi Arabia. High extraction costs, as well as volatile global oil prices, make it increasingly difficult for Nigeria to stay competitive internationally.
Persistent oil theft -- known locally as bunkering -- has created an unstable environment for investment, causing international oil companies to dump onshore assets.
There are four government-operated refineries with a total capacity of 445,000 bpd, but they have long been hampered by poor maintenance and graft.
State owned oil firm NNPC has long been the subject of allegations of corruption, political interference and mismanagement.
Several of its executives are being investigated by the anti-graft police.
In January, US authorities returned to Nigeria nearly $53 million in illicit money recovered from an ex-petroleum minister.
For decades, Nigeria has been shipping crude to Europe for refining, and the country experienced sporadic fuel shortages until the Dangote refinery came on board, resulting in improved supplies.
Prior to the Dangote refinery coming online, the industry had "largely been structured around (the) interests of well-monied and politically connected middlemen", and it was not in their interests for refining to happen domestically, said SBM Intelligence analyst Ikemesit Effiong.
Upon taking office, President Bola Tinubu scrapped fuel subsidies that were bleeding billions of dollars out of the state coffers. Petrol pump prices jumped more than fivefold, but have since gradually dropped.
Dangote is rolling out 4,000 compressed natural gas-powered trucks to distribute petroleum nationwide, in a market where more than 20,000 diesel-powered tankers have operated for decades.
Aside from removing logistics bottlenecks, the initiative will "significantly lower distribution costs and improve fuel availability", and alleviate "inflationary pressures", said Dangote's group spokesman Anthony Chiejina.
But not everyone is happy with the game-changing initiative in the industry. The Independent Petroleum Marketers Association of Nigeria fears the creation of a monopoly.
"In theory, this plan should reduce the cost of petrol distribution," but the drop in the pump prices may not be significant, said Clement Isong, head of the Major Energy Marketers Association of Nigeria.
Some major players acknowledge that Dangote's entry into the industry has impacted their earnings.
Oando group saw its revenue plummet 15 percent in the first six months of 2025, with its group chief executive Wale Tinubu -- who is the president's nephew -- writing that the entity's declining revenue was as a result of slowing petrol imports "into the country due to rising local refining capacity from the Dangote Refinery, a positive development that enhances Nigeria's energy security and self-sufficiency".
TotalEnergies Marketing Nigeria also reported a dip in half-year revenue.
A second privately-owned refinery, BUA is under construction by another Nigerian billionaire, Abdulsamad Rabiu.
Nigeria's oil sector has for decades been tainted by environmental pollution where pipeline spills make fishing and farming difficult.
Oil companies blame most of the leaks on sabotage by local criminal gangs vandalising pipelines to steal the crude.
Accidents involving fuel trucks are common in the west African nation, where people often rush to the site of petrol truck wrecks to scoop up spilled fuel -- underscoring the economic precarity many live in despite the oil riches. For decades, Nigeria has been shipping crude to Europe for refining, and the country experienced sporadic fuel shortages until the Dangote refinery came on board AFP Nigeria's oil sector has for decades been tainted by environmental pollution where pipeline spills make fishing and farming difficult AFP
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Int'l Business Times
5 days ago
- Int'l Business Times
Five Things To Know About Nigeria's Oil Sector
Africa's biggest oil refinery will on Friday start direct and free shipping of fuel to retailers in Nigeria, a move expected to disrupt the oil sector in the continent's largest crude producer. Nigeria's Dangote Refinery says that the plan will boost efficiency by cutting down on intermediaries while providing more competitive options for consumers and retailers such as petrol stations. Owned by the country's richest man, Aliko Dangote, the 650,000 barrel-per-day capacity refinery launched in 2023, helping knock down prices after a steep hike following the removal of fuel subsidies by the government. Here are some things to know about Nigeria's oil industry: Crude was first discovered in Nigeria in 1956 in the southern Niger Delta region. The west African oil giant pumps an average of 1.5 million barrels per day, according to OPEC, but it is still short of its two million bpd target. Oil accounts for around 62 percent of Nigeria's export earnings and forms a huge chunk of government revenue. The industry has for decades been plagued by problems, amongst them high crude oil production costs due to ageing infrastructure, oil theft, corruption and environmental pollution. Producing crude in Nigeria costs around $30 per barrel, according to the Nigerian National Petroleum Corporation Limited, compared to around $10 in Saudi Arabia. High extraction costs, as well as volatile global oil prices, make it increasingly difficult for Nigeria to stay competitive internationally. Persistent oil theft -- known locally as bunkering -- has created an unstable environment for investment, causing international oil companies to dump onshore assets. There are four government-operated refineries with a total capacity of 445,000 bpd, but they have long been hampered by poor maintenance and graft. State owned oil firm NNPC has long been the subject of allegations of corruption, political interference and mismanagement. Several of its executives are being investigated by the anti-graft police. In January, US authorities returned to Nigeria nearly $53 million in illicit money recovered from an ex-petroleum minister. For decades, Nigeria has been shipping crude to Europe for refining, and the country experienced sporadic fuel shortages until the Dangote refinery came on board, resulting in improved supplies. Prior to the Dangote refinery coming online, the industry had "largely been structured around (the) interests of well-monied and politically connected middlemen", and it was not in their interests for refining to happen domestically, said SBM Intelligence analyst Ikemesit Effiong. Upon taking office, President Bola Tinubu scrapped fuel subsidies that were bleeding billions of dollars out of the state coffers. Petrol pump prices jumped more than fivefold, but have since gradually dropped. Dangote is rolling out 4,000 compressed natural gas-powered trucks to distribute petroleum nationwide, in a market where more than 20,000 diesel-powered tankers have operated for decades. Aside from removing logistics bottlenecks, the initiative will "significantly lower distribution costs and improve fuel availability", and alleviate "inflationary pressures", said Dangote's group spokesman Anthony Chiejina. But not everyone is happy with the game-changing initiative in the industry. The Independent Petroleum Marketers Association of Nigeria fears the creation of a monopoly. "In theory, this plan should reduce the cost of petrol distribution," but the drop in the pump prices may not be significant, said Clement Isong, head of the Major Energy Marketers Association of Nigeria. Some major players acknowledge that Dangote's entry into the industry has impacted their earnings. Oando group saw its revenue plummet 15 percent in the first six months of 2025, with its group chief executive Wale Tinubu -- who is the president's nephew -- writing that the entity's declining revenue was as a result of slowing petrol imports "into the country due to rising local refining capacity from the Dangote Refinery, a positive development that enhances Nigeria's energy security and self-sufficiency". TotalEnergies Marketing Nigeria also reported a dip in half-year revenue. A second privately-owned refinery, BUA is under construction by another Nigerian billionaire, Abdulsamad Rabiu. Nigeria's oil sector has for decades been tainted by environmental pollution where pipeline spills make fishing and farming difficult. Oil companies blame most of the leaks on sabotage by local criminal gangs vandalising pipelines to steal the crude. Accidents involving fuel trucks are common in the west African nation, where people often rush to the site of petrol truck wrecks to scoop up spilled fuel -- underscoring the economic precarity many live in despite the oil riches. For decades, Nigeria has been shipping crude to Europe for refining, and the country experienced sporadic fuel shortages until the Dangote refinery came on board AFP Nigeria's oil sector has for decades been tainted by environmental pollution where pipeline spills make fishing and farming difficult AFP
DW
05-08-2025
- DW
Ukraine's Zelenskyy talks to Trump on sanctions, drone deal – DW – 08/05/2025
Ukrainian President Volodymyr Zelenskyy says he had a "productive" call with Donald Trump, covering sanctions and a major drone deal. Meanwhile, Russian attacks on Ukraine killed six. DW has more. President Zelenskyy said he discussed sanctions, Russian strikes, and a major drone production deal with the US president. Trump has reportedly given Putin until August 8 to make peace or face harsher sanctions, with Zelenskyy saying Moscow is already feeling the pressure. Ukraine has been ready to finalize what Zelenskyy called one of the strongest drone deals yet, as Kyiv leans more on foreign defense investment. Meanwhile, President Trump has said that declining global energy prices could pressure Russian President Vladimir Putin to halt the war in Ukraine. Ukrainian President Volodymyr Zelenskyy has said he held a "productive" call with US President Donald Trump on Tuesday, focusing on ending the war, sanctions against Russia, and a planned US-Ukraine drone production deal. Zelenskyy posted on X that Trump was "fully informed" about ongoing Russian strikes on Kyiv and other Ukrainian cities. The conversation came amid growing frustration from Trump toward Russian President Vladimir Putin. Trump has given Putin until August 8 to make peace or face tougher sanctions. "Of course, we spoke about sanctions against Russia," said Zelenskyy. "Their economy continues to decline, and that's exactly why Moscow is so sensitive to this prospect and President Trump's resolve. This can change a lot." Zelenskyy also said Ukraine was prepared to finalize a drone production deal with the US, calling it "one of the strongest agreements" of its kind. "The draft agreement on drones has already been prepared by the Ukrainian side, we are ready to discuss it in detail and conclude it," Zelenskyy said. Kyiv is increasingly turning to foreign investment to build up its domestic defense industry. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video US President Donald Trump has said that declining global energy prices could pressure Russian President Vladimir Putin to halt the war in Ukraine. "If energy goes down enough, Putin is going to stop killing people," Trump told CNBC on Tuesday. "If you get energy down another $10 a barrel, he's going to have no choice because his economy stinks." Trump set an August 8 deadline for Putin to move toward ending the war or face tougher US sanctions. His administration has also ramped up pressure on India and China to stop buying Russian oil. The US president said falling oil prices were driven by increased production worldwide, including by OPEC and allied countries. "If you notice OPEC and OPEC+, they're drilling more because I think they want me happy," Trump said. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video US President Donald Trump has repeated his threat to sharply raise tariffs on Indian goods within the next 24 hours, citing the country's continued oil trade with Russia. "We settled on 25% but I think I'm going to raise that very substantially over the next 24 hours, because they're buying Russian oil," Trump told broadcaster CNBC on Tuesday. "They're fueling the war machine," he added. "And if they're going to do that, then I'm not going to be happy." Trump's remarks come ahead of the deadline he set for Russia to reach a ceasefire agreement with Ukraine. That 10-day window, which began last Tuesday, is set to expire soon. If no agreement is reached, Trump said he plans to impose sanctions on Russia's trading partners, including India. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video Russian strikes across eastern Ukraine have killed six people and wounded at least a dozen more, Ukrainian authorities said on Tuesday, as Moscow ramps up attacks ahead of a looming US deadline for peace progress. "Russian terrorists inflicted a massive strike on the railway infrastructure of Lozova," Ukrainian Railways said in a Telegram post. Among the dead was a railway mechanic. A passenger train was left mangled and scorched, and the station building was partly destroyed. Kharkiv Governor Oleg Synegubov confirmed two deaths in Lozova and said several trains had been rerouted. President Volodymyr Zelensky said 25 Shahed drones hit the city, damaging civilian infrastructure including a depot and station, with 10 people injured. Ukraine's air force reported that Russia fired 46 attack drones and one ballistic missile in the barrage. Lozova Mayor Sergiy Zelenskyy called it "the most massive attack" on the city since the war began. Elsewhere, two people were killed in Sumy region at an agricultural facility, and two more died in Zaporizhzhia when a Russian drone hit a house, officials said.
Int'l Business Times
05-08-2025
- Int'l Business Times
Oil Giant BP Surprises With Better Than Expected Earnings
Oil giant BP, which recently pivoted away from green energy, posted Tuesday better-than-expected quarterly earnings and announced a fresh review of costs. The British group's return to profit in the second quarter contrasted with weaker results from energy rivals, as lower exceptional charges offset falling oil prices. Profit after tax came in at $1.63 billion in the April-June period, compared with a net loss of $129 million in the second quarter of 2024, BP said in an earnings statement. Stripping out exceptional items, underlying net profit was down nearly 15 percent. "This has been another strong quarter for BP operationally and strategically," chief executive Murray Auchincloss said in the earnings statement. BP on Monday said it made its biggest oil and gas discovery in 25 years off the coast of Brazil. In February, BP launched a major pivot back to its more profitable oil and gas business, shelving its once industry-leading targets on reducing carbon emissions and slashing clean energy investment. However, energy prices have come under pressure in recent months on concerns that US President Donald Trump's tariffs will hurt economic growth, while OPEC+ nations have produced more oil. BP managed to post a profit for the second quarter thanks to impairments which were lower than one year earlier, along with a revaluation of assets -- notably in relation to liquefied natural gas (LNG) -- and divestments. By contrast, US rivals ExxonMobil and Chevron, along with French group TotalEnergies, posted heavy falls to their net profits in the second quarter. As did oil giant Saudi Aramco, which on Tuesday announced its 10th straight drop in quarterly profits as a slump in prices hit revenues. The average price for Brent North Sea crude, the international benchmark, stood at $67.9 per barrel in the second quarter, down from $85 one year earlier. British rival Shell still managed to post a slight increase to its profit after tax for the latest reporting period. As for BP, Auchincloss said the company was launching "a further cost review and, whilst we will not compromise on safety, we are doing this with a view to being best in class in our industry". Shares in BP gained 2.2 percent in London morning deals following its results and news of a fresh dividend and share buyback. "A slick turnaround plan pumped up BP's second-quarter results," noted Derren Nathan, head of equity research at Hargreaves Lansdown. "Despite lower oil and gas prices, it's managed to push underlying profits up by nearly $1 billion from the first quarter to $2.4 billion, well ahead of analyst forecasts." Nathan added that "shareholders will be glad to see this matched with financial discipline". BP already announced plans this year to cut cleaner energy investment by more than $5 billion annually and offload assets worth a total of $20 billion by 2027. It recently agreed to sell its onshore wind energy business in the United States, while Shell has also scaled back its climate objectives. BP last month named Albert Manifold as its new chairman, replacing Helge Lund, whose departure was announced amid the strategy reset. The group's net profit plunged 70 percent in its first quarter, hit by weaker oil prices.
