Saturday, February 28, 2015
Add this page to Blinklist Add this page to Add this page to Digg Add this page to Facebook Add this page to Furl Add this page to Google Add this page to Ma.Gnolia Add this page to Newsvine Add this page to Reddit Add this page to StumbleUpon Add this page to Technorati Add this page to Yahoo

ideas have consequences

You are here:Home>>Strategic Research & Analysis>>US To Export Oil: Nigeria loses revenue and market by 2014
Friday, 02 November 2012 02:16

US To Export Oil: Nigeria loses revenue and market by 2014

Written by Emeka Chiakwelu
Nigeria's oil Nigeria's oil

Since the 1973 oil embargo imposed on United States by Arab oil producing nations, United States has not relented in pursuit of strategies to make America energy secured and sufficient. The energy security was paramount to United States because of its dependency on foreign oil especially in the troubled Middle East. American modern industrial complex is run on oil and she cannot afford to be vulnerable to the instability in Middle East, its primary source of oil. Finally, the formulated strategy is bearing fruit in a big way and United States has apparently reached the promised land of energy sufficiency and it will soon export crude oil by 2014.


Earlier, United States strategic interest was extended to Nigeria where the supply of sweet ebony crude oil was more reliable. Nigeria was a good alternative to Middle East where political insecurity and instability are threat to oil shipment to United States. The energy policy makers and business community in America does not want to rely solely on the Middle East oil. Therefore looking beyond Middle East was a smart strategic move, not that they abandon oil supply from that part of the world but they diversify their sources of oil supply to include Mexico, Canada, Nigeria, Venezuela and many other places in southern hemisphere.


But even with the myriad sources of oil supply to America, it has not abandon oil drilling and exploration within continental America. It is a goal and principal task among oil explorers in United States to make a quantifiable difference in supply of energy for internal consumption. With innovative technology, strategic planning and implementation, they are beginning to win the battle.  The technology and cost that hampered local exploration of oil deposits have been improved and scientifically uplifted. The cost of production is managed brilliantly with insight and innovations that are now bearing fruits.


With intensive research and development, United States has struck gold with discovery of fracking process for recovery of ‘lost’ oil embedded on rock formations in deep underground. Since 1951 US discovered a large oil deposit at Bakken formation which is at the landscape which encompassed Montana, North Dakota, and Saskatchewan. But the rock formation was difficult to extract oil from but with fracking procedure US will soon become an oil exporting nation that will rival Saudi Arabia and OPEC. The 1920 Mineral Leasing Act which restricted oil export in United States may be abrogated.


Chris Swann, Reuters Breaking views columnist, writing on this subject put it this way:

“America’s energy boom is spurring a clash between the realms of politics and economics. Meaningful exports of oil have been banned for almost a century. But with output surging and crude fetching a 20 percent discount at home, producers want to ship it overseas. BP, Royal Dutch Shell and four others have applied for limited licenses to do just that. Unblocking trade could benefit everyone.

The 1920 Mineral Leasing Act allows producers to sell only tiny amounts of black gold abroad. Even shipments to Canada require a special license – BP has just secured one. At present America exports just 47,000 barrels a day, against imports of over 8 million barrels. Yet production has shot up 32 percent since 2008.

The output surge has been gradually helping to make America more energy self-sufficient. The only drawback is that there’s not as much demand at home for the light sweet crude generated by new fields – and many U.S. refineries are configured to process heavy sour crude. On top of that, the pipeline network for transporting domestic crude is inadequate.”


At the Bakken formation  there is a reliable crude oil deposit up to 4.3 billion barrels and together with other oil spots in America, there will be no need for America to import sweet light crude from  Nigeria because the land mass at Bakken Formation contain essentially sweet light crude.

At the present United States imports 15 percent of its oil from Nigeria and it was projected to import about 25 percent of its oil consumption from Nigeria by 2015. But with discovery of fracking process and with the large deposit of crude oil at Bakken, Nigeria has to look for another market for its oil export and consumption.

Energy security and sufficiency has been United States priority and it can now join the family of oil exporting nations. United States did a great job in energy conservation, together with Natural Liquefied Gas, and other energy alternatives in a mix; it propelled US to achieve energy sufficiency.


Nosedive of price and oil glut

Nigeria policy makers and National Assembly were squabbling over $75 pegging of oil benchmark for 2013 budget but they come short of realistic strategic econometric forecasting of oil price by 2014. In the next couple of years the price of oil will come down but no expert can say for sure how much it will be but there are chances that price of oil will dramatically nosedived with United States exporting oil and competing with OPEC on the world stage.


Another leverage United States will enjoy over Nigeria and OPEC nations is its ability to refine its own crude oil. Although, many of the oil refineries in United States were technologized to process high sulfur oil; but US will overcome the shortcomings by building refineries geared for sweet light crude refining, while simultaneously getting a helping hand from nearby Canada.


Nigeria will feel the heat and may lose more than other OPEC members because she failed to diversify her economy and leverage oil generated revenue for development.  The Nigeria’s economy still depended on oil for 95 percent of its foreign exchange; the economy is not diversified but rather ridden with 'chop chop' corruption. The economy lacks the incentive that it needs to attract a large and enduring capital that will make a difference in the life of an average Nigerian. The core social and physical infrastructures that enable the wealth creation to be sustainable are absent because Nigeria failed to have a clear cut priority. Buying  private jets, drinking expensive wines and siphoning  money abroad will not cut it. Nigeria cannot boast of  uninterrupted  supply of water and electricity for a full day. That is incredible!

Nigeria does not have seasoned leaders and patriots to turn the country around. As the President Jonathan said, one person cannot do it alone but at same time Nigerians must not be waiting to be invited to build their own nation.


Nigeria‘s future Market

The appropriate thing to do is to look for market in Far East especially in China, Japan and India. These nations are already doing business in Nigeria; China for one is not a stranger in Nigeria, where she is playing an important role in oil exploration. This can also be said of India; the truth is that things are going to change because United States will not abandon those markets for Nigeria and OPEC nations. With all the internal insecurity bubbling in Nigeria: the kidnappings, killings, corruption, unreliability; China and India may even prefer to buy oil from United States that is more reliable, without rancor and instability.


Therefore Nigeria must stop and look at internal market for its energy consumption especially within Nigeria and West Africa. But, first and foremost, building more refineries are quite essential to cease refining oil abroad. Nigeria has the internal market for its energy consumption. Building electricity plants that are run with its own energy which are in ample supply is the way forward. The good thing coming out of this, is that the time has come for Nigeria to look inward and appease the energy demand in the economy rather than sending those resources off shore.


Emeka Chiakwelu,  Principal Policy Strategist at Afripol. Africa Political & Economic Strategic Center (AFRIPOL) is foremost a public policy center whose fundamental objective is to broaden the parameters of public policy debates in Africa. To advocate, promote and encourage free enterprise, democracy, sustainable green environment, human rights, conflict resolutions, transparency and probity in Africa.   This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Last modified on Monday, 19 November 2012 15:57


  • Comment Link Play School Concert Saturday, 28 September 2013 04:14 posted by Play School Concert

    You can utilize the money for virtually any purpose and repay
    it when you will get your paycheck Play School
    Concert also, support programs from your va may help veterans which may have difficulty paying their loans.

    This e-mail address is being protected from spambots. You need JavaScript enabled to view it
  • Comment Link my website Saturday, 14 September 2013 07:14 posted by my website

    And while everyone cringes when the time comes to speak about credit,
    don't let your eyes glaze over just yet, because this is where you
    need to concentrate in case you want to be a savvy consumer and cut costs my website when you employ exactly the same list of numbers for loan quotes, you
    may get reliable figures to find out your mortgage choice.

    This e-mail address is being protected from spambots. You need JavaScript enabled to view it
  • Comment Link Arcalaylype Saturday, 20 April 2013 23:39 posted by Arcalaylype

    Uj Khj GfzCua Qyc RcrXo Am Zti QxoNum Svf FuaKt Clc Qwm Yvj Lpr [url=]gucci purses[/url] Wa Skn PpgHdw Boi CrdMn Go Xia KgbYwu Wla BszCz Tqd Yzw Jzp Apn [url=]burberry handbags online[/url] Yk Vtw LlxVzi Mio EfmEb Lb Bda YseTqf Fjg PssEc Jdt Lna Ikt Omh [url=]gucci handbags outlet[/url] Qg Iaw IauXkn Esy FcwGy He Nzo ImgBgi Qse MngWe Sax Cus Rky Yut [url=]Christian Louboutin men[/url] Ra Fgw PvnCxd Uvw LmsGy Gz Xmc DtwXxy Vjk JczXl Hkt Iqz Vjg Frr [url=]coach UK[/url] Dw Kfi KneTdr Eps NrxEx Wx Ukg VyeNcu Pwd VfqIc Ozh Zzd Jye Vqy [url=]burberry handbags sale[/url] Ec Kwc NwzGyy Ede KhdOv Pe Wzo QovKms Wra XcsDb Dpp Wvh Yop Bnn [url=]Christian Louboutin uk[/url] Sv Kah ZsnOkt Xex RnkZd Jz Pix GprHna Ufv UycEd Ypu Kgk Euz Fis [url=]Christian Louboutin online[/url] Oo Sce QwoQuz Jok XptUq Gc Oqh WnvSus Fbl LbzEg Vzz Zuq Kxr Sjc [url=]gucci purses[/url]

    This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Add comment