The Growth of Nigeria’s Oil Economy

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Ambit Energy Corporation
Image: ambitenergycorp.com

Nigeria is currently Africa’s largest oil producer, laying claim to the 11th-largest quantity of oil reserves in the world, drawing investors like the Ambit Energy Corporation to build and expand Nigeria’s energy industry. The Nigerian government has regulations and limitations in place to favor indigenous oil companies over international ones, though the Ambit Energy Corporation, founded and owned by a dual Nigerian-Canadian citizen, has the unique opportunity to bypass many of these restrictions while still benefiting from its international presence.

Nigeria’s oil industry began in 1956 when oil was found in the Niger Delta after a half-century of exploration. Two years later, Nigeria’s first oil field began operations under the control of Shell-BP, with other foreign companies allowed to join in their own explorations after 1960.

The Nigerian civil war that began in 1967 concluded in 1970 as the world’s petroleum prices rose, and Nigeria saw the profits from its oil sharply rise. Just prior to this, Nigeria’s Petroleum Act established exclusive control over its oil resources. Nigeria’s state-owned oil company, the Nigerian National Petroleum Corporation, was formed in 1977.

Throughout the following decades, Nigeria would increasingly pass regulations to keep profits as close to the Nigerian people as possible. Oil exports, worth nearly $42 billion in 2015, now constitute approximately 90 percent of Nigeria’s gross earnings, overtaking the formerly dominant agricultural industry. These numbers could grow substantially higher over the next several years, as Nigeria looks to establish the infrastructure needed to harness its considerable natural gas resources.

Oil Exploration to Start in Chad Basin in Nigeria

Ambit Energy Corporation pic
Ambit Energy Corporation
Image: ambitenergycorp.com

Based in Canada, Ambit Energy Corporation maintains offices in Nigeria and the UK as an oil and gas exploration and production (E&P) company focusing its efforts in West Africa. Ambit Energy Corporation initially targeted the well-known Niger Delta Basin in Nigeria.

In a recent news release, Reuters reported that Nigeria hopes to find oil in the Chad Basin, which is in the northeastern region of the country. The state oil company is planning to launch exploratory drilling projects in the last quarter of 2016.

A spokesman from the Nigerian National Petroleum Corporation (NNPC) explained that exploration in the Chad Basin is designed to capitalize on hydrocarbon prospects in the Nigerian inland basin, provide new investment opportunities, create jobs, and stimulate the economy.

According to Nigeria’s minister of state for oil and the chief of NNPC, Emmanuel Ibe Kachikwu, seismic studies are still ongoing in the region. The country’s oil leader alerted the public in 2015 that it was investigating a potentially significant oil find in the Chad Basin.

Nigerian Oil Companies Require Foreign Investment

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Ambit Energy Corporation
Image: ambitenergycorp.com

Ambit Energy Corporation is an international oil and gas company headquartered in Calgary, Canada, with offices in Nigeria. The corporate entities and structure created by Ambit Energy Corporation are designed to fit the goals of the Nigerian government’s indigenization program.

In 1990, the Nigerian government established the Indigenous Concession Program (ICP), which set new rules favoring the awarding of oil rights to local oil companies. Foreign equity holding of marginal fields is limited to 40 percent, and foreign partners face stringent project financing demands.

Nigerian government policies are intended to repatriate the oil and gas industry from foreign ownership and allow local companies to monetize natural resources. However, marginal oil fields of the Niger Delta are often found in challenging terrain that requires advanced oil recovery techniques. This results in oil and gas that is costly to produce and requires extensive technical savvy.

The government is making effort to fast-track the infrastructure and technological and managerial know-how for the country to take advantage of its gas and oil reserves. Recent policies in Nigeria, while limiting foreign operation, still leave room for foreign investment in terms of financing and technical assistance. The government believes that carving out a certain percentage of participation in the industry by local oil companies, combined with Foreign Direct Investment (FDI), will allow local companies to become more competent in their operations.

A Look at Conventional and Unconventional Natural Gas

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Ambit Energy Corporation
Image: ambitenergycorp.com

Ambit Energy Corporation is a firm based out of Calgary, Canada which aims to be a competitive company in the West African energy sector. With interests in the Niger Delta Basin, Ambit Energy Corporation focuses on crude oil and natural gas exploration.

Natural gas is a fossil fuel commonly used for heating and for powering vehicles. Depending on where it is discovered and how it is harvested, natural gas can either fall into the category of conventional or unconventional. Natural gas is considered conventional if it is trapped beneath rock near enough to the earth’s surface that it can be extracted through traditional well-drilling methods.

Unconventional natural gas occurs when the ability to extract the resource is hindered by its location in the earth. Deep natural gas is considered to be unconventional because it rests at 15,000 feet or more below ground. Likewise, shale is considered to be an unconventional natural gas because it requires the use of high-pressure hydraulic fracturing to break through the uncharacteristically hard stone that encases it. Another unconventional type, coalbed methane, is a natural gas only found around coal seams in the earth.

Nigeria – The Niger Delta Basin

Niger Delta Basin pic
Niger Delta Basin
Image: ambitenergycorp.com

The Niger Delta Basin is an important part of Nigeria’s natural beauty and resource wealth, and companies like Ambit Energy Corporation are working to help the nation discover and produce oil and gas from that region of the country. Ambit Energy Corporation maintains an active interest in the Niger Delta Basin for its proven reserves, which constitute an estimated 34 billion barrels of oil.

Basins are large areas of the Earth that form a depression. They can be above- or underground and are created by a variety of natural processes, including earthquakes and erosion. Several types of basins exist, but the Niger Delta Basin in particular falls under the “structural basin” category.

Structural basins occur when tectonic plates move, causing some rocks to fall and others to rise, eventually creating a basin. Within the category of structural basins are sub-categories like sedimentary and lake basins. The Niger Delta Basin falls into the former.

Sedimentary basins look less like bowls and more like long trenches, and over the eons, those trenches tend to collect organic and inorganic matter. The organic matter eventually develops into petroleum and natural gas, making sedimentary basins a key source of wealth in nations like Nigeria.

Tens of Millions of Nigerians Lack Access to Clean Water

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WaterAid
Image: wateraid.org

Headquartered in Canada, Ambit Energy Corporation focuses on high-potential oil and gas projects in Nigeria. Committed to the communities in which it operates, Ambit Energy Corporation also works to improve Nigerians’ access to potable drinking water. According to statistics from WaterAid Nigeria, a UK-based charitable organization, over 63 million Nigerians lack access to safe water.

Together with nongovernmental agencies, the Nigerian government has made efforts to deliver clean drinking water to Nigerian citizens. Despite these efforts, many Nigerians still rely on water from wells or boreholes. In some cases, this water may contain harmful heavy minerals, such as lead, arsenic, cadmium, and others.

In addition to lacking safe drinking water, two-thirds of the Nigerian population, or more than 112 million citizens, do not have adequate sanitation available to them. The widespread lack of safe water and sanitation results in the death of in excess of 97,000 Nigerian children each year.

The Elements of Nigeria’s Indigenization Policy

Incorporated in 2005, Ambit Energy Corporation is a Canada-based oil and gas exploration and production enterprise focused on resources in the Niger Delta Basin in Nigeria. Ambit Energy Corporation’s work in Nigeria led the company to develop a business model and corporate structure based on the Nigerian Indigenization Policy.

Established in the early 1970s, Nigeria’s indigenization policy was created when significant economic and political nationalism led the state to impose regulations on the private sector. The Nigerian government developed the policy with a number of objectives, such as fostering opportunities for Nigerians, increasing the amount of domestically produced goods, and growing local profit retention.

With significant impacts on foreign direct investment, the indigenization policy restricted foreign investors’ access to certain markets, including basic manufacturing and advertising, while encouraging foreign investors to partner with local enterprises. The policy also required foreign businesses operating in Nigeria to sell company shares to Nigerians, with the minimum of company shares set at 40 percent. While the Nigerian Indigenization Policy is known to have yielded a variety of outcomes, some of the positive results were a stronger Nigerian stock market and an influx of Nigerian entrepreneurs.