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The Nigerian Energy Base.

Nigeria, the seventh largest oil producer in the world and rich in natural resources, suffers from a chronic fuel shortage. Its poor energy base is compounded with huge economic problems. The country is forced to import fuels. A plan to deregulate the energy market is opposed by powerful unions and a variety of interest groups. The gap between the rich and poor in this country has widened dangerously, with about 40m of Nigeria's population of about 150m being unemployed and most of the rich are corrupt figures protected by very powerful and more corrupt political leaders.

Nigeria's domestic energy market is in a mess and government statistics about local consumption are hotly contested by various interest groups including trade unions. A Petroleum Ministry source in Abuja on July 31 told APS Nigeria's energy consumption this year was expected to amount to 1.2 quadrillion BTUs, of which liquid petroleum and biofuels would account for 59%, the share of natural gas would be about 32% and that of hydropower and wood would be about 9%. But the source warned that the actual figures this year might be different, "depending on the amount of natural gas to be available for the domestic market".

The source explained that the most critical issue for the local energy market now was natural gas. This is because the local oil refining sector is only operating at about 20% of its capacity, i.e., about 87,750 b/d (see down6NigrRefAug10-09), which means the country has to import liquid petroleum and biofuels equivalent to more than 320,000 b/d of crude oil at costs draining the financial resources of the federal government.

Official statistics about the size of the Nigerian energy market published in 2007 were an estimate of consumption in 2004, when it amounted to 1 quadrillion BTUs, of which liquid petroleum accounted for 58%, the share of natural gas was 34% and that of hydropower and wood was 8%. Total per capita energy consumption in 2004 was put at 8.1m BTUs. The 2004 energy intensity was 6,511.6 BTUs per $2,000 purchasing power parity (PPP). APS sources in Lagos on July 26, 2007, said not much had changed since then (see the background in down5NigrEnBaseJul30-07).

Petroleum Minister Rilwanu Lukman on July 21, 2009, said the policy of the federal government to embark on the deregulation of the downstream sector was inevitable as the budget for subsidy of petroleum products was far above the allocations for capital projects every year. He said Abuja would not back down on deregulation, even as the National Assembly, National Union of Petroleum and Natural Gas Workers and Petroleum and Natural Gas Senior Staff Association of Nigeria had only accepted this policy in principle.

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Publication:APS Review Downstream Trends
Geographic Code:6NIGR
Date:Aug 3, 2009
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