Africa is well known for its natural resources, and China has its eye on the continent to increase its crude oil supply. With the global decrease of oil prices, China plans to increase and expand crude oil exports from Nigeria.
With China being the largest developing country in the world, and Nigeria being one of the largest developing countries in Africa, both parties have a stake in the complementary advantages of natural and human resources as well as funds and market. As Nigeria continues to expand its crude oil industry and build relationships with China, leveraging the opportunity to increase economic growth is a major factor for the future success of the country.
Nigeria’s Crude Oil Industry
When people generally think of the crude oil industry, most envision Middle Eastern countries such as Iran and Iraq, but along the Gulf of New Guinea is Africa’s largest petroleum industry. Nigeria’s crude oil industry attributed to 14% of the entire country’s economy in 2014. The introduction of China’s participation, and their recent request to increase their exports as of 2016, we can expect the economical impact to be much greater in the near future.
Oil exploration in Nigeria dates back to 1907 when when Nigerian Bitumen Corporation began working the land and exploring the countries oil capacities. For nearly five decades, Nigeria dabbled with the crude oil industry but it wasn’t until 1953 that substantial commercial oil was discovered. Most of the country’s primary reserves are found in and around the Delta of the Niger River. Recently off-shore rigs have increased in the well-endowed coastal region.
China’s Expanding Impact
The Nigerian government is working to diversify their economy and China’s crude oil needs fit perfectly within that plan. But crude oil is not the only collaboration of this powerhouse duo, and Nigeria has been positioned to partner with China to help build a better industrial, agricultural, construction, and investment platform for long term positive growth and impact.
As China and Nigeria continue their business relationship, it is clear that the efforts have had a positive effect for both countries. Nigeria’s exports to China have grown slower than their imports, creating a positive trade balance. The World Bank reported that over 27% of all Chinese imports to South Africa were electronics and machinery. Making more modern technology affordable and readily available to South Africans.
In February 2016, the Nigerian conglomerate BUA Group announced its plans to work with China to build a steel plant and two cement plants for 1.9 billion. Abdulsamad Rabiu provided no details around the funding but confirmed that Nigeria was in talks with China’s state export and import bank for spur investments of Chinese firms.
Over the last decade, China’s total investment volume in Africa has increased by 100%. This growth shows that the collaboration between both parties is one committed to moving forward in long term investment. With more oil being exported to China each year, and the combined diversity of investments beginning to take root in Nigeria, the crude oil industry continues to be a spring board for economic growth.