After years of poor management, corruption, and unstable geopolitical conditions, Nigeria’s Petroleum industry—once the backbone of the country’s economy—is currently in a state of decline. The exit of large oil firms from Nigerian onshore assets, including Shell, TotalEnergies, Chevron, and ExxonMobil, indicates the end of the country’s oil boom. After being a major role for over 70 years, Shell sold its onshore operations to small local companies who don’t have the capital or know-how to keep them running.
Oil theft, deteriorating infrastructure, and instability have contributed to a roughly 50% decline in Nigeria’s oil production since 2005. Nigeria’s oil is becoming less competitive on the market when compared to other producers such as Saudi Arabia due to high production costs caused by Corruption and inefficiency. The government’s strong reliance on petroleum earnings has hindered the diversification of the economy. Nigeria LNG is running at less than half capacity, undermining attempts to shift to Natural Gas due to poor Infrastructure and supply problems. The Niger Delta has suffered greatly from the environmental effects of the petroleum industry, leaving behind severe pollution, abandoned pipelines, and destitute towns.
The imminent collapse of the sector has long been predicted by experts.
Government’s attempts to hold leaving corporations accountable have fallen short and environmental cleaning measures have been ineffective. If Nigeria doesn’t take immediate steps to diversify its economy, it could turn into a failed petrostate. The fall of the oil sector poses a serious economic, humanitarian, and environmental disaster. The imminent collapse of Nigeria’s petroleum sector has long been predicted by experts. Petroleum Industry corruption and inefficiencies in Nigeria result in high operating expenses and a poisonous business climate, claims petroleum economist, Chijioke Nwaozuzu.
Reputable environmental campaigner, Nnimmo Bassey, highlights the consequences to both the environment and human health: “Oil spills have contaminated rivers and farmlands in the Niger Delta for decades. A ruined ecology and communities fighting for survival are left behind by the departure of petroleum companies. These opinions bring attention to the pervasive problems of Environmental Degradation and poor management in Nigeria’s petroleum industry. Nigeria’s decline in the sector has been shaped by a number of significant events. The technical know-how and financial resources Nigeria lacks may be obtained by working with international organizations and nations that have moved away from the petroleum industry. By investing in a sovereign wealth fund that will help future generations, Norway, for instance, has effectively managed its oil wealth and diversified its economy.
Niger Delta is where the effects of oil downturn are most noticeable.
Also, Nigeria’s oil output peaked between 2005 and 2010, then gradually decreased as a result of oil burglary, theft, and damage and militancy in the Niger Delta. In 2014, the country was severely struck by the global oil price collapse, which highlighted the weaknesses in its Economy that depends heavily on petroleum. To regulate the oil industry, the Nigerian government introduced the Petroleum Industry Governance Bill (PIGB) in 2016, but political squabbles prevented the bill from passing for years. The COVID-19 Epidemic significantly reduced petroleum demand in 2020, which prompted businesses to reduce their investments in Nigeria.
Large oil corporations, such as TotalEnergies and Shell, started to leave onshore operations in 2021, claiming increased operating costs and Security issues. These incidents highlight the sector’s collapse as a result of inaction on change and a lack of proactive oversight. Nigeria must give priority to a number of measures, including international partnerships, policy reforms, and investments in renewable energy, in order to stop the current downward trend. The Niger Delta is where the effects of Nigeria’s oil downturn are most noticeable on the socioeconomic and environmental fronts.
Related Article: Oil Production in Nigeria now Recovering
Ogoni land Farmer Mary Okon revealed, “Our Waterways are dirty, and the farmlands aren’t producing any crops anymore. We always fear that the Oil Spills may harm our health, and the promised compensation and cleanup have never happened. Fisherman Ezekiel Boma bemoans the fact that, “The fish are no longer there, but we used to rely on fishing.” Our way of life has been devastated by oil. These first-hand stories demonstrate the grave human cost of decades of environmental negligence and emphasize how quickly cleanup work needs to be done.