Why Nigeria’s oil sector is lagging behind Angola’s

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Why Nigeria's oil sector is lagging behind Angola's

Key players in Nigeria's oil and gas sector are raising concerns about the disturbing loss of competitiveness of the sector and the resulting collapse in Nigeria's share of global production, especially when placed alongside AngolaAngola was producing only one million barrels of oil daily in 2004 when Nigeria's output was at 2.4 million barrels daily but by end of last year Angola had grown her production to 1.8 mbd, overtaking Nigeria. By 2004, Nigeria's share of global oil production/export was 3.2% and rising but since 2005, Nigeria's share has been on a decline, reducing a low of a mere 2.1% in 2009.According to analysts, between 2000 and 2009, Angola's investment in oil and gas rose to double  that of Nigeria and the resultant effect has been a steady increase in Angola's crude reserve level while that of Nigeria has remained stagnant or falling. The difference is even more warring when the number of exploration drilling levels in the deep water front in both countries is compared. In 1995 both Nigeria and Angola began their romance with deep water exploration. This year, it is expected that  there will be almost 150 exploration wells  in Angola, while there will be only 85 such wells in Nigeria at the end of 2010.According to data available to BusinessDay, where as Angola's deepwater production will peak at 2 mbd by 2018, that  same year deep water production level in Nigeria could drop to less than 400,000bd because of risks associated with the controversial PIB.  Ann Pickard,  Shell outgoing Regional executive vice president for Africa blames Nigeria decline in stature and Angola's success to a number of key differentiators.According to Pickard who fortune magazine calls the bravest woman in oil, oil firms pay no dividend and loyalty in Angola where lower taxes also apply. She told participants at the recently concluded oil and gas conference  in Abuja that in Angola there is uplift in cost recovery which also applies to tax while foreign cost are tax deductable and no VAT is levied on goods used in offshore exploration and production activities. Pickard, 54 and a native of Wyoming said "uncertainty in the fiscal regime for deepwater PSCs (in Nigeria) will reduce investment in the near and medium term and significantly reduce future production. Production in Nigeria's deep water fields under production sharing contracts, PSCs where NNPC has no funding obligation accounts for 30% of all Nigeria's oil production and generates in excess of $13bn revenue to the government.

Source: latest news, breaking news, business, finance analysis, comments and views from Nigeria :: Businessday

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