With most part of the world trying to move away from oil to adopt alternative and renewable energy, Nigeria’s future in the post-oil world looks rather bleak, according to SBM Intelligence. The Nigerian economy is heavily dependent on its oil exports.
According to the Nigeria Bureau of Statistics, crude oil exports contributed N3.376tn or 74.45 percent to Nigeria’s total exports in the first quarter of 2019. The Nigerian government has spoken of its plan to diversify its economy, in order to be less dependent on oil but there have been very little results.
SBM Intelligence, an organization devoted to the collection and analysis of information, in a report titled Energy Revolution and Economic Disruption, notes that the inability of Nigeria to innovate as the world heads towards the post-oil economy could spell doom.
“The federal government of Nigeria remains hopelessly addicted to crude oil revenues, and rather than innovate or truly revolutionize its economic base, the political elite only seems capable of focusing on areas in which some small amounts are already demonstrably available and then increasing taxes in those areas,” SBM said in a special report released last week.
Nigeria is struggling to grow its own food and it is feeling the crunch of collapsing oil price with the success of unconventional oils – US Shale oil and Canada’s Oil sands – in the market. After exiting a recession, the country has been seen its debt profile rise sharply with the country needing to borrow to fund its budget.
According to SBM intelligence, the Shale Revolution has both an economic and a geopolitical impact. “The United States of America has displaced Saudi Arabia as the world’s largest oil producer, and now accounts for 19% of global output.”
The US currently produces 15 million bpd, just 7 million shies of the combined output of Saudi Arabia and Russia, both second and third respectively in oil production while Nigeria produces 2.32 million bpd, according to the NNPC.
The demand for Nigerian crude oil has diminished with the US (formerly Nigeria’s largest buyer) cutting most of its oil imports. Oil exports from Nigeria to the United States fell from 36.4 million barrels in July 2010 to just 5.6 million barrels in January 2019, according to the U.S. Energy Information Administration.
“The Middle East and Nigeria used to be critical to America’s energy security. They no longer are. 15 years ago, the US used to be the top destination for Nigeria’s crude oil exports, today they barely buy anything from Nigeria, and India has replaced the US as Nigeria’s top energy importer,” the SBM report said.
However, India’s status as Nigeria’s top energy importer could change with the competition in the energy market. Saudi Arabia’s crown prince, Muhammad bin Salman’s visit to India in February 2019 is of critical importance, with the world’s second-largest producer of oil looking to capture the Indian market.
The energy revolution is also heavily impacted by the push for clean renewable energy with climate change concerns. Most economies across Europe and America are now investing heavily in the development of mass-produced electric cars. Going forward, strategic partnerships with Europe and America would be less about exports and more about migration and security.
BloombergNEF projects that the number of electric vehicles in the world will increase from 1.1 million in 2017 to 11 million units in 2025. That number is expected to increase to 30 million units “in 2030 as they become cheaper to make than internal combustion engine cars.”
“Some nations will survive the post-oil economy in much better shape than others, and as things currently stand, Nigeria cannot count itself in the former category.”
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.