According to a recent study by Rystad Energy, Nigeria has been recognized as one of the top three countries globally to have unveiled substantial oil reserves in 2023. This achievement is attributed to the investments made during the year. Joining Nigeria in this distinction are Guyana and Namibia.
The report also highlights that the worldwide expenditure on conventional oil and gas exploration is poised to surpass $50 billion throughout 2023. This projection comes from a prominent energy research firm.
With a strategic focus on offshore projects, upstream companies are channeling their investments into regions known for their robust geological insights and lucrative potential. Rystad Energy’s analysis underscores that a remarkable 95 percent of the total expenditure in 2023 is earmarked for offshore initiatives.
“Upstream companies are facing a period of uncertainty. They are eager to capitalize on the increased demand for fossil fuels and find additional resources,” Aatisha Mahajan, vice president of upstream research, at Rystad Energy, said in a report.
“Inflation data for June shows an ongoing acceleration, with an annual rate of 22.8 percent y-o-y, following 22.4 percent y-o-y in May and 22.2 percent in April, and 22 percent in March.
“Food inflation has been a key factor in this rise, reaching 25.1 percent year-on-year (y-o-y) in June, after 24.8 percent y-o-y in May.
“A combination of factors including conflict, the impact of climate change, population pressures, and the below-average output of the agricultural sector, exacerbated the scarcity of food resources over recent years,’’ it said.
In a bid to provide support, the Nigerian government has introduced a comprehensive financial package totaling N500 billion.
In an effort to combat inflation, the report notes that the Central Bank of Nigeria (CBN) raised the key policy rate by 25 basis points to 18.75% in July.
Due to the ongoing challenges, the Stanbic IBTC Bank Nigeria Purchasing Managers Index saw a decline in May 2023, settling at 51.7 in July, following a previous level of 53.2 in June.
In a related context, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) highlighted a 12.56% reduction in the country’s crude oil production in July, dropping to 1.29 million barrels per day from June’s 1.48 million barrels per day. This decrease was attributed in part to the temporary closure of the Forcados terminal. Shell, the operator, cited suspicions of a leak in mid-July as the reason for the shutdown.
While the Forcados terminal typically handles approximately 220,000 barrels per day, workers in the area detected fumes near a crude-loaded vessel on July 12. Repairs on the terminal were anticipated to conclude by the first week of August. As of the middle of the current week, however, Forcados remained inactive.
Earlier this year, the commission had cautioned that Nigeria’s crude oil production was lagging behind its capacity by a million barrels per day. The agency attributed this situation to factors such as insufficient investments, limited funding sources due to the energy transition, and security concerns.
“Currently, Nigeria has the technical allowable capacity to produce about 2.5 million barrels of oil per day.
“However, arising from the highlighted challenges, our current production hovers around 1.5 million barrels of oil and condensate per day,” the chief executive of the body said in May.
To remedy matters, Nigeria, earlier this month, announced the pending launch of a roadshow to pitch upstream investments in the country.
“Whereas the global imperatives for energy transition are clear and justified, the need for Africa’s energy security, economic development, and prosperity cannot be overemphasized,” the Nigerian regulator, which is organizing the roadshow, said.
According to a senior Petroleum Ministry official, Nigeria is looking to boost its oil production to 1.7 million barrels daily by November this year.
Equally, the Nigeria Extractive Industry Transparency Initiative (NEITI) said, Nigeria lost over 619.7 million barrels of crude oil valued at $ 46.16 billion or N16.25 trillion from 2009 to 2020 from theft and sabotage.
Executive secretary of NEITI, Dr. Ogbonnaya Orji, who presented the report as a part of his remarks at the Stakeholder’s roundtable for the review and approval of NEITI Audit Reports in Abuja said: “In addition, NEITI reports have disclosed that Nigeria lost over 619.7 million barrels of crude oil valued at $46.16 billion or N16.25 trillion from 2009 to 2020 from theft and sabotage. This amounts to losing over 140,000 barrels of crude valued at $10.7 million daily.”
