Nigeria holds the second largest crude oil reserves in Africa, and the eleventh largest in the world. The country has 37 billion barrels of proved crude oil reserves.

Top 5 African countries by proven crude oil reserves

Source: U.S. Energy Information Administration

The oil and gas sector is a major source of foreign exchange for Nigeria. The sector accounted for 94.5% of export revenue and around 70% of government revenue in 2016.

The major oil and gas companies in Nigeria are ExxonMobil, Chevron, Shell, Total, Eni, Addax Petroleum, and Statoil.

Nigeria’s oil and gas sectors are mainly located in the volatile Niger Delta region where local groups, seeking a share of the wealth, often attack the oil and gas infrastructure. Major energy players in Nigeria have slowed down their activities because of rising security problems. It is predicted that the country has lost around $100 billion in revenue in 2016 as attacks by militants in Niger Delta cut crude output to a record low.

Nigeria Crude Oil Production

Source: OPEC

Nigeria’s crude oil production stood at around 1.8 million bpd in 2016. The country aims to boost its oil output to above 2.2 million bpd by the end of 2017.

Nigeria Crude Oil Production 2017

Source: IIG

Nigeria has four oil refineries, two in Port Harcourt, and one each in Kaduna and Warri. The refineries have a combined installed capacity of 445,000 bpd. Dangote Group plans to invest over $10 billion to construct a 500,000 bpd refinery near Lagos. It is expected that the refinery to come online in 2018.

Nigeria’s oil and gas exports revenue fell from $82.5 billion in 2014 to $45.3 billion in 2015 due to lower oil prices. European countries are the largest importer of Nigerian crude oil, imported 41% of total in 2015, followed by Asia (28%), Americas (16%), and Africa (15%).

Nigeria - Top crude oil export markets

Source: U.S. Energy Information Administration

Nigeria holds the largest natural gas reserves in Africa and the ninth largest in the world. The country has 5.2 billion cubic metres (bcm) of proved natural gas reserves according to OPEC.

Top 5 African countries by proved natural gas reserves

Source: OPEC

Most natural gas reserves are located in the Niger Delta region. Nigeria’s natural gas industry has been affected by the instability in the region.

Nigeria Natural Gas Production

Source: OPEC

Nigeria was the world’s fourth largest exporters of liquefied natural gas (LNG) in 2015. Japan is the largest importer of Nigerian LNG. It is expected that demand for Nigerian LNG will continue to grow.

Nigeria Top LNG export markets

Source: U.S. Energy Information Administration

Regulatory uncertainty is another obstacle for Nigerian oil and gas industry. Several new exploration projects and investments in Nigeria have been delayed because of regulatory uncertainty. According to the EIA, the country loses $15 billion annually from not passing the Petroleum Industry Bill (PIB). Nigeria plans to pass the PIB in 2017. The PIB aims to restructure the Nigerian National Petroleum Corporation, governing body of Nigerian oil and natural gas industry. It will also establish good governance practices and enhance transparency in the industry. It is expected that the PIB will open up Nigerian oil and gas industry to new regional and international investors in the long term.