WorldCity, Annual Report: No. 3 Nigeria - Oil lubricates market | Connecting Local Business Leaders To The Global Economy

Annual Report: No. 3 Nigeria - Oil lubricates market

July 6th, 2006

Houston was the United States’ third most important port of entry for energy products from oil- and gas-rich Nigeria.

Nigeria, the most populous country in Africa, stepped up its trade with Houston to become the area’s third largest trade partner, up from fifth place a year ago.

Not surprisingly, energy-related commodities fueled the one-sided exchange, which left Houston with a $4.7 billion trade deficit with the West African nation.

Crude oil is Nigeria’s most important commodity, and Houston imported $4.7 billion-worth – or 87 percent of the value of Nigeria’s total shipments to the Houston-Galveston Customs district. The figures reflected a 34 percent increase when compared with results in 2004.

Nigeria is the United States’ fifth biggest supplier of petroleum behind Canada, Mexico, Saudi Arabia and Venezuela. As much as 9 percent of all U.S. oil imports originate in Nigeria. Houston in 2005 became the most important entryway for those oil shipments behind Philadelphia and New Orleans.

In 2005, Philadelphia’s crude imports from Nigeria totaled $8.9 billion while South Louisiana ports took in $6.4 billion-worth.

Non-crude oil imports, meanwhile, were Houston’s second leading import commodity from Nigeria. Those imports rose fourfold to total $420 million.

Imports of natural gas, meanwhile, climbed 68 percent to $344 million. The Office of the U.S. Trade Representative said Nigeria’s natural gas industry should continue to grow for the next five years. Nigerian natural gas reserves are 159 trillion cubic feet of gas, the ninth-largest reserves in the world. Nigeria’s revenues from liquefied natural gas are expected to rise to an estimated $6 billion a year by 2007.

Aside from energy-related commodities, the United States imported small quantities of machinery and computer parts through Houston and Galveston. In 2005, imports of machinery parts equaled $344,000 and computer accessories were valued at $150,000. The U.S. Census Bureau did not report any Houston imports of Nigerian computer parts in 2004.

On the export side, Houston shipped more than $833 million in goods to the African country, an increase of nearly 29 percent compared with 2004. Nearly half the exports were wheat.

Houston exports of wheat reached almost $400 million, a jump of nearly 39 percent from 2004. Nigeria is among the world’s top five buyers of U.S. wheat.

The United States also shipped nearly $150 million in machinery parts, up 35.6 percent from a year earlier. Automobiles were the third leading Nigeria-bound export out of Houston, totaling nearly $25 million, reflecting a jump of 119 percent.

Business between the United States and Nigeria has grown gradually since implementation of the African Growth and Opportunity Act (AGOA) of 2000. The act seeks to stimulate trade by providing numerous trade benefits and incentives to 37 sub-Saharan African nations.

According to the Office of the U.S. Trade Representative, the Act provides duty-free access to the U.S. market for numerous products, including of flowers, minerals, light manufactured goods, metals and energy-related goods. In 2004, President George Bush amended key provisions to the act. One of these provisions allows a country to import fabric from a third country and ship them to the United States. Nigeria’s duty-free exports under AGOA exceeded $15 billion last year. Although most were energy related, Nigeria qualified for AGOA’s textile and apparel benefits in July 2004.

Houston’s trade with Nigeria has also been bolstered by another initiative, the U.S. – Nigeria Trade and Investment Framework Agreements. The goal of the U.S.-Nigeria TIFA is to diversify the economy of the African nation and to stimulate trade.