15 March 2016

Nigeria: Country's Oil Production Activities Slowing Down

Lagos — Oil production activities in Nigeria, Africa's largest oil producer, is slowing down dramatically, as its rig deployment is now six, down from nine as at Friday.

Although Nigeria produces just over two million barrels daily, but a lull in economic activities, occasioned by the crash in oil prices, is dampening exploration and production, E&P, activities in the country and many other parts of the world.

Meanwhile, the Federal Government, yesterday, said the country was committed to ending gas flaring by 2020 and has plans to sign the United Nations Agreement of 'Zero Routine Flaring by 2030.'

Implication for Nigeria

The implication for low rig deployment means that there will be less reserve addition, in view of the low rate of E&P, and will in turn impact on Federal Government's production target of 2.6 million barrels daily, bpd, in the 2016 fiscal year, and 40 billion barrels in reserves by 2020.

According to the Minister of State for Petroleum, Dr. Ibe Kachikwu, Nigeria currently produces about 2.2 million bpd, but with just six rigs active in the industry, growing production by adding 400,000bpd might be a herculean task.

So far, Nigeria has persistently missed all set production targets due to lack of commitment to achieve results and policy somersaults, the last being the target of four million bpd and 40 billion barrels in reserves by 2010, which was later extended by another 10 years to 2020.

From all indications, the realisation of these targets just four years away, may also become a mirage.

Wake up call

Speaking on the challenges before the country, the former Chairman, Petroleum Technology Association of Nigeria, PETAN, Mr. Emeka Ene, argued that the low was a wake up call for the government to spin into action.

Ene, who is also the President/Chief Executive of Oildata, said: "In a time of low oil price regime, this is the time we need to be producing, drilling and developing new wells.

"There is no better time than now to do it because you don't do this during a high oil price cycle, you invest in low cost oil, invest in drilling, work over and exploration."

But he equally noted that efforts to boost exploration and production in the country were currently being frustrated by lack of funds, adding that there were no funds to support the process at this time.

Cash call obligations

But the Managing Director/Chief Executive, International Energy Services Limited, IESL, Dr. Diran Fawibe, argued that the low rig deployment was a direct impact from the billions of dollars estimated at over $5 billion cash call arrears being owed international oil companies, IOCs.

Noting that rig deployment was a function of drilling operations and exploration and development activities, Fawibe, a one-time head of crude marketing at the Nigerian National Petroleum Corporation, NNPC, said not much could be achieved if the Federal Government did not offset all outstanding cash call arrears.

Gas flaring to end 2020

Speaking at the opening of African Petroleum Congress and Exhibition (CAPE VI), organized by African Petroleum Producers Association, APPA, in Abuja, President Muhammadu Buhari, who was represented by Vice President Yemi Osinbajo, said the country was committed to ending gas flaring by 2020 and had plans to sign the United Nations Agreement of 'Zero Routine Flaring by 2030'.

He said: "In Nigeria, gas flaring amounts to about 23 billion cubic metres per annum, in over 100 flare sites constituting over 13 per cent of global gas flaring.

"Nigeria is a member of the World Bank Global Gas Flaring Reduction (GCFR) Partnership and with the support of our legislature; we will sign the United Nations Agreement of 'Zero Routine Flaring by 2030' although our national target is 2020."

Also speaking, Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, identified funding as one of the major challenges hampering the Nigerian oil and gas industry.

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