Nigerian oil sector: The way forward

Nigeria's oil sector has been facing challenges with a decline in oil output at the beginning of 2017. However, recent developments such as Shell lifting the force majeure on the Forcados pipeline have raised hopes for improvement in the country's oil production. This news comes at a critical time when the price of oil has been under pressure, hitting its lowest level since before the OPEC-led cut. To shed light on the prospects for Nigeria's oil sector, Bala Zaka, the Technical Director at Template Designs, joined CNBC Africa for a discussion. Zaka highlighted the significance of the Forcados pipeline being back in operation, indicating a potential increase in stability in the Niger Delta region. This stability is crucial for attracting more investments in the sector. He emphasized that the reduction in business climate hostilities in the Niger Delta is a positive sign that could lead to additional production being added to the main line for export or internal consumption. Zaka expressed optimism about the relative calm in the region, citing the importance of addressing community concerns to sustain the positive trend. He noted that improved drilling campaigns and investment plans could be on the horizon as a result of the increased stability. Despite the current challenges in the global oil market, Zaka highlighted the need for mobilizing new activities in the Nigerian oil sector. He pointed out that companies have scaled back on drilling campaigns due to the collapse in oil prices, but emphasized the importance of fostering a conducive environment for investors. Zaka underscored the significance of key factors such as the Petroleum Industry Bill, local content regulations, and enhanced relationships between governing bodies and oil companies to drive growth in the sector. Addressing the issue of refining capacity, Zaka suggested a strategic approach of investing in smaller modular refineries and operationalizing larger refineries to meet the country's energy needs. He highlighted the lack of significant progress in refinery construction over the past few decades and stressed the potential of refining raw materials locally to boost economic growth. Zaka's insights on increasing local refining capacities and optimizing finished goods production align with the goal of enhancing Nigeria's oil sector and contributing to the country's GDP. As Nigeria aims to revitalize its oil industry and attract more investments, fostering a conducive business environment, addressing regulatory challenges, and enhancing local refining capacities will be key focus areas. The future of Nigeria's oil sector holds potential for growth and development, provided that stakeholders collaborate to overcome existing hurdles and seize emerging opportunities.