How To Invest In Oil & Gas: Business Investment Opportunities In Nigerian Oil And Gas Sector In 2019

Business Investment Opportunities In Nigerian Oil And Gas Industry

Business Investment Opportunities In Nigerian Oil And Gas Industry In 2019

Looking for where to invest your money in Nigeria? The oil and gas sector is your best bet.

In this article, we’ll be reviewing the business investment opportunities in Nigeria oil and gas industry.

Nigeria is an oil-producing country, with petroleum being the mainstay of her economy. The oil and gas industry is arguably the most lucrative sector in Nigeria, and currently, there are investment opportunities worth over $48 billion in the sector.

To get your share from this largess, follow this article with close attention, as we bring you an in-depth review of the various investment opportunities in the Nigerian oil and gas industry, as well as a comprehensive guide on how to invest in oil and gas in Nigeria.

Business Investment Opportunities in Upstream Oil & Gas Industry in Nigeria

The upstream sector is the major and most lucrative area of oil and gas in Nigeria, and the whole world at large. It is the sector that is responsible for the exploration of crude oil and natural gas from their natural reservoirs. And by gross value, it is the most important sector of oil and gas.

At the moment, Nigeria has about 1500 oil wells/reservoirs and 150+ oil fields within the country. Most of these are located offshore, and around the creeks of Niger Delta. However, credible findings have suggested that the crude oil reserve of Nigeria is grossly under exploited And to achieve optimum exploitation, massive foreign and/or local investments are required.

About a week ago, the Nigerian National Petroleum Commission (NNPC), in a report, stated that there is more than $48 billion worth of unexploited crude oil in Nigeria. The commission, therefore, encourages investors to take advantage of this opportunity and invest in the Nigerian upstream oil and gas sector, to facilitate the exploitation of the country’s petroleum resources.

At present, crude oil exploration in Nigeria is carried out at a relatively shallow depth of 1000 to 1500 meters, and most of the crude oil and natural gas in Nigeria‘s petroleum reserve are located deeper (beyond 1500m). This means that a significant portion of Nigeria’s petroleum resources is lying untapped beneath the seabed.

In light of the foregoing, interested parties (investors) who are well equipped, technologically and economically, are invited to come and tap from the pool of unexplored crude oil and natural gas, which are wasting away in the country’s reservoir.

The required technology (equipment and know-how) and funding, needed to exploit crude oil is no child’s play. Hence, the upstream oil and gas sector in Nigeria is largely dominated by foreign investors/companies.

Oil And Gas Companies In Nigeria

Some of the most prominent upstream oil and gas companies in Nigeria include:

  • Royal Dutch Shell
  • Chevron
  • Total
  • Petrobas
  • Agip
  • Exxon Mobil
  • Nexen
  • And more

In summary, below is an outline of investment opportunities in the upstream oil and gas sector in Nigeria:

  • Crude oil and natural gas exploration.
  • Production and/or delivery of exploration equipments like dynamite (explosives), castings, drilling cements, pumps and so on.
  • Equipment installation and maintenance.
  • Pipeline maintenance and repair.
  • Off shore transportation services.
  • HSE consultancy on exploration rigs/refinery.
  • And lots more.

With respect to the complex equipment, expertise and huge capital required to run an upstream oil and gas firm, most Nigerian oil and gas investors focus on the downstream sector, which, by all standard, is less complex. And in the next section of this article, we’ll be looking at various investment opportunities in the downstream sector.

Investment Opportunities in Downstream Oil & Gas Sector in Nigeria

This area of oil and gas is sequel to the upstream – exploration – sector. It basically entails refining and distributing petroleum products across the length and width of the country (and beyond). Interestingly, this is the main area of oil and gas in Nigeria, which can easily be ventured into by anyone, provided such person is financially capable.

The downstream oil and gas sector in Nigeria is dominated by prominent firms like Forte (owned by Otedola), Lubcon, MRS, Oando, Capital Oil and lots more. In fact, there are hundreds (if not thousands) of firms under this sector, and majority of these firms are into PMS (gasoline) distribution via “filling stations”. So, if you have the capital, you can easily set up a filling station, to distribute refined petroluem products or natural gas to final consumers.

For better understanding, we have summarized the myriads of business investment opportunities in the downstream oil and gas sector of Nigeria.

PMS & Natural Gas Distribution

As emphasized above, this is the most popular oil and gas business in Nigeria.

To invest in this area, all you need to do is to get a distribution license from PENGASSAN (Petroleum & Natural Gas Staff Association of Nigeria), NUPENG (Nigeria Union of Petroleum & Natural Gas Workers) and other regulating bodies. You can then set up your distribution outlets, which are colloquially known as filling stations.

Here, you get your supply from one of the sixteen petrol depots in the country, and transport the fuel, in tanker(s), to your filling station(s).

This business requires a sizable amount of money (for start-up and sustenance), but the return on investment is usually very impressive.

Production & Processing of Petroleum into Domestic Products

The downstream sector offers a viable investment opportunity in the establishment of manufacturing/processing set up, to refine or process petroleum into components like petroleum jelly/wax, grease, lubricant and so on.

Furthermore, you can engage in the processing of crude oil into domestic products like:

  • Tarpaulin
  • Rubber materials
  • Waterproof materials
  • And more

In summary, you are afforded the opportunity of venturing into full-fledged production of domestic derivatives of crude oil. This, like other aspects of oil and gas, requires a sizable amount of money to set up and sustain.

Establishment of Chemical Plants to Process Natural Gas into Valuable Chemicals & Solutions

You can establish plants to refine natural gas into solvents/solutions like methane (chlorinated), acetylene, formaldehyde, naphtha, ethane, and so on. These chemicals are used for various purposes in the manufacturing industry and in our homes. If you are lucky, this could turn out to be a gold mine for you.

The main issue here, like others, is start-up capital, as the level of technology (equipment and expertise) and structure required to get a chemical plant up and running do not come cheap.

Other Business Investment Opportunities in Downstream Oil & Gas Sector in Nigeria

Below is an outline of other investment areas in the downstream sector of the petroleum industry in Nigeria:

Conclusion

As emphasized in this write-up, the downstream sector of oil and gas in Nigeria is significantly wider than the upstream sector. It also offers more viable business investment opportunities to prospective investors.

Hence, unless you are outstandingly rich, with a powerful political backing, the downstream sector of the oil and gas industry in Nigeria is the best investment option for you.

For more business ideas and what to business investment opportunities in Nigeria, visit NaijaGists.com Business Ideas Column.

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2 thoughts on “How To Invest In Oil & Gas: Business Investment Opportunities In Nigerian Oil And Gas Sector In 2019

  1. Good tips but oil is dwindling world wide.venezuela is crumbling with govt shutting down,hunger,power failure marred with rough president who is battling his seat.shale is the inthing and other sources of energy is now sellable.hybrids,electric cars rolling out daily in western world and asia.most countries are shunning oil and investing in cleaner energy.Global warming accord was signed by many countries to reduce carbon emmissions disturbing the ecosysytem.summit is held in almost all countries.lets make hay while the sun is shining.Time to diversify

  2. I like the report on oil and gas. It has broadened my knowledge on the sector .l now know the areas to venture into when l want to invest my money.

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