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Crude Oil Reserves/ Production

Today, Nigeria has risen very fast and steadily to host the world's 10th largest reserves at about 25 billion barrels. Within the Organisation of Petroleum Exporting Countries (OPEC), having produced some of its past leaders such as the late Chief M.A.Feyide and Dr. Rilwanu Lukman, Nigeria is in the 6th position in terms of reserves and daily production.

Including her condensates production, Nigeria's current daily average production is over two million barrels. She has the capacity to up her reserves to 30 billion barrels within the next two years, with her daily production upped to 3mb/d. Indeed, the aspiration of government is to hit the 40 billion barrels mark in reserves by the end of the first decade of the millennium, with a production of about 4mb/d by that target date. As part of the aspiration, the government, through the NNPC, has targeted 2008 as the flare-out date when all gas flaring is expected to stop in all oil and gas fields in Nigeria.

Although Nigeria for over 30years has established herself as a leading producer of crude oil, she is known in energy circle as a ?gas province with only a little pool of oil.? The country's natural gas reserves is put at more than 166 TSCF (trillion standard cubic feet), with her current gas production put at 12 billion scf, which is the associated gas (AG) produced in the course of crude oil production.

Until lately, virtually all of this gas had been flared, with the rest deployed to reinjection to aid secondary oil recovery in the companies' operational areas. Current flare figure is put at about 63% of the 2 billion scf daily production of AG in response to government's gas monetization efforts, which had included gas-flare penalties, incentives and tax credits to encourage gas-based projects, virtually all the major players are sure to beat the year 2008 flare-out date.

To this end, not only is gas reinjection being intensified, all the companies are now involved in giant gas-based projects tied to utilizing the gas being produced in their operation areas. It is for this reason that NNPC's Joint Venture partners such as Shell, Elf and Agip have been actively involved in the Nigerian Liquefied Natural Gas Limited (NLNG) not only as suppliers of gas feedstock from their various field in the Niger Delta, but also as investors.

​For others like Mobil, Chevron and Texaco, there have been several projects either to take Nigerian natural gas to the international market or to utilize it in Independent Power production (IPP) on the domestic scene as well as the West African sub region; a move being fully backed by government in its desire to step up economic activities and realize the nation's full economic potentials.

Reserves in Upward Swing with Production

Another major surprise of the petroleum industry, which should interest outside investor, is the fact that Nigeria's reserves continue to grow even in the face of growing production. Responsible for this scenario is a combination of reasons, ranging from innovative fiscal and legal regimes fashioned by government to technological advances on the part of the operating companies.

While modern scientific means of exploration and production continue to re-evaluate hitherto abandoned oil wells to a great success, government has continued to motivate the companies with new contractual arrangements such as the Production Sharing Contract (PSC), which seeks to address the bane of the older Joint Venture (JV) arrangement.

In addition, the opening up of the Frontier Areas in the deep and ultra deep sections of the Nigerian offshore as well as the inland basins, along with the marginal fields, have given interested participants - local and foreign - a room not only to grow but also to collaborate and engage in profitable business alliances. Added to this competitiveness is the far lower cost of finding oil in Nigeria compared to other petroleum climes.​

Crude Oil Reserves

Six oil companies - Shell, Chevron, Mobil, Agip, Elf and Texaco - currently dominate the oil industry in the country. Together, they hold some 98% of the oil reserves and operating assets. About 50 other companies have minor interests, some of which were recently acquired (Detailed profile of these players are available from the DPR).

Today, recoverable reserves are estimated at 28.5 billion barrels, with an average productivity of about 2.5 million barrels per day, including condensates. Average oil depletion rate is 15% but the reserves base has continued to increase due to increase additions from exploration and appraisal drilling and deep offshore exploration.

Nigeria's associated and non-associated gas reserves are estimated to be well over 166 trillion standard cubic feet (TCF). This places Nigeria among the top ten countries with largest gas reserves in the world.

Geographical Spread of Operations

The six large operators have different geographic spread. Shell's operations extend over the whole Niger Delta, while the other majors are concentrated in specific parts of the country.​

Nigeria's Oil Fields

There are 500 fields in the Niger Delta. Over 55 per cent of these are onshore, while the remaining are in the shallow waters (less than 500 metres). Of these fields, 193 are currently producing while 23 have either been closed-down or abandoned.

Drilling and Production

With the advent of state-of-the-art exploration techniques, the average exploration success rate has moved from cumulative of about 11% to over 60% presently. This is among the best in the world. To date, some 5,284 wells have been drilled in the predominantly Niger Delta region of Nigeria; of these some 603 are discovery wells.

Current emphasis is on increasing the number of high performance wells capable of producing 20,000 bopd, and above. The average production costs per barrel are $3.5 and $5.0 onshore and offshore respectively. It is not surprising, therefore, that Nigeria continues to offer one of the most profitable investment climates, and a central pull to foreign investments.

Rejuvenation of Power and Telecommunications

Modern business is hinged on infrastructural facilities like electric power and modern telecommunications. After a long but careful period of planning, the Nigerian government has started a process, which is akin to a revolution in these vital sectors that are widely known to be pivotal to growing the nations economic base.


The National Electric Power Authority (NEPA) is the state monopoly of power generation. Operating all generating stations and the national distribution grid to supply 50Hz, volt electricity. The outfit is presently billed for privatization. Government has already approved the involvement of private concerns and the various State Governments in the generation of electricity in the face of less-than-satisfactory performance from the monopoly.

Currently, while NEPA is being re-positioned to match up with growing economic boom, Independent Power Production (IPP) is being encouraged, with active involvement of oil and gas companies such as Shell, Mobil, Chevron, Agip, Elf, Texaco etc. These companies have focused to use hitherto flared gas in their areas of operations to generate more electric power for NEPA to distribute.

It is expected that by the time some of these private IPP projects take off, the reinvigorated NEPA will be better placed to distribute and thus give the much-needed steam to the engine room of the economy the industrial sector. The concomitant swing in industrial capacity is expected to engender more gas usage and provide jobs for Nigerians.


In like manner, the issue of telecommunications is being addressed by government not with the privatization of NITEL but equally with the involvement of private telecommunication services provider.

Already, there are a number of such companies providing reliable services in competition with state-owned NITEL, which hitherto had enjoyed the monopoly status. Four major GSM providers are now fully in operation, through the Nigerian Communications Commission (NCC) supervised open competitive bidding.

The new Mobile (GSM) Communications service is a step by government to an enhanced telecommunications density status for the country, the Nigerian business climate has began to enjoy the kind of boom which only enhanced modern communications could ensure.

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