Shell in Nigeria
NIGERIA: POTENTIAL,
GROWTH AND
CHALLENGES
Growth
167
MILLION
Largest population
in Africa and
seventh largest
in the world.
Modern day Nigeria came into being in 1914. One hundred
years later it is established as a political and economic giant
of Africa and is emerging as an exciting growth story on
a global level.
With a population of about 167 million, Nigeria is the
largest country in Africa and seventh largest in the world.
According to UN projections it could have the world’s fourth
largest population by 2030 and potentially surpass the
United States by 2050.
Economic growth has averaged around 7% per year
since 2003 according to World Bank figures, against the
backdrop of a global economic slowdown. This growth has
been underpinned by oil and gas. Nigeria is the biggest oil
exporter in Africa, with the continent’s largest natural gas
reserves. It has the tenth largest proven oil reserves in the
world, the ninth largest proven gas reserves and exciting
exploration prospects. It is the largest producer of light,
sweet crude oil in OPEC with a location on the Atlantic
seaboard that makes it strategically significant to oil and
gas importing nations in Europe, the Americas and Asia.
Oil and Gas
1958
10 th
First commercial
oil exports
largest proven
oil reserves
in world**
2005
9 th
First deep water
production
Biggest oil exporter in Africa
with continent’s largest natural
gas reserves*
* (Source: World Bank)
** (Source: OPEC)
*** (Source: US Energy Information Administration)
largest proven
gas reserves
in world***
Shell in Nigeria
NIGERIA: POTENTIAL,
GROWTH AND
CHALLENGES
Oil and gas: the backbone of growth
Nigeria has the natural resource foundations on which to build a
more prosperous economy and address some of its human
development challenges in the years ahead. Its energy policies
and decisions will also be increasingly significant to the future of
NIGERIAN OIL AND GAS HAS HUGE
SCOPE, AN ECONOMIC IMPERATIVE AND
A POLITICAL MANDATE TO GROW.
the global energy system.
International oil companies (IOCs) have played a major role
Oil accounts for most of the export income and overall government
throughout the history of Nigeria’s oil and gas industry. Shell has the
revenue of Nigeria. There is a consensus that strong growth in
biggest footprint but Total, ExxonMobil, ENI and Chevron also have
other areas of the economy, improved infrastructure and progress
a substantial presence through subsidiaries. Total and ENI subsidiaries
on human development will be crucial to Nigeria’s long-term
are also members of the SPDC Joint Venture, which is operated by
economic and social health. It is also clear that oil and gas will
the Shell Petroleum Development Company and includes the Nigerian
provide a backbone for this wider growth for the foreseeable
national oil company NNPC.
future. Gas will be crucial to driving progress in other industries,
agriculture and transportation.
In the early years, government participation in the oil industry was
largely confined to regulation and fiscal administration. Since the
At the same time sizeable numbers of Nigerians still live in poverty;
1970s the national oil company has been a participant in all
a minority have reliable access to electricity. Improving access to
petroleum licenses but, until recently, has depended heavily on foreign
energy has therefore been identified as a key development priority
companies to operate them . The last decade has seen indigenous
by successive Nigerian governments, with more effective utilisation
companies gain a greater foothold in the industry, reflecting a growth
of gas one of the keys to achieving that objective.
of local capacity. This trend is accelerating, with IOC divestments
creating more opportunities for local companies.
OIL AND GAS WILL PROVIDE A BACKBONE
FOR GROWTH FOR THE FORESEEABLE
FUTURE. GAS WILL BE CRUCIAL TO DRIVING
PROGRESS IN OTHER INDUSTRIES.
Unlocking Nigeria’s full energy potential rests in part on the delivery of
large, complex projects in difficult locations. IOCs have an important
role to play, bringing cutting-edge technologies, project management
experience, access to global markets and the ability to operate and
manage risks on a large scale. Effectively integrating the capabilities
of a range of local and international companies, contractors and
A Changing industry landscape
stakeholders will be one of the most important challenges for the
Nigeria’s petroleum industry dates from the late 1950s. The majority
Nigerian oil and gas industry in the years ahead.
of production comes from the Niger Delta and surrounding shallow
water fields but the last decade has also seen major growth in
The industry landscape is continually evolving and there are many
deep water. Shell Companies in Nigeria (SCiN) have played
uncertainties. The government is seeking to reform governance of the
a pioneering role onshore and offshore, with Nigeria’s first
sector, a key component of which is the Petroleum Industry Bill (PIB).
commercial oil exports coming from the Shell Petroleum Development
The terms under which IOCs operate may change when the PIB is
Company’s Oloibiri field in the Niger Delta in 1958. The Bonga
passed but two things are clear. First, Nigerian oil and gas has huge
project, operated by Shell Nigeria Exploration and Production
scope, an economic imperative and a political mandate to grow.
Company, led to the country’s first deep water production in 2005.
Second, driving this growth will require partnerships between the
It is expected that the contribution from deep water to Nigeria’s
government and companies with the ability to innovate, the capacity to
overall production will grow substantially in the coming years,
deliver major projects and a long-term commitment to Nigeria. Shell has
assuming a conducive investment environment.
been here throughout the history of Nigeria’s oil and gas industry and is
determined to remain a substantial, value-adding part of the economy
for many years to come given the right investment environment.
Published by Shell Companies in Nigeria in April 2014: Shell Petroleum Development Company of Nigeria Limited, Shell Nigeria Exploration and Production Company
Limited and Shell Nigeria Gas Limited. More information on the operations of Shell companies in Nigeria can be found at www.shellnigeria.com
Royal Dutch Shell plc. and the companies in which it directly or indirectly owns investments are separate and distinct entities. But in this publication,
the collective expression ‘Shell’ may be used for convenience where reference is made in general to these companies.