The Nigerian political machine poses a significant risk to the vitality of the nation's oil sector as investment uncertainty lingers, a report finds.
The Independent National Electoral Commission said it plans to hold a nation-wide vote March 28, six weeks later than originally planned. Nigeria's government postponed the vote in February, arguing the threat from militant group Boko Haram was too great to ensure safety at the polls.
Nigeria is Africa's largest oil producer. A report from IHS finds the future of the nation's oil sector is at risk from the uncertain political future.
Roderick Brice, the author of the report on Nigeria for the analytical group, said elections are a disruptive force in the oil-rich country. Regardless of who wins, investors will face an uncertain future.
"That uncertainty has already constrained deepwater exploration and development," he said in a statement Monday.
IHS forecasts crude oil production in Nigeria will drop from the 2 million barrels per day in 2011 to below 1.5 million bpd by 2020 without substantial investments in the offshore sector. The steep decline in oil prices is already hurting the country's finances, the report finds.
The latest report from the Organization of Petroleum Exporting Countries finds oil production from member state Nigeria declined 3.2 percent from January to February to a monthly average of 1.9 million bpd.
Nigeria's oil minister in February said OPEC member states were uncomfortable with the low price of oil, though Saudi Arabia is the de facto head of the 12-member production group and has shown no signs of revising current production policies.
With the future political climate uncertain, Brice said potential exploration and production investors are taking a "wait-and-see approach" to Nigeria.
