Tumultuous conditions in the Niger Delta involving oil theft, gangsterism and political uncertainty have sparked rumours about oil majors such as Royal Dutch Shell and Chevron pulling operations out of the region.
Industry experts, however, say these corporations are not leaving the region completely but, rather, are scaling back and selling off small blocks that are most affected by theft or sabotage.
Nigeria is Africa's leading petro-state and currently has a total oil production of about 2 million barrels per day (bpd).
However, the region is struggling with deteriorating conditions that are taking a toll on its oil and gas sectors.
According to the Nigeria extractive industries transparency initiative (Neiti), Nigeria lost out on more than 136 million barrels of oil, estimated at US$10.9 billion in potential revenues, from oil theft occurring between 2009 and 2011.
In Nigeria, oil theft, estimated at up to 250,000 barrels per day, is often associated with criminal gangs who tap crude oil from pipelines for local refining, although there is also the problem of crude leaving the country in large tankers, which requires complicity from top officials.
In March, Shell's compound in Warri, a Nigerian city, shut its doors after 40 years of operation.
A series of sell-offs and temporary disruptions have since taken place in Nigeria, where Shell obtains close to 9 per cent of its world production.
Since 2010, Shell sold eight blocks in the Niger Delta for about $1.8bn.
Last year, Shell agreed to sell its most prolific oil block for $850 million to a local consortium backed by Heritage Oil, an independent oil and gas exploration and production company.
In Shell's second quarter earnings report this year, published on August 2, Peter Voser, the chief executive, said the company had recently launched "strategic portfolio reviews" in Nigeria onshore.
"Higher costs, exploration charges, adverse currency exchange rate effects and challenges in Nigeria have hit our bottom line. The results were undermined by a number of factors - but they were clearly disappointing for Shell," Mr Voser said.
Shell's underlying current cost of supplies (CCS) earnings were $4.6bn for the quarter, a 21 per cent decrease in CCS earnings per share from the second quarter of last year.
According to Shell, Nigeria's operating environment, marked by crude oil theft and pipeline vandalism attacks, has eroded its profit margin for the second quarter of this year by $250m. Issues in Nigeria lowered production by about 100,000 barrels per day, or about 40 per cent, the company said.
There has been recent speculation it plans to sell at least four more oil blocks in Nigeria due to increasing crude theft, spills and an inability to renew some licences.
These blocks, which are in joint ventures with the Nigerian National Petroleum Corporation (NNPC), include oil mining licences (OMLs) 13 and 16 onshore the Niger Delta and OML 71 and 72 in shallow water.
The NNPC owns 55 per cent, France's Total owns 10 per cent, and Italy's Eni owns 5 per cent. Shell owns 30 per cent. In all previous deals, Total and Eni have also sold their shares but there has yet to be any confirmation on whether they plan to do the same again, should Shell offload the blocks.
Meanwhile, the Shell Petroleum Development Company of Nigeria (SPDC) joint venture has repeatedly shut the trans Niger pipeline (TNP), which has long been a target of theft. Each day the TNP is shut costs the company 150,000 barrels of oil.
"This is another sad reminder of the tragic consequences of crude oil theft," Mutiu Sunmonu, the SPDC managing director and country chair of Shell companies in Nigeria, said regarding a June 19 closing of the 28-inch section of the facility at Bodo West in Ogoniland.
"Crude theft continues to pose significant challenges to the people, environment and the local and national economy, and all stakeholders must work together to stop this criminal activity," he said.
The spokesman for the US giant Chevron James Craig said the company was also reviewing its business plans in Nigeria and adopting new approaches to investment due to the current situation.
Chevron is selling five shallow-water blocks, with some observers suggesting Shell may be interested in acquiring some of them after offloading other existing blocks.
Chevron has been in Nigeria for more than 50 years. In the past, the oil major showed its support for the region by establishing the Niger Delta partnership initiative foundation, in which the corporation contributed $50m to help to ease socioeconomic conditions.
More than 60 per cent of Nigerians live on less than $1 a day. In the Delta, the Human Development Index (HDI) score, a measure of well-being based upon life expectancy, education and living standards, is just 0.564 with 1 being the highest score, far below countries with similar natural resource export industries. For example, in 2003 the UAE, Kuwait, Libya, Venezuela and Indonesia had scores of 0.849, 0.844, 0.799, 0.772 and 0.697, respectively.
The HDI is used to rank countries into four tiers of human development and published by the United Nations development programme.
The Italian oil company Eni, in its second-quarter results this year, reported losing an estimated 30,000 barrels of oil per day in Nigeria, due to crude oil theft, sabotage of oil facilities and flooding.
"First-half results were affected by a difficult economic situation across Italy and Europe, production interruption in Libya and Nigeria and by the fall in Saipem's results," said Paolo Scaroni, Eni's chief executive.
Oil majors have also expressed ongoing disapproval over Nigeria's failure to pass the Petroleum Industry Bill (PIB).
The non-passage of PIB has caused significant delays and resulted in some firms ditching plans, including Shell and Chevron pulling out of their Olokola LNG Project.
Shell and Chevron each have a 19.5 per cent stake in the project.
The Olokola LNG project, solidified in 2007, planned for gas producers and owners to send natural gas to the facility where it would be converted to LNG for a fee and pumped in to owner ships for sale.
Nigeria officials are acknowledging and working to propose solutions to the region's ongoing issues.
On July 26, Alhaji Ahmed Gulak, special adviser to the president of Nigeria on political matters, told the News Agency of Nigeria in Abuja that there must be complete deregulation of the oil sector in order for the region to move forward.
"Our petroleum sector will not be developed; private investors will not bring in foreign investment to build the refineries," Mr Gulak said.