Background

The petroleum sector constitutes more than 95% of Nigeria’s export earnings and about 85% of government revenue. The volumes of the sector’s contributions would be much higher than they currently are but distortions in the marketing of major petroleum products, pipeline vandalisation, oil spills, and gas flaring have bedevilled the sector. Government’s decision to remain the major player in the sector despite its capital-intensive nature, which makes the private sector more suitable to dominate it, has further disallowed the sector from realising its full potentials.

Past Reform and Achievements

The petroleum sector has remained the focus of one reform effort or the other, since a Structural Adjustment Programme (SAP) carried out by a military government in 1986. Civilian reforms began in 2000 with the inauguration of an Oil and Gas Sector Reform Implementation Committee (OGIC), which produced a National Oil and Gas Policy (NOGP), whose major thrust was separating the revenue generating petroleum institutions from the regulatory and policy-making ones. In 2008, a Nigerian Gas Master Plan was developed with the aim of making Nigeria a major player in the international gas market, and of laying a solid framework of gas infrastructure and expansion in the domestic market. Some deregulating and divesting of government interests were subsequently carried out to allow private indigenous companies participate in the supply and distribution of petroleum products—especially in its importation. To reduce the volume of gas flared, a gas monetisation and commercialisation policy was carried out. The Oredo Field in Oil Mining Lease (OML) has been delivering 65 million standard cubic feet of gas per day (mmscf/d) from the Nigeria’s first liquefied natural gas plant (NLNG) that commenced production in October 1999 with two trains but that now has eight trains five of which are fully operational. The government has also been rehabilitating the refineries.

Challenges and Next Steps

The Petroleum Industry Bill (PIB) should be passed into law to increase efficiency in the sector. Rehabilitation of the nation’s four refineries should be fastened, and they should be made to begin functioning at 100% capacity. Security agencies should engage communities and draw up plans towards ending oil theft, pipeline vandalisation, and illegal oil bunkering. The process of acquiring and diffusing technology and managerial expertise in the energy sector should always be accelerated. Sustainable exploitation of petroleum resources is key to the livelihoods of the citizens of Nigerians living in petroleum-rich areas, and should be prioritised.