“One of the things that immediately strikes you once you get the report is the fact that it is still a negative in the sense that it is -6.6 per cent contraction compared to -11 per cent last year but in the sense of when you compare where we were last year is some improvement,” Dolapo Oni oil gas analyst at Ecobank told CNBC Africa.
According to the Nigerian Bureau of Statistics, the country’s oil refinery recorded the slowest first quarter figures and showed a negative real growth of 15.23 per cent.
“I think what has led to that is the fact that the oil prices in the first quarter were slightly higher than what we saw last year. So in actual sense it was all an oil price story because production went down in terms of volume but the price was a little higher,” Oni said.
Despite the country having four oil refineries, Nigeria’s quantity of refinery output slowed down during the quarter.
“There have been efforts to actually revamp the refineries. However, some areas are inaccessible because of insecurity in the north [of the country].”
The West African country's government has allocated money over the years to revamp the oil refineries, however the cash has been ill-spent. In May 2014, state-owned Nigerian National Petroleum Corp. (NNPC) reported that three refineries performed at a disappointing 19 per cent of their capacity from January to September 2013.
The sector has faced other setbacks with the United States imports from Nigeria in the first quarter of 2014 declining to 5.6 million barrels from 30.7 million barrels in the first quarter of 2013, as a result to the development of hydraulic fracturing that has led to a significant decline in African oil and gas exports to the country.
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“There are efforts to improve it [the oil and gas sector] and we are seeing this from the private sector as there is a lot of interest from them. The story could change,” said Oni.
The government wants to recapitalise the National Oil Company in order to position it for a leading role in Nigeria’s oil and gas industry. Also, there is an urgent reform of the Nigerian oil sector and the passage of the Petroleum Industry Bill (PIB). The PIB will address all the problems in Nigeria's oil and gas sector at a go.
Despite setbacks, in 2013, the country managed to maintain an average crude oil production of approximately 2.3 million barrels per day.
On the other hand, the country is moving towards liberalizing the gas sector. However, new regulations and guidelines are required to as to attract private investors.