Nigeria is projected to witness a shortage of crude oil, as new refineries may have to compete with the sale of the product at the international market where the country earns the bulk of its hard currency.
The delay in the award of new oil blocks and uncertainties over existing marginal oilfields are upsetting industry players, amid a warning that the country’s economic development could be jeopardised.
Nigeria is projected to witness a shortage of crude oil, as new refineries may have to compete with the sale of the product at the international market where the country earns the bulk of its hard currency. Also, some experts think the Nigerian National Petroleum Corporation’s (NNPC) bid to increase crude oil reserves by one billion barrels yearly to meet targets would remain elusive.
The Federal Government has repeatedly failed to meet a 40-billion reserve target for about eight years. Instead of making progress, the country could be inching backwards, according to statistics from the Department of Petroleum Resources (DPR), showing that the reserves declined by 961.47 million barrels between 2012 and 2016 alone.
Experts said the challenges that have frustrated meaningful exploration and production activities from marginal fields for the past 13 years could spell doom for the future of the nation’s oil sector.
The country had recently targeted daily earnings of $4.23 million (N1.29 billion) from an average of 90,000 barrels of oil per day, which the experts said could have been feasible from 18 of about 30 marginal fields awarded in the country, if they were operating optimally. Of the 30 marginal fields awarded since 2004, only 12 are active and currently produce about 2.6 per cent of daily oil production and 2.5 per cent of the estimated 4,000 MMscf gas production in the country.
Considering it has been over a decade since the country conducted a bid round, Minister of State for Petroleum Resources Ibe Kachikwu recently insisted that unless there are new oil and gas regulations, the country might not award oil blocks.
Awarding new oil fields or creating the needed environment that would ease exploration, especially for marginal field operators, are key ways the country could add to national oil reserve and boost revenue, especially when demand rises on the backdrop of new refineries and needed supply to the international market.
With the failure of President Muhammadu Buhari to assent to the governance fragment of the four-part Petroleum Industry Bill (PIB) and the delay that has impeded the entire legislation for about two decades, stakeholders said the stagnation would continue to frustrate desired objectives in Nigeria’s oil and gas sector.