Nigeria’s crude oil production may witness a steady decline to approximately 7.93 per cent before 2025, a new research, conducted by U.S.-based Orbis Research has said.Being the same year Nigeria has targeted to increase oil reserve to about 40 billion and daily production to about three million barrels per day, the current revelation raises doubts over the achievement of the target.
Nigeria has been facing reduction in investments into the oil and gas sector due to unaddressed uncertainties in regulations, as well as growing security tension in the country.
The Nigerian Natural Resource Charter (NNRC), had earlier disclosed that Foreign Direct Investment (FDI) in Nigeria’s oil sector dropped by $17.12 million in the third quarter (Q3) of 2018 from $24.85 million in Q2.
Similarly, the Executive Director of the Institute for Oil, Gas, Energy, Environment and Suitability (OGEES), Prof. Damilola Olawuyi, had also predicted an uncertain outlook for the sector in 2019, given the triple challenges of policy uncertainties, security challenges, and slump in crude oil prices at the international market.
The new report indicated that oil and gas production had been hampered in Nigeria in the past few years, due to the attack on oil and gas infrastructure by militants as well as oil theft, which has remained one of the major issues faced by oil & gas operators in Nigeria.The development, according to the Nigerian National Petroleum Corporation (NNPC), led to the loss of over 22 million barrels of crude in the first six months of this year, as the rate of vandalism rose to about 77 per cent in June.
“Lack of infrastructure, uncertainties in regulations, and security concerns have led Nigeria to underutilize its refining capacities, thereby pushing the country to become a net importer of refined petroleum products,” the report noted.However, Nigeria is on the edge of altering refined products’ supply dynamics in the region with the help of the upcoming Dangote Refinery, and is expected to become the regional refining hub in the coming years.
While top government officials had stressed on the need for a gas based economy, considering the huge gas resources in the country, the report noted that the shift to gas is also supported by the fact that major oil reserves are likely to get dry in coming three to four decades.
“The oil market is considered to be one of the most vulnerable markets where natural gas has the highest potential to penetrate. Moreover, gas production has become a major focus for the oil and gas companies, in response to strong investment in gas-to-power projects, across the region,” it added.
While noting that investment in the Nigerian upstream oil and gas sector declined by 13 per cent yearly, during 2015-2017, due to the downturn in the crude oil price, the reported stated that the decline in spending was largest in 2016, driven by severe disruptions on major oilfields
“The drilling activity in the country is ramping up, and is expected to continue on account of current and upcoming projects. However, production is not expected to ramp up in the coming years, as the new projects that are expected to come online may be able to offset the declining volume from brownfields, keeping the oil supply stable, provided the political situation does not exacerbate, leading to renewed supply disruption.
“Development of ultra-deepwater Egina oilfield by Total is one of the key projects, which started production in the first week of 2019. The Egina field may significantly boost the production and cash flow, in 2019, and continue onward.“Further, NNPC (Nigeria National Petroleum Corporation) has signed an agreement for seven Critical Gas Development Projects, to deliver around 3.4 bcf of gas per day, in order to bridge the medium-term supply gap, by 2020, on an accelerated basis,” it added.