How To Start An Oil And Gas Company In Nigeria: The Complete Guide
The oil and gas business in Nigeria is so far the most lucrative industry to venture into. With over 35+ profitable sub-sectors within it, it sits as the pillar of the Nigerian economy with thousands of businesses operating profitably in its sphere.
The oil and gas industry is an interesting one, as the total share of oil export value grew from less than 1 percent in 1958 to over 97% in 1984, without dropping from less than 90% since that period. It is the holy grail of the Nigerian economy, especially with Nigeria being the 6th largest oil-producing nation in the world.
In previous articles, we’ve explained in fine details several opportunities in the oil and gas business in Nigeria, but how does a person choose, start up and get to build a thriving oil and gas business in Nigeria?
To answer this question, we took out time today to detail the oil and gas business in Nigeria, what it’s all about, the opportunities, the challenges, and much more to help any entrepreneur looking or hoping to someday start an oil and gas company in Nigeria to easier get on board.
What Is The Oil And Gas Business About?
The oil and gas business in Nigeria is the provision of goods and services within the oil and gas sector in Nigeria whether for local use for international purposes. It involves the upstream, mid-stream, and downstream sectors, and holds immense opportunities for any platform anyone wants to operate in.
Business Opportunities In The Oil And Gas Business Around The World
There is a wide list of business opportunities in the oil and gas industry.
9 out of a wide number of over 35 are:
- Crude oil export brokerage
- Diesel supply to organisations and tank farm
- Vessel charter services
- Petrol stations
- Oil and gas security services
- Oil and gas blog
- Oil and gas magazine
- Oil and gas equipment leasing services
- Oil and gas legal services
- Oil and gas waste management services
And much more.
Facts And Benefits Of The Oil And Gas Business
- Nigeria is the top crude oil producer in Africa.
- Saudi Arabia’s Aramco is the largest crude oil exporter in the world.
- The first time pipelines were used to transport natural gas was in 500 BC, in China.
- John D Rockefeller was the world’s largest oil mogul with a net worth of $336 billion dollars at his time of death.
- The US consumes 25% of the world’s crude oil. This is 1.85 billion barrels per day.
- Venezuela has the largest share of global oil reserves at 17.5% as at 2014.
- Most oil workers are highly skilled and well paid.
- The oil and gas industry is the largest revenue generator for Nigeria and many other countries.
- The oil and gas industry creates wealth very easily for almost any entrepreneur that ventures into the sector.
- There’s more oil in transit over the seas of the Earth than there are fish.
- You’re statistically safer on an oil rig floor than driving around with a real estate agent.
- Gasoline makes up 45% of crude oil.
- Petrochemicals found in crude oil helped produce the electronic device you are reading on right now.
- Oil is used to create medicine, cosmetics, recreational sports items, and more.
- Crude oil is also called black gold.
How To Start An Oil An Gas Company In Nigeria: Step By Step Guide
1). Determine The Type Of Oil And Gas Company You Want To Start:
There’s a wide number of oil and gas businesses you can start up. We covered over 35 of them in a previous article, and choosing the right match for your business is critical to your success. But most people who want to get into the oil and gas business have little to no cash to startup, and so, are left with no choice but to look elsewhere.
If you want to venture into the oil and gas industry in Nigeria, the first step is to start out as a commodity broker. You could broker transactions between a crude oil buyer and seller, Gas Oil (AGO) buyer and seller, and much more.
By choosing the oil brokerage route first, you can venture into the oil and gas business and still earn high margins.
2). Register A Company With All Relevant bodies:
It is difficult for international buyers to trust a trading company that is not registered. You need to organise yourself properly by first registering with the CAC, registering with the FIRS, registering with any required oil and gas agency, setting up a website, getting an office (preferably a co-working hub or work from home), and much more.
When you’ve organised yourself properly, sourcing end clients for an end supplier as an oil and gas company in Nigeria focused on trade facilitation would be a lot more fruitful once the buyer decides to do a due diligence check on your organisation.
3). Market Your Business:
Lastly, you need to hire great marketers to source international and local buyers for your oil and gas company in Nigeria. These marketers should not be required to visit the office daily, but should mostly work with commissions that would ensure they make so much if they can close a deal for your company.
That aside, you can market your services online on social media, contact international export councils, register on online platforms like Alibaba, and much more.
The more deals you can close, the easier it will be for you to build a recognised, successful, and reputable oil and gas business.
Challenges Of The Oil And Gas Business In Nigeria
- Lack of experience.
- Marketing challenges.
- Low consumer purchasing power.
- Poorly managed supply chain.
Lack of experience causes sellers to either purchase the wrong specifications, underprice or overprice their products, and much more.
Fake buyers wasting exporters time with fake inquiries.
Most prospective entrepreneurs have little to no access to finance for their projects.
Most oil sellers have poorly managed supply chain and may sometimes be unable to deliver.
Your time could be wasted as a result of long-term conversations with oil buyers who have no real money to pay or oil sellers who have no means to supply.
The large pool of fraudsters posing as oil and gas sellers makes it difficult for buyers to trust you.
The oil and gas business in Nigeria is a Lucrative and profitable venture, due to its vast market demands, oil prices, and a wide supply chain network. If you’re looking for a lucrative business to venture into, starting an oil and gas company in Nigeria with an initial focus on brokerage is an exceptionally lucrative one.
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What are your thoughts on how to start a lucrative oil and gas company in Nigeria or Africa? Let me know by leaving a comment below.