Nigeria moves to regain lost oil, gas production

Nigeria's Minister of Petroleum Diezani Allison-Madueke speaks at a media briefing on a new gas price regime in the capital of Abuja10 0ctober 2013, Lagos – Nigeria’s dwindling crude oil production is expected to rise significantly in 2014 when many large fields would have come on stream, according to a new report from the United Kingdom-based Business Monitor International (BMI).

The country had in the last two years, witnessed the worst wave of oil production disruptions, with output falling to levels last seen before the federal government’s amnesty programme.

Output was said to have dropped to an all time lows of about 1.9mbpd owing to incessant attacks on oil facilities, which often resulted to production shut ins.

But hopes that crude production is set for a new high emerged with revelation by BMI that output would ramp-up more significantly, following the coming on stream of new oil fields.

“We expect feeble production from 2013 and for the following two years. Output should ramp-up more significantly as many large fields come online after 2014, more than offsetting current depletion,” said the report.

Highlighting main trends and developments for Nigeria’s oil and gas sector, BMI noted that the weak output flows in 2012 were the consequence of flooding, repeated oil thefts and regulatory uncertainty.

“We expect feeble production from 2013 and for the following two years. Output should ramp-up more significantly as many large fields come online after 2014, more than offsetting current depletion,” said the report.

In BMI’s view, adoption of the Petroleum Industry Bill (PIB), which is expected around the fourth quarter of 2013 and the first quarter of 2014, would be a strong signal for investors that Nigeria’s hydrocarbon sector is ready to move forward.

However, disturbances and outages due to oil theft have continued throughout 2013, with Shell, largest oil producer, having declared force majeure on Bonny Light exports several times since the beginning of the year.

“We, therefore, forecast that 2013 production will be slightly lower than 2012 estimates, reaching 2.50 million barrels per day (b/d),” BMI said, but indicated optimism for increased oil production to 2.70mn b/d by 2020, as ambitious projects such as Usan (180,000b/d) peak and Egina (150,000-200,000b/d) come on stream in the coming years.

Consumption of crude is forecast to rise at a compound annual rate of seven per cent year-on-year between 2012 and 2022, boosted by anticipated strong (GDP) growth.

“We forecast consumption rising from an estimated 252,000b/d in 2012 to 495,000b/d by 2022,” BMI said in its report, while forecasting a more than two fold increase in gas production from an estimated 36.4 billion cubic metres (bcm) in 2012 to 85.3bcm by 2022, as the authorities and companies reduce the practice of flaring and start monetising associated gas resources.

The report further noted that booming demand from the government’s ambitious power sector plans and large export engagements will thus bolster production growth.
Also, BMI forecast Nigerian gas consumption rising from an estimated 5.8bcm in 2012 to 15.0bcm by 2022.

In terms of infrastructure, authorities in the West African country have ambitious plans in liquefied natural gas (LNG) and refining, the report added.

The downstream sector, according to the BMI remains highly inefficient and, despite a nameplate capacity of 505,000b/d, actual output is often around 100,000b/d.
“Many projects have been proposed, but there has been no update indicating that any are progressing”, said the report.

BMI omitted the projects in its forecast on account of the country’s past woes in the sector.

The report further noted that the Nigeria National Petroleum Corporation (NNPC) is aiming to more than double its annual production of LNG, from 22mn tonnes per annum (tpa), or 30.36bcm, to over 52mn tpa (71.76bcm).

Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, had in 2012 announced that the government was planning to direct more than US$1.6 billion towards the repair of traditional refineries, located in Port Harcourt, Warri and Kaduna Maintenance work, which started in late 2012 and was due for completion in October 2014. However, the Port Harcourt refinery is currently halted indefinitely, as oil thieves damaged the feeding pipeline in early 2013.

“Nigeria’s dependence on oil prices leads to high volatility in the country’s export revenues. Continuing tight supply, due to booming demand in emerging markets, is clearly an opportunity for the country,” the report added.

Meanwhile, Shell Petroleum Development Company (SPDC), last night shut-in 150,000 barrels per day (bpd) of crude oil in the Eastern Niger Delta.

A top official of SPDC, who confirmed the development, however, declined to speak further on the issue, saying he was not yet authorised to speak on the matter.

Chika Amanze-Nwachuku, This Day

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