Oil production stagnant after 40 years — Report
In the mid 70’s, Nigeria’s oil production reached a high of 2.2 million barrels per day, mainly from onshore and shallow water fields.
Virtually all of Nigeria’s oil growth over the last decade, according to the company, came from the deepwater region.
Delays in project approvals, restrictions in the Nigerian National Petroleum Corporation’s funding and tortuous contract award process, it added, had slowed overall reserve replacement and put pressure on long-term production and growth.
The firm said, “We all know the story of the impact of militancy and oil bunkering/illegal refinery on the maintenance and growth of JV volumes. The point here is that successful regimes must match hydrocarbon resources with clear regulatory and fiscal terms and provide a safe and secure operating environment. The same holds true for Nigeria’s vast gas resources.”
Although gas production for sales is forecast to grow in the future, it said Nigeria must focus on creating a clear policy and fiscal incentives to drive development of both domestic and export markets, adding that the country had a good vision of where it wanted to be.
“But the effective execution of the vision has not occurred due to inconsistent and conflicting plans, shortage of funding and incentives, slow development of domestic market and significant competition for export market share, with new entrants and new resources such as the North America Shale gas boom,” it stressed.
To sustain the momentum for continued leadership, MPN said Nigeria needed to look further ahead, making long-term planning critical.
It stated, “We no longer find, produce oil and gas in the easy places. Our industry has evolved over time; and planning and the right application of technology will be critical to Nigeria’s continued success in the future, especially for new and economically challenging areas like deepwater and to extract optimum recoveries from older fields.
“We must invest in and match the appropriate technology – cutting-edge technology for complex, frontier regions, and fit-for-purpose technology for more mature onshore/shallow areas.
“Taking this long-term view in policymaking decisions is, therefore, an imperative for the country where the application of technology supplied by global players and investment go hand in hand.”
The government’s focus on restructuring the industry through the Petroleum Industry Bill, it explained, was timely in the light of the listed challenges.
It noted, “Establishing a framework where the roles of policy, regulation, asset management and National Oil Company operations are segregated and clearly defined could provide the structure necessary to sustain Nigeria’s position as Africa’s leading producer and exporter.
“But it must be designed and implemented correctly,” the firm said.
ExxonMobil maintained that without investments, the industry would not replace declining production, let alone grow. “Clearly a tragedy for a country blessed with such a significant hydrocarbon endowment,” it stressed.
The firm said it had demonstrated its commitment to invest in partnerships and projects around the world, adding that it invested billions of dollars and supported large scale financing in both developed and undeveloped markets.
It said, “We have tapped into a variety of funding sources from banks to capital markets, export credit agencies, the World Bank and others have structured innovative funding solutions to meet the financing needs of our partners.
“Here, we see what is possible when an investor has the confidence of contract sanctity and stable, predictable policies.”
CULLED FROM: PUNCH
January 13, 2013 by Stanley Opara
Written by NEWSTRAWL ONLINE UPDATE
Sodiq Oyeleke is a Media, Human Resources, Project Management and Public Relations Practitioner
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