The nation’s crude oil reserves of 37 billion barrels, two per cent of which is being produced annually, will be depleted in 49 years, according to the Department of Petroleum Resources .
The reserves, which stood at 37. 45 billion barrels in 2014 , fell to 37. 06 billion barrels in 2015 and 36. 74 billion barrels in 2016. It, however, rose to 36.97 billion barrels in 2017 and 37 billion barrels in 2018, the DPR data showed .
“ The nation’ s depletion rate and life index are 2. 04 per cent and 49. 03 years respectively, ” the regulator said .
The reserves depletion rate is a measure of 2018 total oil and condensate production divided by the reserves as of January 1, 2019, according to the DPR .
It said , “ This indicator gives a bird ’s eye on an annual basis , what percentage proportion of the quoted reserves was produced .
“ The life index , on the other hand , is a measure of the reserves as of January 1, 2019, divided by the total production in 2018 . This parameter highlights how long ( in years) quoted reserves volumes will be available for production .”
The DPR said to achieve the government ’s aspiration of four million barrels per day production and reserves of 40 billion barrels , “ there is a need for corresponding increase in reserves as production increases . ”
He noted that if that was not done , “ the life index will fall from a sustainable long- term threshold to a less futuristic and sustainable medium to short- term range .”

The nation ’s oil and gas production structure is majorly split between Joint Ventures onshore and in shallow water with foreign and local companies, and the Production Sharing Contracts in deepwater offshore, to which most of the international oil companies have shifted their focus in recent years.
The JV operators, despite having the highest production (about 41. 64 per cent) among all the contract types, recorded a low depletion rate of about 1. 8 per cent and high life index of 56 .34 years, according to the DPR .
It said the PSC companies had the highest depletion rate of 3.10 per cent and the lowest life index of 32.15 years, while accounting for about 36. 08 per cent of the nation’ s total production .
“ Perhaps , the companies may have taken advantage of the poor government take in the deep offshore terrain to deplete the reserves therein with little regard for long- term sustainable production as amplified by the life index ,” the regulator said in a report.
It said the sole risk companies had the lowest depletion rate of 1. 5 per cent and the highest life index of 65. 49 years.
The regulator said these companies accounted for about 20. 14 per cent of the nation’ s total production in 2018, adding, “ This depletion rate does not reflect the fact these companies hold the second largest reserves of about 26.90 per cent. ”
The marginal field operators produced about 2 .14 per cent of the nation’ s total production in 2018, with a depletion rate of about 2. 7 per cent, life index of 36 .83 years and a national reserves portfolio of 1. 61 per cent.
The DPR said about nine operating companies , which it described as “ unhealthy ” , “ have oil and condensate life index of less than 15 years.”
“ The statistics paint a very gloomy picture for these companies and urgent steps will be taken to address this observed trend. The department is engaging the companies to review their strategic plan to guarantee future reserves growth in order for them to remain in business, ” it said .
According to the regulator , as of January 1, 2019 , the reserves replacement ratio, which measures the addition to reserves relative to the total production , for Nigeria’s oil and condensate reserves stood at four per cent.
It said “ Though this shows a positive RRR , it is not an impressive performance as just four per cent of the 2018 annual production was replaced via net addition to reserves.
“ The ideal scenario is when we have a 100 per cent RRR , i . e replace reserves at the same production rate . The RRR is used to judge the operating performance of the exploration and production industry. An RRR that is consistently over 100 per cent is ideal as it indicates that more reserve is being replaced than is produced. ”
Last week, the Minister of State for Petroleum Resources, Chief Timipre Sylva, said the nation’ s oil sector had worsened as the uncertain fiscal environment put a damper on the investments badly needed to ramp up oil production and increase reserves.

He warned that most of the resources might have to be left in the ground if not explored and produced before the world moves away from oil .
He said , “ If there is a lot of exploration , we believe that a lot of oil still remains to be found in Nigeria. And that is the beauty about Nigeria. Nigeria is not yet a mature territory; it is still very prolific. ”
“ There has been no targeted exploration for gas and yet we have 200 Tcf reserves. So, we believe that if we really go out looking for gas, we can find a lot more that will put us in the league of the most prolific in the world .
“ Let us allow the investment to come into Nigeria, because there is still a lot of oil and gas to be found . Unfortunately, the bad news is that the world ’s 2020 outlook tells you that by 2040, oil and gas will account for only 50 per cent of the energy of the world .”