Yemisi Izuora

Except some drastic measures are taken, Nigeria may find itself neither able to produce required volume of crude oil to support long term aspiration to scale up in-country refining of products nor have ability to export for the purposes of boosting revenue earning.

This is because despite its world class hydrocarbon resource base, with over 37 billion barrels of proven crude oil reserves and 207 trillion cubic feet of tcf and 600 tcf of proven and contingent gas reserves respectively, the country finds itself in a situation where daily production has significantly dropped and lies at a about 1.3 million barrels of oil and 8.5 bcf of gas today.

The Chairman of the Independent Petroleum Producers Group, IPPG, Abdulrazaq Isa, in his keynote address at the Nigeria Oil And Gas Summit, NOG, in Abuja, with the theme; “Showcasing Opportunities, Driving Investment, Meeting Energy Demand” observed that notwithstanding some laudable Government policies and the gradual positive turnarounds being experienced, the industry is in dire need of extraordinary focus to mitigate the genuine concerns on its long-term sustainability.

Isa, said this is way below our capacity as a nation and by all globally acceptable standards, this reserves to production ratio is extremely low and a clear indicator that the industry is in a dire situation.

He warned that the country is running the risk of partial implementation of its national budget considering an estimated deficit of 400,000 bpd from the forecasted 1.78 million bpd.

This trend in production, he added portends another frightening dimension where in the not-too-distant future the overall installed domestic refining capacity, currently closing in on about 1.2million barrels per day, may soon outstrip current crude oil production level with the risk of Nigeria finding itself in a position where it is unable to meet its domestic refinery crude demand or even become a net importer of crude oil.

It is against this scary backdrop that the Group is calling for urgent measures to be undertaken by all relevant stakeholders to immediately arrest this dwindling production level and under-investment.

In proffering solutions he called for immediate conclusion of all pending IOC divestment transactions, stressing that its member companies which include Seplat, the Renaissance Consortium and Oando have the proven track record to successfully take over and manage these onshore and shallow water assets to realise incremental production in the region of 100,000 – 200,000 barrels of oil and over 1.5 billion cubic feet, bcf, of gas per day within 24 months and well over 500,000 barrels of oil per day in the long term.

The IPPG believes that the timely approval of these IOC divestment transactions will also be a clear signal capable of restoring global investor confidence in Nigeria in an era of competing global investment destinations in Africa and very limited access to capital.

Isa, also called for urgent need to address deepwater development and production, particularly in terms of competitive fiscal regime being negotiated with Shell, Total Energies, ExxonMobil and Chevron, which he said has the potential to unlock incremental production of 700,000 barrels per day from this terrain in the short to medium term.

He also mentioned that enabling deepwater development will attract significant economic benefits as Nigeria has one of the world’s largest untapped deepwater resource base.

The Chairman further sought for the adoption of a national value-retention strategy.

He said that Nigeria’s domestic crude oil refining and petrochemical capacity must be sustained primarily from domestic crude oil and gas production in order to transform the country into a net exporter of refined petroleum and petrochemical products that will lay a strong foundation for the rapid industrialization of the Nigerian economy.

“It is therefore imperative to grow our daily production to 2.5 million barrels of oil and 10 bcf of gas in the near to long term to ensure we are able to meet our domestic refinery and petrochemical demands and export commitments to generate the much- needed foreign exchange earnings for macro-economic stability.” he noted.

The IPPG Chairman, called for the development of Nigeria’s gas resources to catalyze economic growth and complement decarbonisation drive.

In his submission he said that Nigeria’s vast gas resources must be exploited with immediate focus placed on restoring production to existing installed LNG capacity and expanding production (FLNG).

“In addition, we must expand domestic gas utilization (Gas-to-Power; Gas-Based Industries) by investing heavily to address the gas infrastructure deficit facing us today. The International Oil Companies will lead the charge on export gas while IPPG members will drive the domestic gas agenda led by NNPCL.

“These priority areas provide the most realistic and sustainable pathway towards meeting our national long term production aspiration of 4 million barrels of oil per day and 13 billion cubic feet of gas per day.”

Isa, in addition stressed that as a matter of national importance, Nigeria must act fast and hasten the pace of recovery across the entire industry, even if it means declaration a state of emergency in the oil and gas sector.

According to him, We must be seen to do everything possible to unleash the industry. Unlocking this incremental production is achievable only through collaboration and commitment between the industry regulators (NUPRC and NMDPRA) and industry operators (NNPCL, OPTS and IPPG) and this must be done for the sake of our country.

He therefore reminded stakeholders the vital role the industry plays in sustaining the national economy as the theme of the summit is yet another clarion call for the country to collectively confront the challenges and opportunities shaping the energy landscape and stakeholders must remain steadfast in dedication to driving positive change within the energy sector and beyond.

With Strategic Policy Makers, Business-Enabling Regulators and Commercially Focused and Socially Responsible operators working in unison towards achieving shared goal of energy security, he expressed optimism that the country can unlock the full potential of the industry.

He reaffirmed IPPG’s continuous commitment and support to the policies of Government, particularly on its quest for energy availability, affordability and energy security for all Nigerians.