By Udeme Akpan

Nigeria’s rig count – an index for measuring performance in the upstream sector – increased Year-on-Year, YoY, by 83.3 per cent to 11 in May 2022, from six in the corresponding period of 2021, according to the Organisation of Petroleum Exporting Countries, OPEC.

This was obtained in its June 2022 Monthly Oil Market Report, MOMR, obtained by Vanguard.

Despite the rise, the report indicated that Nigeria’s rig count remained low compared to other African nations, especially Algeria, which topped the list of African producers with 34 rigs

However, Gabon, which oil industry started to attract attention in 1931 when many oil deposits were discovered in the neighbouring regions of Libreville, came last with only one rig.

Oil output

In terms of output, the nation’s oil output dropped Year-on-Year, YoY, by 23.8 per cent to 1.024 million barrels per day, mbpd, in May 2022, from 1.344 mbpd recorded in the corresponding period of 2021, according to OPEC.

This showed that the nation did not meet its 1.753 mbpd May 2022 OPEC quota, despite its daily production of between 300,000 bpd and 400,000 bpd condensate.

However, with the 2022 oil price budget benchmark at $62 per barrel the poor performance appears to remain a lesser threat to the fiscal plan though the plan was also based on output benchmark of 1.8 mbpd, including condensate.

Investment

Investigation by Vanguard showed that the industry is still gasping for new investment, which seems possible, especially now that Petroleum Industry Act, PIA, has been put in place.

According to the Minister of State Petroleum Resources, Chief Timipre Sylva, “The enactment of the PIA is expected to open up opportunities in the oil and gas sector of the economy. However, the challenge posed by the huge divestment in the hydrocarbon explorations by oil majors in the country in the past as a result of the global energy transition calls for more innovative ways in the exploitation and exploration of fossil fuel in the country.

“If we must continue to be relevant at the global stage, we must in designing any regulation put in focus how we can balance the energy base load for Nigeria so that we will not be left behind in the energy transition train while still harnessing our rich natural hydrocarbon reserves”.

He also 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 utilization. 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 centerpiece of Nigeria’s economy by 2030.

“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.”

Experts comment

Commenting on the development, the National President, Oil and Gas Service Providers Association of Nigeria, OGSPAN, Maxi Colman Obasi, said: “There is a great need to further increase investment in the industry. The nation’s rig count remains low because significant investment has not yet been made into the industry, despite the passage of Petroleum Industry Act, PIA, into law. It should be noted that because of lack of legislation, it was not possible for the nation to attract much investment in the past.

Also speaking, a Port Harcourt-based energy analyst, Dr. Bala Zaka, also called on local and foreign investors to invest seize the opportunity created by the PIA to increase their investments in the industry.

Subscribe for latest Videos

Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.