NIGERIA. INTRODUCTION Ambitious growth targets see oil production doubled in the space of a decade
Energy vital in long haul to recovery

Nigeria, Africa’s largest oil producer, has set ambitious growth targets for its hydrocarbons sector under the democratically-elected leadership of president Olusegun Obasanjo.
The president knows that, if the country is to haul itself back on its feet, it will need a stronger, more dynamic oil and gas industry to fuel the development process.
The government wants to double oil production in a decade, from around two million barrels per day (bpd) currently to four million by 2010, and increase total proven oil reserves to 40 billion.

It is a multi-pronged strategy. Nigeria has opened up more deepwater acreage under revised fiscal terms to encourage more exploration and development from the likes of Shell, ChevronTexaco and ExxonMobil.
The country is also looking to the evolving indigenous oil industry to develop smaller, marginal fields – those deemed uneconomic by the major players – as part of the effort to raise the levels of output and reserves; this sector contributes a small, but rising proportion, about five per cent, of total oil output.

‘Making more from oil than just crude’ Rilwanu Lukman

The industry is in safe hands. Rilwanu Lukman, a former head of OPEC, is the presidential adviser on petroleum and energy, a calm and experienced figure in a generally unpredictable business.
As well as the oil sector, he has helped to bring in fresh ideas and stable management across the whole energy chain, including the downstream industries, such as refining, and the emerging natural gas sector.

The ongoing deregulation of the refining and marketing side has already brought significant change in terms of product availability and pricing levels. The next step is to encourage foreign investors to come and set up their own refineries, to improve competition and enhance Nigeria’s profile as an exporter of sophisticated fuels.
“This has the advantage of creating jobs, adding value, and making a bit more from our oil than we would have done if we had just exported mere crude oil,” says Mr Lukman.
Nigeria is also looking to tap its vast reserves of natural gas as the basis for domestic industrial development. It is on track to extinguish gas flaring, a by-product of the country’s oil production, by 2008.

The rehabilitation of power stations, a steel plant, an aluminium smelter and a fertiliser plant will absorb large amounts of gas. The development of new power projects throughout the country in the coming years is expected to lead to the creation of a gas grid that will drive further productive activity.
There are a number of gas export projects in the planning stages. These include further expansions to the Nigerian liquefied natural gas (LNG) plant on Bonny Island which will make it the second largest LNG facility in the world by the middle of the decade.
There are also plans for a West Africa Gas Pipeline that will transport Nigerian gas to some of its near neighbours, including Ghana, Togo and Benin. More ambitious is talk of a pipeline running north across the Sahara Desert linking Nigeria with Algeria’s existing gas network.

There are other investment prospects, too. Kanu Agabi, the minister of solid minerals development, is keen to draw attention to the country’s reserves of coal, bitumen, gold, titanium and other minerals. To date, very little has been done with these resources.
Mr Lukman believes that if the country proceeds with its current policies it will transform the energy sector and guarantee the health of the industry in the long term. Crucially it will attract investment, provide jobs and encourage skills transfer.

In the end, more funds will be available to the government – through increased revenues from higher production levels and lower commitments to failing state enterprises – to allocate elsewhere in the economy.
“We don’t need to be persuaded by the international community to do it because we have done this on our own self-determined basis,” he says. “We believe that it is the right policy for our country and our people.”