The rebasing of the Nigerian Gross Domestic Product (GDP) on Sunday by the National Bureau of Statistic has underscored the decline in the contribution of the oil and gas industry to the GDP in recent times.
Before the rebasing, the share of crude oil and natural gas to the nominal GDP was 40.86 percent in 2011, 37.01 percent in 2012 and 32.43 percent in 2013. According to the rebased figures, the share has declined to 17.52 percent, 15.89 percent and 14.40 percent for 2011, 2012 and 2013 respectively.
According to Yemi Kale, statiistician general, National Bureau of Statistics, the results indicate that the structure of the Nigerian economy has changed significantly, with stronger diversification of the Nigerian economy than earlier reported. But industry analysts say it also exposes the lethargy that has gripped the vital oil and gas industry in the past few years.
Nigeria is at a vantage position as it has the largest conventional reserves in Africa and in the top 10 globally for oil reserves, with significant heavy oil yet to be tapped in the Benin basin, which is one of the world’s largest heavy oil belts in the world after Canada and Venezuela.
The majority of reserves in the country are found along the country’s Niger River Delta and offshore in the Bight of Benin, the Gulf of Guinea, and the Bight of Bonny. Current exploration activities are mostly focused in the deep and ultra-deep offshore with some activities in the Chad basin, located in the northeast of the country.
Nigeria hopes to increase proven oil reserves to 40 billion barrels in the next few years; however, exploration activity levels are at their lowest in a decade and only three exploratory wells were drilled in 2011, compared to over 20 in 2005, according to the Energy Information Administration (EIA), the statistics arm of US Energy Department.
Over the years, industry analysts have raised concerns over the dwindling performance of the sector, which has been attributed to the structural gaps in its regulatory, fiscal and business practices.
The long-delayed Petroleum Industry Bill (PIB), which seeks to overhaul the industry, is still stuck in the legislative pipeline, creating investment uncertainties.
Aside from the PIB, rising security problems related to oil theft, pipeline sabotage, and piracy in the Gulf of Guinea have curtailed oil exploration projects and impeded the country from reaching its target to increase oil production and reserve base.
The passage of the PIB is germane in reversing the dwindling fortunes of the industry as it is expected to expand investment in the sector.
FEMI ASU
