14th October, 2014
The discovery of shale oil and its sudden boom in the United States of America is not doing Nigeria, one of leading global oil exporters, any good at the moment. For the first time and among the members of the Organisation of Petroleum Exporting Countries, OPEC, Nigeria completely stopped sales of oil to the US, which is the world’s largest consumer of the product.
Prior to this stoppage, Nigeria was one of the five major suppliers of oil to USA, but a recent report quoting the US Department of Energy said Nigeria did not export a single barrel of crude to US in July for the first time since 1973. This continued in August and September, signalling an abrupt end to the benefits accruing to Nigeria from such transactions. This recent development is a sharp contrast to what obtained in 2006 when the US imported up to 1.3 million barrels per day from Nigeria.
Though the signs that all was not well began in 2012 when Nigeria started exporting just 0.5 million barrels per day, further reducing to 100,000 barrels per day, the country’s government continued as if all was well and even denied when the various state governments raised the alarm over dwindling oil revenues and allocations to them.
Also, Nigeria rated Africa’s largest oil producer, seems not to recognise the gravity of the troubles that await it with this shortfalls in oil exportation that have led international companies like ExxonMobil, Royal Dutch Shell, Total and Chevron to start thinking in the direction of divesting some of their assets.
Even when Diezani Alison-Madueke, the Nigerian Minister of Petroleum stated last year that shale was one of the most serious threats for African oil producers, it seemed to be a statement in passing as the central government seems to have done nothing to avert this threat. All the country witnesses is increased borrowing with little or nothing to show for it. State governments have also been caught in the web of borrowing and now most of the 36 states of the country are wallowing in huge debts.
Though Nigeria is not the only OPEC member country so affected by this situation, it is bad enough to know that by the next two to three years which analysts believe that the Africa-US oil trade could completely stop, the country’s challenges could further degenerate simply because successive governments never utilised the oil wealth for the benefit of the people of the country.
Today, there is widespread poverty, corruption in high places, a rule by cabals, lack of will by those in government to put things aright, insecurity, unemployment, a profligate government, an ever-increasing borrowing rate and a docile citizenry that cannot hold their leaders accountable.
It is disheartening to note that past warnings about what could happen should the oil dry up or should sales begin to dwindle had never been taken seriously. Now the reality is dawning on us.
Today, while the shale revolution is spreading, many other countries are discovering oil. It could therefore get to a time when the situation could get out of hand with few countries to export to. We would then rely on local consumption alone. For long, experts had canversed for diversification of the economy, yet the government remained complacent. Now that the tides are overwhelming the country, there is fear about what could happen to the economy in the nearest future.
Despite this fear, however, we still feel it is not too late to begin to work on diversifying the economy immediately. Agriculture which was the mainstay of the nation’s economy before the discovery of crude oil, should be revived. The government should also create an enabling environment for manufacturing and industrialisation to thrive if the nation is to survive the depleting oil revenue. This development is a wake up call for everybody to sit up to turn around the nation’s dwindling economic fortunes.