₦airaland Forum

Nigeria records over five billion products’ depletion in three years

• Govt urges states to develop contingency plan

NIGERIA’S crude oil reserves have declined from the 37.2 billion barrels it recorded in 2011 to 31.81 billion barrels as at Wednesday last week, according to data from the Pipelines and Product Marketing Company (PPMC).

The nation’s oil reserves slumped from 38.5 billion barrels in 2008 to 37.5 billion barrels in 2010. In 2011, the reserves further dropped to 37.2 billion barrels, raising concerns among industry stakeholders.

This development has confirmed the fears by experts who predicted three years ago that the country’s crude oil reserves may soon dry up due to low investment in hydrocarbon reserves’ replacement.

The Managing Director of PPMC, Haruna Momoh, who made this disclosure at the Oil Trading Logistics (OTL) conference in Lagos noted that Nigeria had the potential to transform its economy if stakeholders could leverage on the opportunities that abound in the oil and gas industry

The former Governor of Central Bank of Nigeria (CBN), Prof. Charles Soludo, had expressed the fear that with a production output of 2.5 million barrels of oil equivalent per day, Nigeria currently depletes about one billion barrels of crude oil yearly from its 37.2 billion barrels of hydrocarbon reserves.

A call for aggressive policies of hydrocarbon reserves’ replacement

Soludo and other economic experts had predicted that except the Federal Government urgently creates aggressive policies of hydrocarbon reserves’ replacement, the nation’s crude oil reserves would be totally depleted by 2048.

Just three years after the warning, the nation’s crude oil reserves have reduced by more than five billion barrels. This is, however, higher than the one billion yearly depletion forecast by experts.

With this current development, the hope of the country to increase its crude oil reserves to 40 billion barrels and production to four million barrels per day, may be a mirage.

Confirming the declining state of the country’s crude oil reserves, President, Nigerian Association of Petroleum Explorationists (NAPE), Adedoja Ojelabi, stated: “The country’s reserves are showing a sign of decline as exploration drilling has hit the lowest level ever experienced.

“The reports of new discoveries are few and the reserves are getting smaller. Ironically, the operating landscape is experiencing a lot of challenges as the industry witnesses the largest number of divestment and acquisition activities that bring new players as operators to the risk business of oil and gas exploration and production.”

Involving local firms through award of licences

In 2003, the award of 24 marginal field licences was part of the government’s quest to ensure rapid involvement of Nigerian companies in the nation’s crude oil exploration and production, and another award of 77 oil blocks through three bid rounds in 2005, 2006 and 2007.

However, only eight out of the 24 awarded marginal field licences were able to go into full- scale production 10 years after being licensed.

Of all the 77 oil blocks awarded between 2005 and 2007, only one has gone into production while less than 30 per cent of the remaining 76 are actively working.

Energy Information Administration (EIA) said in its recent report that exploration in Nigeria was at its lowest in a decade and only three exploratory wells were drilled in 2011, compared to over 20 in 2005.

The Minister of Petroleum Resources, Diezani Alison-Madueke, said recently that the country was working to increase the national crude oil reserves to 40 billion per day and raise production to four million barrels per day.

Rising security problems related to oil theft, pipeline sabotage, and piracy in the Gulf of Guinea, coupled with investment uncertainties surrounding the long-delayed Petroleum Industry Bill (PIB), have curtailed oil exploration projects and impeded the country from advancing towards its target to grow reserve base and production.

Boosting exploration to augment dwindling reserves

On the declining state of the nation’s reserves base, the Director, Department of Petroleum Resources (DPR), George Osahon, said that Nigeria should boost exploration to augment the dwindling reserves, which were depleting in geometric progression, while replenishment was stagnant.

“Oil reserves are dropping, our output is dropping too. What are we supposed to do to correct this? Exploration, exploration, exploration . We started with 2D seismic, now we are at the 3D seismic. Already, 1,300 exploration wells have been drilled so far.

“We need to do more in this regard to have more reserves. We have reached the plateau of production in the Niger Delta and we are already going down. A lot of money has to be spent to increase our reserves at the old fields, for instance, exploration in the Chad basin.

“Because we have not found anything at the Chad basin as at today does not mean that oil is not in the basin. We are optimistic about this. We are sure it would help us boost our reserves,” he added.

He stressed the need to increase national reserves via more seismic data coverage and drilling of exploration wells, drilling for deeper oil fields to enhance recovery methods, utilisation of non-straddled reservoirs, bitumen exploration and exploitation, among others.

“We have come up with strategies to boost our reserves and in due course, we would make these known.”

Osahon said: “Of the 77 oil blocks awarded between 2005 and 2007, it is only one that is producing and it is being operated by a foreign firm, while the ones awarded to indigenous operators have yet to commence production.”

The DPR boss identified lack of access to finance, high taxes, community issues, technical competence, fluctuating assistance from foreign equity partners and low funding capacity of indigenous players as some of the challenges posing serious concerns to marginal field operators in the country.

An expert, who spoke on the condition of anonymity said that policies must be put in place for the industry to gain a lot of time in the contracting cycle, especially by drastically shortening and reducing the time to access rigs for exploration in the Nigerian waters, “the country should make reserves’ replacement a priority.

“If we take a critical look at perspectives for growing reserves in the next decade, the answer is exploration, exploration and more exploration to run parallel to development projects, which are also becoming more and more expensive to execute, due to slippages in complex contractual environment, coupled with security challenges,” he added.

Expressing concerns over the nation’s depleting oil reserves recently, President Goodluck Jonathan said Nigeria must find other means to sustain its economy, stressing the need to encourage the private sector to set up manufacturing industries to produce non-oil products and also create employment opportunities for the country’s population.

“We must move away from crude oil because experts have predicted that in 35 years from now, our oil reserves will dry up. If that is true, it spells economic doom for our future generation,” he said. Meeting the revenue shortfall with contingency plans

Besides, the Federal Government has urged states to emulate and also look for contingency plans backed up by the appropriate laws to make up for the shortfall in revenue.

The Minister of National Planning Abubaka Suleiman made this call at the weekend during the meeting of the National Council on Development Planning (NCDP) in Ibadan.

He said: “The National Planning Commission is working closely with the Federal Ministry of Finance and the Central Bank in developing a contingency plan at the national level. The states are also advised to develop their strategic plans, as well as the associated contingency plans to complement the effort of the Federal Government.

“There is also a need to ensure that important legislations needed to facilitate and institutionalise strategic planning at both levels are given rapid consideration.”

Suleiman who presided over the meeting with the state Commissioners of Economic Planning as members of the council charged the states to search for alternatives to explore.

While stressing the need for cooperation among all tiers of government in order to achieve the desired vision as none of the other tiers could stand alone in the circumstances, the minister explained that the decline in crude oil price from $100 to $80 per barrel in the recent past had the potential of affecting the economic performance of member nations, including Nigeria and by extension the states that rely on crude oil as major revenue receipts.

http://www.ngrguardiannews.com/lead-story/185292-crude-oil-reserves-decline

Agriculture is the future black gold of the nation I wish they could do more to encourage youths in this regard I will be a good. then Mendo Agroprenuer Project will be some day

Intresting. An avenue for APC flocks to counter GEJ.
.
.
.not my biz tho

mrofficial:
Why create the avenue?

Am i the owner of the topic?

D oil don dey finish

1shortblackboy:
D oil don dey finish

Make the oil finish self