Yemisi Izuora/Ijeoma Agudosi
A new report has indicated that Nigeria’s oil production is likely to falter due to under-investment, despite the country over 37 billion bbls proven reserves.
Production losses are estimated at between 100 000 and 400 000 bpd since 2010.
According to Young Okunna, GlobalData’s Upstream Analyst covering Sub-Saharan Africa, Nigeria’s oil and gas sector is in desperate need of reforms and transparency.
He stressed that the country needs to capitalise on the opportunity to rebuild investor confidence following the smooth general elections.
He explained that, “Buhari brings a reputation as a heavy-handed president able to potentially neutralise the Boko Haram threat, which is concentrated in the poorer northeast of the country.
Whilst the oil sector is concentrated in the south, the Islamist group has in the past named refineries and oil infrastructure as targets.
“Nigeria’s new president is also a fierce opponent of corruption, having recently dissolved national oil company NNPC’s board following an estimated $20 billion scandal of inappropriately managed oil revenues,” Okunna adds.
Stagnation of Nigeria’s oil industry is exemplified by the 335 discoveries that remain undeveloped.
Approximately 185 of these are exposed to rising oil theft and vandalism rampant in the Niger Delta since 2010, which has led to huge production losses.
The GlobalData report further suggests that if new fields were to come online over the next five years, approximately 300 000 bpd will be added.
Okunna concludes that, “As companies look to redeploy capital after having pulled back when oil prices collapsed, Buhari’s government must reform the sector and also engage with community leaders to reduce sabotage and communal disturbances, in order to attract investment that will reverse the forecast production decline.”