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A pro-northern bias which took root within state-owned Nigerian National Petroleum Corp or NNPC under former president Muhammadu Buhari led to a lack of investment in exploration in traditional reserve rich areas in the South of the county, helping to stifle the oil sectors growth, sources told S&P Global Commodity Insights.
This led to NNPC spending in northern regions, such as the Chad basin, at the expense of southern deep-water reserves. Majority-Muslim northern Nigeria was Buhari’s electoral stronghold.
Nigeria’s oil sector is the worse for it today, blighted by falling production, theft, under-investment, technical problems at fast-maturing fields, regulatory confusion, political in-fighting and minimal exploration activity.
Oil accounts for much of Nigeria’s foreign exchange reserves and government revenue, but the OPEC member is producing well below capacity.
In April, crude production excluding condensates dipped below regional rival Angola to just 1 million b/d, reminiscent of a torrid 2022 characterized by a string of force majeures. By September, production had risen to 1.41 million b/d, according to official data, still well below its 1.742 million b/d OPEC quota.
With the sector in bad shape, Shell, ExxonMobil, Eni, Chinese oil firms and others have begun selling onshore assets.
Just this month, Italian oil giant Eni agreed to sell its onshore assets to local producer Oando.
Between 2018 and 2021, only 11% of the $87 billion plunged into African oil and gas went to Nigeria, according to S&P Global, despite 37.1 billion barrels of proven reserves, according to the US Energy Information Administration.