René Muschter
Research Expert covering Industry & Mobility
Oil industry in Nigeria - statistics & facts
Oil was discovered in Nigeria in 1956, with production starting in the late 1950s. In the following decade, oil exploration would open to foreign companies, and with some exceptions due to economic circumstances, the oil industry would grow constantly to become a global giant. In 1977, the Nigerian National Petroleum Company (NNPC) was founded. The aim of the state-owned corporation is to regulate and participate in the country’s oil business. Nigeria is one of Africa’s main oil producers. With 15 operating pipelines and an average daily production of some 1.5 million barrels in 2023, Nigeria is the fifteenth largest oil producer worldwide. Moreover, the petroleum industry accounts for about 5.5 percent of Nigeria’s GDP and for around 92 percent of the value of all exports.
The oil industry value generated by foreign companies represents an important source of income for the Nigerian government. In 2023, the Norwegian company, Equinor, paid 176 million U.S. dollars to the Nigerian government for extractive activities, of which the largest amount was derived from host government entitlements. Indeed, despite the oil industry being the main source of income in Nigeria, the wealth generated by oil reaches only a small share of the population.
Impact of the pandemic on the oil industry
At the beginning of 2021, the average daily oil production in Nigeria stood at 1.7 million barrels. In 2020, the production decreased due to the impact of the coronavirus (COVID-19) pandemic and the subsequent lower demand. According to estimations from April 2020, Nigeria's daily oil production would have reached 2.1 million barrels per day in a scenario without COVID-19. The low demand for oil during the first half of 2020 led to a sharp fall in prices. The biggest drop in gasoline prices was recorded in April 2020, when the average price decreased by ten percent compared to the previous month. Nevertheless, in 2021 gasoline prices increased again, reaching over 160 Naira per liter. Diesel prices in Nigeria dropped by over two percent in May 2020, this being the most significant monthly drop in 2020. As of the beginning of 2021, the price of diesel in Nigeria was over 220 Naira per liter.Leading exporter of oil worldwide
Since the early 1970s, Nigeria has been a member of the Organization of the Petroleum Exporting Countries (OPEC). The organization’s members are mainly from the Middle East and Africa, with Venezuela being the only South American member and founder. OPEC has the purpose to unify and coordinate the oil market. Nigeria is the eighth largest oil exporter in the world in terms of value. The main destination areas of crude oil from Nigeria are Europe and Asia. In the second quarter of 2023, the export value of crude oil to Europe amounted to about 1.48 trillion Naira, while exports to Asia followed with 1.2 trillion Naira. Consequently, exports of oil products other than crude oil recorded the highest value in the Asian and European markets as well.American giants in Nigeria
Most of the largest oil companies operating in Nigeria are from the United States and Europe. For instance, the multinational oil and gas producer, ExxonMobil, produced 123,000 barrels of liquids per day in Nigeria in 2022. Similarly, Chevron, another American oil giant in Nigeria, produced crude oil and natural gas liquids amounting to 107,000 barrels per day in 2022. During the same year, the British-Dutch multinational, Royal Dutch Shell, produced over 27.5 million barrels in Nigeria.The oil industry value generated by foreign companies represents an important source of income for the Nigerian government. In 2023, the Norwegian company, Equinor, paid 176 million U.S. dollars to the Nigerian government for extractive activities, of which the largest amount was derived from host government entitlements. Indeed, despite the oil industry being the main source of income in Nigeria, the wealth generated by oil reaches only a small share of the population.
