NS4960 Spring Term 2017 Nigeria: 2017 Update Nigeria Oil Rebound Vital for Economic Recovery Oxford Analytica January 30, 2017

Overview January 26, 2017 Nigerian court ordered the temporary forfeiture of Oil Prospecting License 245 Held by Shell and Eni with corruption investigations into the 2011 sale ongoing Despite such controversies government pinning hopes for economic recovery on restoring hydrocarbons production along longstanding plans to reduce country's dependence on oil While large international oil companies are retreating to the relative safety of the deep offshore, the government will look to new partnerships with China and India for large infrastructure projects

Recent Developments I Some form of the Petroleum Industry Bill (PIB) will be debated by the National Assembly in 2017. Process has been ongoing for years -- Nigeria Extractive Industries Transparency initiative has estimated that $200 billion has been lost as a result of the government's failure to reform its oil and gas legislation Diversification efforts Nigeria needs economic diversification to reduce its historical dependence on oil Buhari is widely seen as too conservative to bring about radical change, but his diversification message has been welcomed as a move in the right direction

Recent Developments II Diversification (contd.) In his budget speech to parliament on December 14 Buhari announced an era of greater economic self-sufficiency in which "we will increasingly grow and process our own food, we will manufacture what we can and refine our own petroleum products." Diversification plans include a scheme to revive the Ajaokuta steelworks -- notorious white elephant using obsolete Soviet technology -- began construction in 1970 but never finished In October government said it was targeting $5 billion in investment in Nigeria's mining industry as part of a bit to boost the sector's contribution to GDP from less than 1% of GDP to 7% over the next decade

Assessments I Assessments of the Nigerian situation conclude that: Employment gains in the oil sector will be marginal compared to increases in the agricultural sector. Recent state interventions against oil majors are unlikely to deter future investment Counter-insurgency operations against Boko Haram could distract from government peace efforts in the Niger delta The aims to return production to 2.2 million bpd in 2017 which will depend largely on improving security in the Niger Delta in addition to much-touted sectoral reforms In October 2016 fresh attack on Niger Delta pipeline shut in 200,000 bpd of production

Assessments II OPEC has allowed Nigeria to ignore recently agreed quotas as it rebuilds its capacity The government has set a target of reducing petroleum product imports by 60% in 2018 and eliminating them by 2019 Production could rise close to an average of 2.2 million barrels per day but sporadic attacks on pipelines are likely as negotiations in Niger Delta region continue over a lasting peace settlement Indigenous oil companies will play a growing role through increased production from smaller fields Several of the government's oil reforms will likely stall in parliament