Experts differ on NNPC’s 40bn barrels reserve target by 2025

Debate has stirred up among industry players and stakeholders following the Nigerian National Petroleum Corporation’s (NNPC)disclosure of a new deadline of 2025 to boost the nation’s crude oil reserves from 36 billion barrels to 40 billion barrels, and a production capacity of three million barrels per day from 2.2 million barrels.

This new deadline comes barely a few months to go for the initial closing date of 2020, after almost 10 years when the Federal Government declared in 2010 to increase reserves.

The Corporation’s new leadership under Mele Kolo Kyari, has however revealed its ambitions to increase reserves at a new deadline of 2025, as the corporation with its partners, seeks to grow the national reserves to 40billion barrels in six years time, as well as improve crude oil production to three million barrels/day during the period.

Experts in the industry have however held divergent views on the reality of this new target considering what is currently obtainable in the sector.

Some of them have rather described it as too ambitious, while others suggest its possibilities if things were done right.

An energy consultant, Charles Mojomi noted that for the target to be met, upstream production has to increase through cost reduction of crude oil production in the country, which lies at about 30 dollar per barrel.

The reduction in this cost, he said would not only increase investments for more production, but will also enhance midstream profitability.

The ambition, which he described as a noble one can only be realistic when refineries are revamped to increase the amount of products availability in the market, considering the fact that Nigeria is the only country under the Organisation of the Petroleum Exporting Countries (OPEC) that still relies heavily on product importations through the current direct sale and direct purchase agreement.

He maintained that the immediate focus of the corporation and the new minister should be finding real ways of attracting investment for the overhauling of the refineries to reduce export of raw materials and rather boost increase in foreign exchange savings, adding that could also be a mechanism to drive down corruption.

The energy consultant observed that, given that 70 per cent of the nation’s energy resources are located onshore within the Niger Delta, it is pertinent for government to find lasting solutions to the issues around that area, since the conflict in the region is another major factor fuelling vandalism of pipelines and oil theft.

“Vandalism would always occur in Nigeria, as long as the host communities are unhappy because it’s used as a geo political tool to bring the attention of government to the plight of the people,” he added.

Majomi opined that until the industry looks beyond just extract and export’s products for funds, to seeing it a transformative platform that can add value to the people and economy, energy security can’t be achieved.

Similarly, the Managing Director of ExxonMobil, Paul McGrath, in his address at the just ended Association of Energy Correspondents of Nigeria’s (NAEC) yearly conference, also expressed some concerns about the high cost of production of crude in the country, noting that the country ranks among the top 10 nations with the highest cost of crude oil production.

The security cost, he noted, was another factor to consider, as it poses a lot of fears to investors coupled with an unpredictable environment.

For him, if Nigeria wants to remain sustainable, government will need to work on cost reduction modalities and mechanisms, as well as stable and competitive fiscal policies and a healthy contract integrity culture, because it is a global commodity.

On his part, Chairman, Ghana National Petroleum Commission (GNPC), Petroleum Economics Institute for Oil and Gas Studies, University of Cape Coast, Wumi Iledare, described the ambition as a cliché of the corporation as investment is not the problem, but management and leadership with key performance indicators are.

He advanced that in the last 12 years, no oil block has been leased out for exploration.

“No enabling environment nor incentives, no PIGB passed, how will they now increase the barrels?” he added.

Iladare, who expressed doubt in the target timeline, taking into cognizance all the named factors, said, “2025 is just six years away; to deliver on this promise is a big question.”

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