IPPG lists four key areas to tackle in driving crude oil production

Tue, Jul 2, 2024
By editor

Featured, Oil & Gas

By Anthony Isibor

AS parts of efforts to find a lasting solution to the continuous drop in oil production in the country, Abdulrazaq Isa, Chairman, Independent Petroleum Producers Group, IPPG, has called for urgent measures by all the stakeholders to key into priority areas.

The IPPG boss, who made the call during his keynote address on Tuesday at the ongoing Nigeria Oil and Gas Energy Week in Abuja, listed the four key priority areas to include:

Priority Area 1: The immediate conclusion of all pending IOC divestment transactions: IPPG strongly advocates that our member companies – Seplat, the Renaissance Consortium and Oando – have the proven track record to successfully take over and manage these onshore and shallow water assets to realise incremental production in the region of 100,000 – 200,000 barrels of oil and over 1.5bcf of gas per day within 24 months and well over 500,000 barrels of oil per day in the long term.

IPPG believes the timely approval of these IOC divestment transactions will also serve as a clear signal that can restore global investors’ confidence in Nigeria in an era of competing global investment destinations in Africa and very limited access to capital.

Priority Area 2: The urgent need to address deepwater development and production: Untangling issues around deepwater development, particularly in terms of competitive fiscal regime being negotiated with Shell, Total Energies, ExxonMobil and Chevron, has the potential to unlock incremental production of 700,000 barrels per day from this terrain in the short to medium term. Enabling deepwater development will attract significant economic benefits as Nigeria has one of the world’s largest untapped deepwater resource base.

Priority Area 3: The adoption of a national value-retention strategy: Nigeria’s domestic crude oil refining and petrochemical capacity must be sustained primarily from our domestic crude oil and gas production in order to transform our country into a net exporter of refined petroleum and petrochemical products that will lay a strong foundation for the rapid industrialization of the Nigerian economy. It is therefore imperative to grow our daily production to 2.5 million barrels of oil and 10 bcf of gas in the near to long term to ensure we are able to meet our domestic refinery and petrochemical demands and export commitments to generate the much needed foreign exchange earnings for macro-economic stability.

Priority Area 4: The development of Nigeria’s gas resources to catalyse economic growth and complement decarbonisation drive: Nigeria’s vast gas resources must be exploited with immediate focus placed on restoring production to existing installed LNG capacity and expanding production.

In addition, we must expand domestic gas utilization (Gas-to-Power; Gas-Based Industries) by investing heavily to address the gas infrastructure deficit facing us today. The International Oil Companies will lead the charge on export gas, while the IPPG members will drive the domestic gas agenda led by NNPCL.

He explained that these priority areas provide the most realistic and sustainable pathway towards meeting our national long term production aspiration of 4 million barrels of oil per day and 13 billion cubic feet of gas per day.

He said that if focused on, these four key areas will help to immediately arrest the dwindling oil production level and under-investment.

According to Isa, the call became necessary given that although the President Bola Tinubu’s government has initiated laudable policies that are recording gradual positive turnarounds, the Nigerian Oil and gas industry is still in dire need of extraordinary focus to mitigate the genuine concerns on its long-term sustainability.

He noted that despite the country’s world class hydrocarbon resource base, with over 37 billion barrels of proven crude oil reserves and 207 tcf and 600 tcf of proven and contingent gas reserves respectively,

“We find ourselves in a situation where our daily production has significantly dropped and lies at a about 1.3 million barrels of oil and 8.5 bcf of gas today.

“This is way below our capacity as a nation and by all globally acceptable standards, this reserves to production ratio is extremely low and a clear indicator that the industry is in a dire situation. In addition, we now run the risk of partial implementation of our national budget considering an estimated deficit of 400,000 bpd from the forecasted 1.78 million bpd.

“This trend in production portends another frightening dimension when we consider that in the not-too-distant future our overall installed domestic refining capacity, currently closing in on about 1.2 million barrels per day, may soon outstrip our current crude oil production level with the risk of Nigeria finding itself in a position where it is unable to meet its domestic refinery crude demand or even become a net importer of crude oil, God forbid!

“Consequently, as a matter of national importance, Nigeria must act fast and hasten the pace of recovery across the entire industry, even if it means Mr. President declaring a state of emergency in the oil and gas sector.  We must be seen to do everything possible to unleash the industry. Unlocking this incremental production is achievable only through collaboration and commitment between the industry regulators (NUPRC and NMDPRA) and industry operators (NNPCL, OPTS and IPPG) and this must be done for the sake of our country,” he said.

Isa also expressed his profound appreciation to President Tinubu for the transformative reforms being undertaken by his administration, especially the recent presidential executive orders and directives are a welcome development for the industry.

“Also of note is His Excellency’s direct intervention in untangling issues in some of the long-overdrawn IOC divestment transactions – these delays have been costly to the industry and extremely detrimental to the nation as a whole. We are encouraged to see swift progress on implementation and some tangible results within a relatively short period of time. Such progressive and impactful policies are exactly what the industry has consistently clamoured to sustainably develop and move the industry forward,” he added.


July 02, 2024 @ 18:55 GMT|