*Recorded $53.5m capital inflow in 2020
Abuja — A significant decline was recorded in foreign capital inflow into the Nigerian oil and gas industry, as foreign investments into the sector dipped by 72.64 per cent to $53.51 million in 2020, compared to $195.61 million recorded in 2019.
According to data obtained from the National Bureau of Statistics (NBS) in its Nigerian Capital Importation Report for the Fourth Quarter and Full Year 2020, the oil and gas sector accounted for 0.55 per cent of total capital imported into the country in 2020, compared to 0.85 per cent in 2019.
The NBS disclosed that total capital imported into all sectors of the Nigerian economy in 2020 stood at $9.68 billion, dropping by 57.8 per cent compared to $22.941 billion recorded in 2019.
Giving a breakdown of inflow, the NBS noted that $10.09 million; $6.55 million; $25.03 million and $11.83 million foreign capital inflow were recorded in the oil and gas sector in the first, second, third and fourth quarters of 2020 respectively; compared to $17.22 million; $139.73 million and $38.66 million recorded in the first, second and third quarters of 2019 respectively.
In general, total foreign capital inflow into the Nigerian economy in the first, second, third and fourth quarter of 2020 stood at $5.85 billion, $1.29 billion, $1.46 billion and $1.07 billion respectively; compared to $8.508 billion, $6.052 billion, $5.627 billion and $2.753 billion in the first, second, third and fourth quarters of 2019, respectively.
The decline can be attributed to the COVID-19 pandemic, which forced many countries worldwide to shut down significant sectors of their economies, while movement was curtailed globally for most part of the year.
COVID-19 began in China at the end of 2019 and spread to other countries gradually, until it was declared a global pandemic by the World Health Organisation (WHO), with nations commencing lockdown measures from February 2020.
As a result of the pandemic, the year 2020 also saw crude oil price falling below zero dollar to a barrel for the first on record, April 2020, as oil producers ran out of space to store the oversupply of crude oil.
Specifically, the price of US crude oil crashed from $18 a barrel to -$38 in a matter of hours, as rising stockpiles of crude threatened to overwhelm storage facilities and forced oil producers to pay buyers to take the barrels they could not store.
It took additional interventions by the Organisation of Petroleum Exporting Countries (OPEC) and the gradual reopening of the global economy for the price of crude oil to rebound slowly as oil demand edges up.
Also, Nigeria’s situation was helped by the fact that during the pandemic, major investment decisions were made in Nigeria, especially with the signing of the Engineering, Procurement and Construction (EPC) contract of the Nigerian Liquefied Natural Gas (NLNG) Train 7 project, among others.