“Without natural capital accountability GDP growth is meaningless’
Stock photo of an offshore oil rig

By Udeme Akpan

The rig count of Nigeria has dropped by 38.5 per cent to 75 in the first 10 months (January – October), of 2021, from 122 recorded in the corresponding period of 2020, according to data obtained from the Monthly Oil Market Reports, MOMR of the Organisation of Petroleum Exporting Countries, OPEC.

The rig count is utilised globally to measure exploration and production activities in the upstream sector of the Petroleum Industry.

According to the data, the highest rig count of 11 was recorded in August and September 2021, while the lowest of five was recorded in April and June, 2021, compared to the highest and lowest of 23 and six recorded in February and July, 2020 respectively.

However, this showed that the nation did not invest much of its resources to explore and produce oil and gas during the period under review.

Factors

However, the organisation did not provide reasons for the dwindling rig count, but an investigation by Energy Vanguard, pointed to the COVID-19 pandemic and the prolonged delay associated with the passage of the Petroleum Industry Act, PIA.

African nations

In any case, the rig count of some African oil and gas nations showed an improvement during the period under review.

For instance, the rig count of Angola stood at 40, indicating an increase of 33.1 per cent when compared to 30 recorded in the corresponding period of 2020.

Experts

In a telephone interview with Energy Vanguard, the National President, Oil and Gas Service Providers Association of Nigeria, OGSPAN, Maxi Colman Obasi, said: “Lack of significant investment usually leads to low depletion of current reserves, due mainly to continued oil and gas production.

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“It is highly probable that because of lack of legislation, it was not possible for the nation to attract much investment in the past.”

Obasi, who commended the legislators for the completion of work on the nation’s PIA, said: “But armed with the current PIA, the nation would likely start to witness substantial investment, capable of boosting investment in the industry.”In other words, the industry stands a chance to record a substantial increase in rig count, exploration and the reserves addition.

“This should be encouraged as Nigeria had in the past failed to achieve its 40 billion barrels reserves target by 2020”.

Previously, Prof. Omowumi Iledare, Ghana National Petroleum Corporation, GNPC, Professorial Chair in Oil and Gas Economics and Management, Institute for Oil and Gas Studies, University of Cape Coast, Ghana, had said: “The rig count is far below expectation, bearing in mind that Nigeria is a leading producer with 30 billion barrels reserves and over 200 trillion standard cubic feet of gas.

Prospect

In any case, Minister of State for Petroleum Resources, Timipre Sylva, has expressed hope that the PIA would stimulate investment, leading to increased rig deployment and other activities in the industry.

Specifically, he said: “The PIA 2021 will undoubtedly assist in harnessing Nigeria’s potential to achieve its plan of increasing oil production to 4mb/d and oil reserves from 37bbls to 40bbls, while also drawing on the country’s estimated 600TCF of natural gas reserves to provide clean and efficient energy.

“These resources will be crucial in supplying world markets with a broad portfolio of energy options, as well as supporting the global endeavour to alleviate energy poverty as envisioned in the United Nations’ Sustainable Development Goal 7.

“Furthermore, generous incentives have been proposed in the PIA 2021 to enable development, distribution, penetration and utilisation of gas.

“The National Gas Expansion Programme was also launched in January 2020 to drive domestic utilisation. Our proven gas reserves are sufficient to cover current demand levels and support plans for the construction of nine new gas-fired power plants with a combined name-plate capacity of nearly 6,000 MW by 2037.

“This validates gas as a viable and transformational fuel for industrial development. This is why President Muhammadu Buhari who is also the Minister of Petroleum Resources has declared 2021-2030 as the Decade of Gas, which provides the fulcrum for focusing effort and resources required at making gas the centrepiece of Nigeria’s economy by 2030.”

He added: “The PIA 2021 also preserves existing levels of Government take for a transition period through grandfathering provisions, and proposes a fiscal regime that encourages investment in order to monetise existing reserves before the clock runs out.

“Thus, provisions relating to voluntary conversion, production allowances, lower royalties and taxes, cost optimisation focus, etc. have been enshrined therein to address the envisaged fiscal vulnerabilities.”

Vanguard News Nigeria

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