What 18 Oil Executives Just Told Me in Las Vegas

by | published November 19th, 2013

As you read this, Marina and I are once again on a flight home from Las Vegas.

It was our sixth trip to “The Strip” since May. It seems everybody wants to meet there these days. It is also the first stage in what is going to be a very hectic travel schedule.

We arrive back in Pittsburgh late tonight. Then I fly solo to Baltimore tomorrow to work on very significant new product launch at Money Map Press (you’re going to hear a great deal about this one soon…so stay tuned.)

Afterwards, there won’t be much time to wind down. The two of us are off to Rio de Janeiro on Thursday, back on Thanksgiving and then on to Moscow the next day.

Of course, I will be bringing you along on all of these trips – including my December adventures which I’ll be discussing in due course.

For now, let’s just say it’s shaping up to be a blur of airports over the next two months.

As I noted about a month ago, there are some big things happening in the global energy mix right now and they are going to provide us with some great investment opportunities.

But first, I need to talk to some very important but scattered people.

That brings me to the 18 oil executives I just met with in Vegas…

The Perfect Storm Brewing in Nigeria

All 18 of the executives I met with were from the Nigerian National Oil Corporation (NNOC).

The NNOC is currently facing a range of problems, with production volume declining in what ought to be a thriving crude oil environment. What’s more, Nigeria is also one of the few places left in the world that still has a large supply of light sweet crude.

Light sweet crude is the most prized oil because it is low in sulfur (sweet) and low in weight (light), making it the easiest to refine. That makes it the most desirable crude in an already high-priced market.

That would seem to put Nigeria in a very enviable position…if it weren’t for the situation in the country right now.

You see, in a Houston meeting more than a year ago, I laid out what I saw as the 11 priorities that would be necessary for Nigeria to reverse its course. These involved revisions in its energy, governmental, security, legal, infrastructure, and training sectors.

But one year further down the road, the results have not been encouraging.

Today, Nigeria is still experiencing a continuing decline in oil production (its primary source of hard currency), the exodus of more foreign international oil companies, accelerating security concerns in the north and in the main onshore basin in the south, rising political unrest, and expanding corruption.

This is a perfect storm if there ever was one.

The executives I met with in Vegas are not naïve about these prospects, but they are also better administrators and planners than their predecessors. It is a small encouragement, perhaps, but an improvement nonetheless on what we had to work with just a few years ago.

The problems are numerous in what should already be a prosperous country despite its size (at 180 million, it is the largest country by population in Africa). All of these difficulties end up being one element or another of a vicious cycle.

This situation hasn’t changed in decades and works to pull down each and every reform or advance. This ongoing cycle requires that changes take place at several points in the energy sequence simultaneously or any attempt at change will fail.

The Vicious Cycle Continues

For example, consider the following…

Nigeria is one of the top ten producers of oil in the world. Unfortunately, it has a miserable refining sector. The facilities are old, in desperate need of updating, and unable to come close to providing domestic supplies of diesel.

That is important because of another shortfall in the cycle.

The country also has a terrible power generating capacity. On an average day, it provides only about 15% of the electricity required by the nation. The remainder – 85% of daily needs – must be provided by private generators.

And guess what?…The generators run on diesel…and because of the refinery situation, the diesel needs to be imported.

So a nation with large oil resources both on and offshore is reliant on imports of a basic oil product to survive.

Or consider the difficulties Nigeria faces in passing a national oil law.

It’s Petroleum Industry Bill (PIB) has been in process for years. The most recent version has 362 sections and is designed to cover every aspect of the production, processing, distribution, administration of, and control over, the oil and gas in the country. This is about as pervasive a piece of legislation as you can find anywhere.

The problem here is it can’t be passed. The regions (they are called states in Nigeria) refuse to discuss the matter, while corruption impedes passage in one direction and smuggling in another.

Because the PIB has been stalled for some 14 years, the government has been forced to use stopgap measures in the absence of an omnibus code. Those piecemeal approaches have spawned all manner of inefficiencies and outright scams generating opportunities for vested interests at the local level.

And these in turn prevent the PIB from moving forward. The vicious cycle continues.

I have seen similar developments in a number of countries where the surfeit of energy or its potential should be igniting genuine prosperity. Nigeria is hardly alone in this regard.

However, based on our discussions, I may be moving one step closer to determining what can be done about all of this. I have been invited to Lagos, the Nigerian capital, in April.

We shall see what the lay of the land actually is when I get there. I promise to keep you posted.

PS. As you know, we’ve been using every opportunity we can to make you aware of the developing situation surrounding one of the biggest oil discoveries of all time. Now the small Western company that everything hinges on is about to go ballistic. I have all the details right here.

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  1. Allan Robinson
    November 19th, 2013 at 15:19 | #1


    as an informed oil analyst and university professor, you should be aware (especially if you are to be invited to the Country), that the capital of Nigeria is NOT Lagos, but Abuja. No kudos for that booboo!

  2. Mr Martin
    November 20th, 2013 at 06:52 | #2

    Nigeria is a cesspool that is best left untouched for any investor worried about losing their money.

    Just check out Mart Resources (MMT on the Toronto Venture exchange) which produces over 10,000 Barrels a day, but has 30% of its oil stolen from the government oil company’s pipeline and therefore does not get paid for it. Add to that the never ending corruption of local, state and federal officials, bureaucrats, and oil company employees and I’m amazed they make any money at all.

    The stock continues to drop, from over $2 to barely a buck, all due to the problems beyond their control. This doesn’t even include the violent Boko Haram Islamist terrorists who have killed thousands in the last 4 years or the re-born guerilla movements in the south seeking to stop all oil production.


  3. yngso
    November 20th, 2013 at 07:08 | #3

    Lagos is the biggest city, the “economic capital”.
    Please tell us about any investment opportunities you find in that part of the world.

  4. George
    November 20th, 2013 at 10:36 | #4

    Be sure to get a heavily armed security force to convoy you around so we don’t read about your kidnapping for ransom. Life is cheap in Nigeria my friend.


  5. November 20th, 2013 at 11:27 | #5

    Nigeria is known as the internet scam capital of the world!! I often recieve offers of Government backed funds reportedly from the CNB in Nigeria. They offer several million USD for various purposes for sending a few hundred USD through Western Union. As there are probabily no International laws regarding internet scams, the FBI and Interpol appear useless in stopping these crimes. Other neighboring nations in West Africa seem almost as bad. I found that LLoyd’s of London will not touch this part of the world.

  6. Engr. O. H. Oladosu
    November 21st, 2013 at 14:02 | #6

    That was, to a large extent a factual presentation of what predicaments are impeding rapid industrial and economic development in Nigeria. This, however, is not to say that the case of Nigeria defies solution as events in Nigeria presently indicate. A few state Executives are now making waves and strong statements in infrastructural renewals and transformation, there is now a strong indication that the Federal Authorities are serious about reforms in the power sector, democracy is deepening its roots as both houses are getting more and more experienced and the fact that the insecurities evident in North East and the South-South regions have forced the proposed convocation of a National dialogue on the National question. It is hoped that the National dialogue will usher in a true and all en-compassing federalism, which to my mind will free the potentials of the states and lower the nationwide tendency to corrupt practices. Most part of Nigeria is not as scary as painted. Please, come and offer what suggestion you think can get investors swarming into great untapped industrial potentials crying to be harnessed in Nigeria. Our Government is now more than ever ready to encourage investors. Lagos is one of the states making bold statements regarding transformation. Lagos is safe

  7. Engr. Caleb Olakigbe
    November 26th, 2013 at 18:32 | #7

    I would like the investors to ignore the enemies of Sub- Sahara Africa countries but search the United Nations agencies website such as World Bank and IMF for fair in judgement about Nigeria economy.
    An example is Nigeria a gross domestic product is over 6.7%, which is one of the best in the world presently. The problem is that some economic analysts want to always hammering on Nigeria difficulties to scare the investors. The same people has done these things to China until they have no choice that to seek for trading with China. Nigeria or Africa as a whole has been under the UK and Europe for over 500 years but nothing to show for it than unfavourable trade instead of fair trade. They are jealous that China’s deal with African countries has no string attached compare with the Western Countries. The Europe favourite countries in Sub-Sahara Africa is South-Africa due to 4.5million European descendance and it abundant resources. It shocked the European when it joined BRICS countries to be future competitors to their international institutions. The European do not really border about Namibia, Botswana and Zimbabwe with average of 100,000 whites descendance due to their less resources.
    Nigeria is 175million in population, 105million living below World Bank stated living standard. The remaining 70million is more than either UK or France population, even close to Germany 82million population, which is a good market.
    The investors can invest in something else apart from Crude Oil and Gas such as food industries. They can invest in agriculture, electricity, water, housing/ real estate, wheat, rice, sugar, road with toll charges, hospitals, transportation, hotels and solid-minerals.

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