A Comparative Study of Licensing and Concession Systems
New Horizons in Environmental and Energy Law series
Edited by Tina Hunter
Chapter 9: The legal regime for petroleum activities in Nigeria
Nigeria is the largest producer of oil in Africa, with reserves of 36–37.2 billion barrels of proven crude oil as at January 2013. Daily production varied between 2.1 million and 2.3 million barrels per day (bpd) at the close of the third quarter of 2013. There are about 500 oilfields in the Niger Delta of Nigeria. Over 55 per cent of these are onshore, while the remaining are in the shallow waters (less than 500 metres). Of these fields, 193 are currently producing, while 23 have either been abandoned or closed down. About 5,284 wells (approximately 10 per cent discovery wells) have been drilled, mainly in the Niger Delta region of Nigeria. The average production cost per barrel of crude is $3.50 onshore and $5.00 offshore. Nigeria’s crudes are of the finest quality, being sweet light crude, and therefore in high demand. Petroleum accounts for 40 per cent of the country’s gross domestic product (GDP), 80 per cent of government revenue and 95 per cent of foreign exchange earnings. Concessions, until recently, were discretionarily allocated, with the industry gaining a reputation of being less than open and transparent. The industry, although slow to change, has moved from the granting of large concessions to the award of licenses for defined acreage in licensing rounds. This chapter examines licensing in the petroleum industry in Nigeria from inception to date, and also considers the future direction of the regulatory regime.
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