13 December 2012, Sweetcrude, Lagos – MOBIL producing Nigeria unlimited, has warned that Nigeria’s crude oil and gas production risks a decline of 40 percent in the next ten (10) years if urgent steps are not taken to maintain or increase the current level of production.
Unveiling its 2012 outlook for the energy industry, Exxonmobil disclosed that it would need at least $11billion investment to increase its production level in Nigeria adding that since oil was discovered in Nigeria, the industry has not experienced real growth.
Speaking to newsmen in Lagos yesterday, the General Manager, Operational Technical Geoscience department of Exxonmobli, Mr Andrew Ejayeriese said that for Nigeria to sustain its leadership position in Africa, it must create the right condition and take quick decisions that enhance the overall production chain.
He stated that Nigeria has the potential to remain the leading hydrocarbon producer and exporter in Africa for the foreseeable future, adding it must put measures in place that allow investors to achieve a competitive return, to operate in the most effective and efficient manner possible, and have a stable, fair investment environment.
Government should encourage investments and application of appropriate technology, both cutting edge and fit-for-purpose, to enable successful long term development of Nigeria’s resources.
He explained that the era of easy discoveries of oil sites are over, noting that oil discoveries are made in deeper horizon which bring about more challenging and technical expertise in the production process which has also resulted in more cost.
He stated that an attractive investment environment must be created by the government just as a stable fiscal and regulatory regime is needed to ensure a sustained growth.
According to Ejayeriese, an operator needs to reinvest about 50% of annual cash flow to keep production
He was of the opinion that the current draft Petroleum Industry Bill (PIB) proposes fiscal and non-fiscal recommendations that will not encourage investment in the industry, nor will it offset natural decline as fields mature.
His words “The current draft PIB proposes fiscal and non-fiscal recommendations that will not encourage investment in the industry, nor will it offset natural decline as fields mature.
“An operator needs to reinvest about 50% of annual cash flow to keep production flat. Without new investments, Nigeria’s production will decline by 40% by 2020, while it could potentially grow by nearly 50% within same period, with continued (and planned) investments of $110 billion.
“Without investments, the industry will not replace declining production, let alone grow.
“Clearly a tragedy for a country blessed with such a significant hydrocarbon endowment.
“ExxonMobil is supportive of the restructuring objectives and as part of OPTS, is committed to providing industry’s input to the evolution”.