Drop in Africa’s Oil Exploitation

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The inability of African countries to come up with a law to regulate the petroleum industry sector is said to be one of the factors responsible for the drop in oil exploitation in the continent

By Anayo Ezugwu  |  Aug. 4, 2014 @ 01:00 GMT

OIL exploitation in Africa and, particularly in Nigeria, has dropped by 12 percent between May and June this year. This is attributed to the inability to pass the Petroleum Industry Bill, PIB, into law in Nigeria and other African countries. The drop, according to Global oil industry analysts at Baker Hughes, United States, reflected in the rig count during the period under review.

The implication of the finding means that the continent may be producing at a faster rate than that at which it makes new oil finds. It also means that its crude oil reserves could be depleted faster than other continents because of increased production and export, without much investment in exploration.

 The Baker Hughes global oil industry analysts stated in their June report that oil exploration companies operating in Africa deployed a total of 123 rigs in June against 140 utilised in May, this year. The report, which showed a general lull in exploration state: “The international rig count for June 2014 was 1,336, down by 14 from the 1,350 counted in May 2014, and up by three from the 1,333 counted in June 2013. The international offshore rig count for June 2014 was 314, down by 12 from the 326 counted in May 2014, and down by 23 from the 337 counted in June 2013.”

According to the analysts, some nations and continents made impressive outings during the period under review. For instance, the United States of America, which used to import about 40 percent of Nigeria’s oil, recorded an average rig count of 1,861, up by two from the 1,859 counted in May 2014, and up by 100 from the 1,761 counted in June 2013.

The average Canadian rig count for June 2014 was 240, up by 78 from the 162 counted in May 2014, and up by 57 from the 183 counted in June 2013. The worldwide rig count for June 2014 was 3,437, up by 66 from the 3,371 counted in May 2014, and up by 160 from the 3,277 counted in June 2013, the analysts said.

The Baker Hughes Rotary Rig Counts are counts of the number of drilling rigs actively exploring for or developing oil or natural gas in the United States, Canada and in the international markets. The reasons for the low exploration in many African countries could not be confirmed.

But in the case of Nigeria, it is attributed to the delay in the passage of the nation’s Petroleum Industry Bill, PIB, into law. Timothy Okon, group coordinator, corporate planning and director of transformation, Nigeria National Petroleum Corporation, NNPC, admitted that the delay in the passage of the PIB has impacted negatively on the ability of the country to enhance investment in the industry. “We are told that the PIB is now at the third reading. The act of making legislation resides in the National Assembly. It will be nice to complete work on the legislation in order to boost investment in the industry,” he said.

Andrew Yakubu, group managing director, NNPC, who painted a picture of the industry in the past two years at a recent workshop organised for energy reporters in Uyo, Akwa Ibom State, said “the PIB is a comprehensive legislation that should boost investment in the industry.

“During the period, we improved on the exploration activities of our subsidiaries, the Frontier Exploration Service, FES, and the Integrated Data Services Limited. A total of 6,102 square kilometres of seismic data including 818 square kilometres were acquired for FES operations in the Chad Basin in phases 3, 4 and 5 combined. Acquisition of 266 sq. km of seismic data in the phase 6 by IDSL (a subsidiary of NNPC) in the Chad Basin is ongoing even at the height of the security challenges,” he said.

Meanwhile, the Organisation of Petroleum Exporting Countries, OPEC, has said that the global oil industry needed much investment in order to meet future demand. Abdalla S. El-Badri, secretary general of the organisation, said OPEC’s focus should be on maintaining market stability. He said  this was central to OPEC’s decision to maintain the organisation’s existing production levels of 30 million barrels a day. This is what is required by the market.

“World oil demand in 2015 is anticipated to increase at a faster pace of 1.21 million barrels per day, while OECD demand is expected to see positive growth for the first time since 2010, increasing around 40 tb/d, while non-OECD consumption is expected to provide the bulk of oil demand growth with 1.18 mb/d. Non-OPEC oil supply is expected to increase by 1.47 mb/d in 2014, following a slight upward revision from the previous report. In 2015, non- OPEC supply is projected to grow at a slower pace of 1.31 mb/d. OPEC NGLs and non-conventional liquids are forecast to grow by 200 tb/d in 2015 to average 6.0 mb/d, after growth of 150 tb/d this year.”

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