The Independent Petroleum Producers Group (IPPG) has expressed concerns over the continuous delays in concluding ongoing divestment transactions by the international oil companies (IOCs).

Chairman of IPPG, Mr. Abdulrazaq Isa, raised his members’ concerns yesterday in Abuja at the ongoing Nigeria Oil and Gas (NOG) Energy Week 2024, with the theme: “Showcasing Opportunities, Driving Investment and Meeting Energy Demand”.

In his industry address at the event, Isa specifically said that the long-overdrawn delays in concluding the IOCs divestment deals were costly to the Nigerian petroleum industry and extremely detrimental to the country as a whole.

He appreciated President Bola Tinubu for the transformative reforms being undertaken by his administratio, pointing out specifically that the recent presidential executive orders and directives were a welcome development for the industry.

“Also of note is His Excellency’s direct intervention in untangling issues in some of the long-overdrawn IOC divestment transactions – these delays have been costly to the industry and extremely detrimental to the nation as a whole.

“We are encouraged to see swift progress on implementation and some tangible results within a relatively short period of time.

“Such progressive and impactful policies are exactly what the industry has consistently clamoured for to sustainably develop and move the industry forward”, Isa stated.

Notwithstanding those laudable policies and the gradual positive turnarounds being experienced, he maintained that the industry was in dire need of extraordinary focus to mitigate the genuine concerns on its long-term sustainability.

According to him, despite Nigeria’s world class hydrocarbon resource base of over 37 billion barrels of proven crude oil reserves and 207 trillion cubic feet (tcf) and 600 tcf of proven and contingent gas reserves respectively, we find ourselves in a situation where our daily production has significantly dropped and lies at about 1.3 million barrels of oil and 8.5 bcf of gas today.

He noted that the current oil and gas production was way below Nigeria’s capacity as a nation. He added that by all globally acceptable standards, this reserves to production ratio was extremely low and a clear indicator that the industry was in a dire situation.

In addition, Isa noted that “we now run the risk of partial implementation of our national budget considering an estimated deficit of 400,000 bpd from the forecasted 1.78 million bpd.

This trend in production, according to the IPPG chair, “portends another frightening dimension when we consider that in the not-too-distant future, our overall installed domestic refining capacity, currently closing in on about 1.2 million barrels per day, may soon outstrip our 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, God forbid!

“It is against this scary backdrop that IPPG is calling for urgent measures to be undertaken by all relevant stakeholders to immediately arrest this dwindling production level and under-investment by focusing on the following priority areas.”

On the first priority area, he called for immediate conclusion of all pending IOC divestment transactions.

Isa posited that IPPG strongly advocates that their member companies such as Seplat, the Renaissance Consortium and Oando have the proven track record to successfully take over and manage those onshore and shallow water assets to realise incremental production in the region of 100,000 – 200,000 barrels of oil and over 1.5bcf of gas per day within 24 months, and well over 500,000bpd in the long term.

He maintained that IPPG believes the timely approval of these IOC divestment transactions would 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.

On the second priority area, Isa stressed the urgent need to address deepwater development and production in Nigeria.

He said untangling issues around deepwater development, particularly in terms of competitive fiscal regime being negotiated with Shell, TotalEnergies, ExxonMobil and Chevron has the potential to unlock incremental production of 700,000 bpd from this terrain in the short to medium term.

Isa stated, “Enabling deepwater development will attract significant economic benefits as Nigeria has one of the world’s largest untapped deepwater resource base.

“Priority Area 3: The adoption of a national value-retention strategy: Nigeria’s domestic crude oil refining and petrochemical capacity must be sustained primarily from our domestic crude oil and gas production in order to transform our 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.”

On the fourth priority area, the IPPG boss called for the development of Nigeria’s gas resources to catalyse economic growth and complement decarbonisation drive.

He stressed that Nigeria’s vast gas resources must be exploited with immediate focus placed on restoring production to existing installed Liquefied Natural Gas (LNG) capacity and expanding production (FLNG).