Oil, natural gas and related products account for 90% of Nigeria's total export volume and more than 80% of the government revenues. Nigeria is Africa's largest producer of petroleum and the 6th largest in the world, with an average capacity of 2.5 million barrels of crude oil daily. As a member of OPEC, Nigeria also ranks as the world's 8th largest exporter and has the largest natural gas reserves in Africa, ranking 7th position globally.
However, the local refining capacity is only 24% which creates a huge gap between the demand for refined petroleum products and local supply. Towards bridging this gap, the downstream industry has been opened to private sector participation and foreign investments and with the President's signing of the Petroleum Industrial Bill (PIB) into law as the new Petroleum Industrial Act (PIA) in August 2021, conditions have become much more favourable to foreign investors. By various government schemes and policies like better profit sharing, Nigeria's oil and gas remains one of the most lucrative sectors to invest in. For this reason, Oil giants like Total, Chevron, ExxonMobil, Elf, Shell, ConocoPhillips, Eni and China's CNOOC all have operations in Nigeria.
According to the Nigeria Investment Promotion Commission, the country has attained an annual average production of about 2,000 billion standard cubic feet (BSCF) of natural gas; of which about 70% is utilized while 30% is still being flared annually.Towards ensuring zero percent gas flaring, the Federal Government has embarked on comprehensive and integrated gas utilization master plan/programmes which includes the development of Liquefied Natural Gas (LNG) plants and Independent Power Plants (IPP). Consequently, domestic gas consumption has continued to expand. Major gas grid infrastructure is being built to enable flexible delivery structure of high-quality gas across major industrial plants and homes.
The state-owned Nigerian National Petroleum Corporation (NNPC) which has become much more liberalised under the new PIA 2021, accounts for more than 50% of oil production and over 40% of gas supply. The local refining capacity is put at 24%. This creates a huge gap between the demand for refined petroleum products and local supply. Towards bridging this gap, the downstream industry has been opened to private sector participation.The Nigerian oil & gas sector is regulated by the Department of Petroleum Resources (DPR). The country is a member of the Organization of Petroleum Exporting Countries (OPEC). Major international oil companies (IOC) currently operating in the country include, but not limited to: Total, Chevron, ExxonMobil, Elf, Shell, ConocoPhillips and Eni. Nigeria signed an accord with some of the world’s largest oil companies that could unlock billions of dollars of investment in an offshore oil field, and there is room for more.
In addition to the general investment incentives, graduated royalty rates approved for oil companies are as follows: