11 October 2011, Sweetcrude, Lagos – The Nigerian Association of Petroleum Explorationists (NAPE) says Nigeria’s crude oil reserves are dwindling because the government, through the Department of Petroleum Resources (DPR) had not put adequate incentives in place to encourage oil companies to drill exploration wells.
Speaking at the weekend on the position of the country’s crude oil reserves, the President of NAPE, Mr. Jide Ojo, said the oil companies needed to be encouraged to search for more oil reserves.
Ojo stated that oil companies were looking for returns on their investments and also regulations that would support their efforts.
“When a company spends so many millions of dollars to drill exploration wells, the company needs to have the assurance that it will have returns on its investment. We are probably not finding as much reserves as we should be finding. That is a fact. What we need therefore, is to find out why the exploration wells are not being drilled.
“The reasons are not far-fetched; it has to do with the fact that the operators are looking for incentives to drill exploration wells. Sometimes when a company applies to the DPR to drill an exploration well, they (DPR) will come back and re-classify it as appraisal. That happens; I am just giving you an example. The operators tend to get discouraged by that kind of situation. They are looking for the enabling environment,” he said.
Ojo acknowledged that the escalating global demand for energy had made the need to find new hydrocarbon reserves imperative.
He said forecast from various recognised organizations and institutions had indicated that global demand for energy would continue to rise into the next decade and beyond.
“A significant proportion of the projected increase in energy demand is expected from fossil fuel. There is therefore ever increasing pressure on identifying new reserves. Nations endowed with hydrocarbon reserves will continually need to create a business environment that will enable greater investment and engage in processes that will further promote exploration and post exploration sustainable activities aimed at harnessing the hydrocarbon resources, so as to derive maximum value in an environmentally friendly way,” he said.
The Federal Government had targeted to grow the country’s crude oil reserves to 40 billion barrels by December 2010 but the figure currently stands at about 38 billion, apparently due to lack of efforts in the area of exploration.