Nigeria Oil and Gas Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

The Nigeria Oil and Gas Market is segmented by Sector (Upstream, Midstream, and Downstream).

Market Snapshot

Nigeria Oil and Gas Market Overview
Study Period: 2018- 2026
Base Year: 2020
CAGR: >2 %
Nigeria Oil and Gas Market Key Players

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Market Overview

The Nigerian oil and gas market is expected to register a CAGR of more than 2% during the forecast period. The COVID-19 pandemic has significantly hampered the growth of the market, mainly due to global oil and gas demand contraction and global economic slowdown. The outbreak of COVID-19 led to the crude oil price crash of April 2020, leading to a significant reduction in CAPEX spending by oil and gas companies globally. The country’s national oil and gas companies were already struggling with liquidity and cash shortage, and due to the outbreak of COVID-19, the situation has further deteriorated. However, some of the major factors driving the market include increasing investments in the upstream sector and the development of large-scale and modular refineries in the country. Oil and gas production had been hampered in Nigeria in the past few years due to the attack on oil and gas infrastructure by militants. Furthermore, oil theft has been one of the major issues faced by the oil and gas market in Nigeria, which resulted in huge losses to operating companies in the country. Such factors are expected to have a negative impact on the market growth during the forecast period.

  • Nigeria's offshore oil and gas industry continues to expand, albeit not very fast, opening more market opportunities. The growth of Nigeria's offshore exploration and production activities was mainly driven by the efforts of the government to improve the country's hydrocarbon industry.
  • Lack of infrastructure, uncertainties in regulations, and security concerns have led Nigeria to underutilize its refining capacities, thereby pushing the country to become a net importer of refined petroleum products. However, Nigeria is on the edge of altering refined products’ supply dynamics in the region with the help of the upcoming Dangote Refinery, and it is expected to become the regional refining hub in the coming years. Once completed, the country is planning to become the refinery hub in Africa. This, in turn, is expected to attract foreign players to tap into the country's downstream market in the near future.
  • Given the country’s huge gas reserves and its advantage as a clean fuel, gas has already witnessed a massive surge in its domestic consumption in recent years. Further, the country is steadily moving away from oil and exploring different ways to replace the oil consumption with gas in power as well as the transportation sector. The shift to gas is also supported by the fact that major oil reserves are likely to get dry in the coming three to four decades. Hence, the oil market is considered to be one of the most vulnerable markets where natural gas has the highest potential to penetrate. Moreover, gas production has become a major focus for the oil and gas companies, in response to strong investment in gas-to-power projects, across the region.

Scope of the Report

The Nigerian oil and gas market report includes:

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Key Market Trends

Offshore Oil and Gas Segment to Witness Significant Growth

  • Nigeria's offshore oil and gas industry continues to expand, albeit not very fast, opening up more market opportunities. The growth of Nigeria's offshore exploration and production activities has been mainly driven by the efforts of governments in the region, such as providing key incentives and supporting policies to unlock the investment opportunity, as well as a growing list of international oil and gas companies interested in exploring alternative fields to replace the maturing offshore producing sites.
  • The China National Offshore Oil Corporation mobilized a USD 3 billion investment, in addition to the USD 14 billion already spent on its existing oil and gas operations in the West African country. A large share of this investment goes into the operations in Nigeria. One of the most ambitious ultra-deep offshore projects is the Egina oil field in water depths between 1,400 and 1,700 meters.
  • Furthermore, since 2008, the Nigerian government has been trying to pass the Petroleum Industry Bill (PIB). The country lost billions of dollars of investments due to the failure to pass the bill. One section of the bill was finally passed in 2018, as the Petroleum Industry Governance Bill (PIGB). Under this, the oil sector will be restructured, including the national oil company, the oil and gas regulator, the Department of Petroleum Resources (DPR), and the Nigerian National Petroleum Corporation (NNPC), which will become the National Petroleum Company (NPC), a fully commercial integrated entity. This reform is expected to drive the Nigerian offshore oil and gas upstream market.
  • Therefore, due to the above-mentioned factors, the offshore segment is expected to be the fastest-growing segment.
Nigeria Oil and Gas Market Key Trends

Increasing Investments to Maintain the Country’s Oil and Gas Production

  • Nigeria is one of the largest and oldest oil producers in Africa. The oil and gas sector is one of the most important sectors in the country’s economy, accounting for more than 90% of the country’s exports and 80% of the federal government’s revenue.
  • The country is the ninth-largest in terms of global gas reserves with over 200 Tcf, but it has not started up any new gas projects recently.
  • As of 2020, Nigeria had the largest oil and gas reserves in the African region, with around 37 million barrels of crude oil (36,910) and 5.5 trillion cubic meters of gas.
  • The country's economy was hit hard by the global commodity price downswing in 2014. Investment in the Nigerian upstream oil and gas sector declined by 13% annually, during 2015-2017, due to the downturn in the crude oil price. The decline in spending was largest in 2016, driven by severe disruptions on major oilfields. Oil and condensate production recovered in 2017, and it returned to remain at the level of more than 2 million bbl/d in 2018.
  • The drilling activity in the country is ramping up, and it is expected to continue on account of current and upcoming projects. However, production is not expected to ramp up in the coming years, as the new projects that are expected to come online may be able to offset the declining volume from brownfields, keeping the oil supply stable, provided the political situation does not exacerbate, leading to renewed supply disruption.
  • The development of ultra-deepwater Egina oilfield by Total is one of the key projects, which started production in the first week of 2019. The Egina field may significantly boost the production and cash flow in 2019 and continue onward. Further, NNPC (Nigeria National Petroleum Corporation) signed an agreement for seven critical gas development projects to deliver around 3.4 bcf of gas per day in order to bridge the medium-term supply gap, by 2020, on an accelerated basis.
Nigeria Oil and Gas Market Growth by Region

Competitive Landscape

The Nigerian oil and gas market is moderately consolidated. Some of the major players operating in the market include Nigerian National Petroleum Corporation (NNPC), Royal Dutch Shell PLC, TotalEnergies SE, Chevron Corporation, and Exxon Mobil Corporation.

Recent Developments

  • In September 2020, Nigeria’s long-awaited oil reform bill was sent by the country’s President to the Senate. The bill would take steps to privatize the Nigerian National Petroleum Company (NNPC) and proposes creating a limited liability corporation into which the ministers of finance and petroleum would transfer NNPC assets. The government would then pay cash for shares of the company and it would operate as a commercial entity without access to state funds, which could make it easier for the struggling company to raise funds.​ Therefore, foreign investment in the country’s oil and gas sector is also expected to slow down due to the COVID-19 pandemic and is expected to hamper growth of the market during the initial years of the forecast period.​
  • In January 2021, Nigerian National Petroleum Corp. (NNPC) announced that they had received bids from 96 companies for the rehabilitation of downstream infrastructure. The company held a virtual public opening round on companies pre-qualifying for the work. NNPC had issued the tender in August 2020. The work covers the rehabilitation of NNPC downstream, critical pipelines and associated depots and terminal infrastructure through Finance BOT (Build, Operate and Transfer] to cover four lots. The first lot covers infrastructure related to the Port Harcourt refinery, the second the Warri Refinery, the third the Kaduna Refinery, and the fourth System 2B related infrastructure.
  • In January 2021, Heirs Holdings, in partnership with affiliated company Transnational Corporation of Nigeria Plc, announced the acquisition of a 45% participating interest in Nigerian oil license OML 17 and related assets, through TNOG Oil and Gas Limited (a related company of Heirs Holdings and Transcorp), from the Shell Petroleum Company of Nigeria Limited, Total E&P Nigeria Limited, and Eni. OML 17 has a current production capacity of 27,000 barrels of oil equivalent per day. ​

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Scope of the Study

    2. 1.2 Market Definition

    3. 1.3 Study Assumptions

  2. 2. EXECUTIVE SUMMARY

  3. 3. RESEARCH METHODOLOGY

  4. 4. MARKET OVERVIEW

    1. 4.1 Introduction

    2. 4.2 Oil and Gas Reserves, 2010-2020

    3. 4.3 Oil and Gas Upstream Spending in USD billion, till 2026

    4. 4.4 Crude Oil Production Forecast in billion barrels per day, till 2026

    5. 4.5 Natural Gas Production Forecast in billion cubic feet per day, till 2026

    6. 4.6 Oil Breakeven Prices in USD/bbl for Key Unsanctioned Projects

    7. 4.7 Active Rig Count in Nigeria, till July 2021

    8. 4.8 Recent Trends and Developments

    9. 4.9 Government Policies and Regulations

    10. 4.10 Market Dynamics

      1. 4.10.1 Drivers

      2. 4.10.2 Restraints

    11. 4.11 Supply Chain Analysis

    12. 4.12 PESTLE Analysis

  5. 5. MARKET SEGMENTATION - BY SECTOR

    1. 5.1 Upstream

    2. 5.2 Midstream

    3. 5.3 Downstream

  6. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Mergers and Acquisitions, Joint Ventures, Collaborations, and Agreements

    2. 6.2 Strategies Adopted by Leading Players

    3. 6.3 Company Profiles

      1. 6.3.1 Nigerian National Petroleum Corporation (NNPC)

      2. 6.3.2 Royal Dutch Shell PLC

      3. 6.3.3 TotalEnergies SE

      4. 6.3.4 Chevron Corporation

      5. 6.3.5 Exxon Mobil Corporation

    4. *List Not Exhaustive
  7. 7. MARKET OPPORTUNITIES AND FUTURE TRENDS

**Subject to Availability

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Frequently Asked Questions

The Nigeria Oil and Gas Market market is studied from 2018 - 2026.

The Nigeria Oil and Gas Market is growing at a CAGR of >2% over the next 5 years.

Nigerian National Petroleum Corporation (NNPC), Royal Dutch Shell PLC, Chevron Corporation, Exxon Mobil Corporation, TotalEnergies SE are the major companies operating in Nigeria Oil and Gas Market.

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