Nigeria’s oil sector contribution to GDP among lowest in OPEC

…as emission control, improved technology, fuel efficiency take front seat

Data from Organization of Petroleum Exporting Countries (OPEC) has revealed Africa biggest oil-producing country’s oil sector contributes the lowest to its Gross Domestic Products (GDP) among other members of the Organization of Petroleum Exporting Countries (OPEC).

In Angola, Africa’s second-largest oil producer, oil production and it’s supporting activities contribute about 50per cent of the nation’s GDP and around 89 per cent of exports. Oil and gas sector accounts for about 60 per cent of Libya’s GDP and about 40 percent of Kuwait’s GDP.

In Saudi Arabia, the cartel’s largest producer, the oil and gas sector accounts for 50 per cent of the GDP and about 70 per cent of export earnings while Libya’s oil and gas sector accounts for about 20 percent of GDP.

About 30 per cent of the United Arab Emirates’ GDP is directly based on oil and gas output, while Venezuela’s oil and gas sector is around 25 per cent of the GDP.

Other OPEC members like Congo, Ecuador, Equatorial Guinea, Gabon, Iran and Kuwait didn’t have information concerning oil sector contribution to GDP.

Nigeria, Africa’s top oil producer, derives 95 per cent of export earnings and 70 per cent of government revenue from the oil sector, which saw its contribution to the real GDP growing by 5.15 percent quarter on quarter against -1.46 percent in Q1 2019. This is the first and biggest growth recorded since Q1 2018 were the sector recorded a GDP growth of 14.02 percent.

To perform at the same optimal level as its peer, experts in Nigeria’s oil and gas sector ranked reforming fiscal and regulatory terms as the most urgent task needed to make an oil sector record a two digits growth rate. Next is domesticating the value chain and also ensuring the oil and gas sector provides linkages across the economy.

“Lack of legislative framework and the inability to create value makes Nigeria’s oil and gas sector vulnerable to these cyclical ups and downs that are completely out of the control of the country’s economic managers,” Charles Akinbobola, energy analyst at a Lagos-based energy firm Sofidam Capital said.

Today, Nigeria is only capable of pumping some about 2 million barrels of crude oil per day despite sitting on more than 40 billion barrels of proven reserves with its midstream and downstream infrastructure are arguably in worse shape than upstream production.

In September, Nigeria pumped about 1.87 million bpd compared to 1.85 million bpd in the previous month losing about 16,000 bpd.

Further data from OPEC revealed crude oil production lost about 1.3million in September leading to its lowest monthly average since February level in 10 years of 28.4million bpd.

Saudi Arabia’s production for September fell to 8.56 million bpd, the lowest level since May 2007 thanks to drone attacks on September 14, which knocked out 5.7 million bpd of the country’s output.

The kingdom gradually restored the lost output, which was equal to almost 6percent of global oil production. Yet, production decline in other OPEC members also contributed to the organization’s crude output falling to its lowest level in a decade.

With struggles in its economy and oil industry, Venezuela, the world’s largest oil reserve holder, saw its crude production decline by 46percent to 644,000 bpd in September 2019, from 1.2 million bpd in September 2018, according to OPEC data.

After the U.S. re-imposed sanctions on Iran in November 2018, the country’s crude output fell to 2.16 million bpd from 3.45 million bpd during that period, to mark a 37percent fall, OPEC figures showed.

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