Nigeria and the Nigerian National Petroleum Corporation, with their 37.5 billion in proved crude oil reserves, have been scrambling lately.
The government is fighting to pass a law designed to save the country’s floundering oil industry.
Trust me, the problems have been growing for decades…
Rampant oil theft, lack of pipeline and refinery capacity, and dwindling production numbers are all contributors to the full-blown panic inside the Nigerian energy industry.
But the biggest culprit of all in their oil revenue crisis might be the United States.
Just this week the country’s Minister of Petroleum Resources, Diezani Alison-Madueke, said that Nigeria no longer has any tangible trade in crude oil with the U.S.
Yesterday, she said, “I know many of you must have heard of the shale gas and the shale oil revolution. This has literally knocked out Nigeria from export of oil to the United States.”
Over the last decade, we’ve counted on Nigeria for anywhere from 9% to 11% of our daily imports. Which means Nigeria was selling 406,000 barrels per day to the U.S.
That number dropped to 4% over the last several years.
Now, it’s pretty much at zero.
Nigerians are very concerned with the loss in exports, and for good reason.
With oil consumption so low in Nigeria, there really isn’t a domestic market to pick up the slack the U.S. left behind, and the government is losing revenue from the lack of exports.
But the fact remains — and will remain — that the U.S. just doesn’t need it…
With the recent gains in oil production in red-hot plays like the Bakken and Eagle Ford, it was only a matter of time before the U.S. stopped importing from Africa’s largest oil producer.
Truth is, our production has jumped by 1.8 million barrels per day from 2011 to 2013, and we’re looking to add another 2 million barrels per day to that total by 2016.
In other words, Nigerians shouldn’t expect that cash flow to return anytime soon. And it’s particularly disturbing for their government because the oil industry provides 80% of their revenue, as well as one-fifth of all their exports.
Luckily for them, Argentina has shown some interest, but with that country’s economic foibles as of late, I doubt its economy can support the level of imports the U.S. did for the last decade.
But, as we’ve said before, it’s not just Nigeria hurting thanks to the astounding growth in U.S. oil production. And it’s only a matter of time before another member of OPEC collapses.