Nigeria faces surge in competition for oil investments from African peers

The development of new oilfields across Africa look set to bring competition to Nigeria, Africa’s largest oil producer.

The West African region has traditionally been an oil hotspot in the global market, given the presence of Nigeria, Angola, Equatorial Guinea and Gabon.

The discovery of further oil and gas fields along the west coast looks set to bring competition over the next decade for the experienced players, as new producers come on board.

So promising are these prospects that analysts have begun to talk of a new oil province that hugs the coast of four countries: Ghana, Ivory Coast, Liberia and Sierra Leone.

With oil accounting for around 80 percent of government revenue and 95 percent of foreign exchange reserves, Nigeria, Africa’s largest economy, is vulnerable to

any negative shifts in oil and gas prices and demand.

“Nigeria’s resource base is by far superior to any of its neighbours, even taking into account recent discoveries offshore Ghana and other countries, I think the sheer size of Nigeria resources will continue to attract various types of operators,” Iidar Davletshin, Oil and Gas Analyst, Rennaissance Capital, told BusinessDay.

“However, with violence remaining high in the Delta, the country would be required to continuously reduce the tax burden to lure new capital. In essence, this means that the future proceeds for the government will be declining should violence remain,” he added.

“I also think a bigger challenge is emerging from East Africa, with prospects for a new LNG hub in Mozambique becoming real by 2020,” he said.

Ghana Jubilee oilfield has been adjudged as one of the largest oil discoveries in the African region. Ghana is already producing around 70,000 barrels per day (bpd) of oil from Jubilee field, currently its only operating oilfield, whilst output is expected to reach a 120,000 bpd “plateau” in 2013.

Businessday