PETAN, others urge Nigeria to resume sustainable exploration activities
Oil and gas industry operators have expressed fears that Nigeria may not be able to meet up in the event of an improvement in the price of crude oil and upward swing in the demand of crude at the international market because of lack of sustained production.
The basis for their fears is the fact that the crude oil reserve is depleting without any considerable level of production to shore up the reserve base, and therefore wants the country to resume sustainable exploration activities.
The industry operators, who expressed worries over the depletion of Nigeria’s crude reserves, said no new addition had been added to the reserve in the last 10 years.
In recent time, the country’s reserve has declined from about 35 billion barrels reserve base to 28 billion barrels, as there has not been any exploratory activities that have taken place in 10 years.
Bank-Anthony Okoroafor, chairman, Petroleum Technology Association of Nigeria (PETAN), urged the government to swing into action, as further delay might not be too good for our economy. “The issue about reserves addition is not about setting targets, but about swinging into action which would help reverse the declining trend.”
According to Okoroafor, “Government should encourage more oil exploration activities, so that what happened to us with the refineries will not happen with oil production as well. We had four refineries and we failed to maintain them as and when due until they gave up.”
Since the oil price crash is not permanent, now is the time for government to encourage exploration to shore up reserves, he said, adding that “for every volume of crude produced, Nigeria should set aside some quantity to build our reserves. Nigeria will benefit more from this when oil prices rise again as they will surely do in the future.”
The lack of reserves addition also puts at risk Federal Government’s production targets of 4 million barrels daily and 40 billion in reserves, which have now been moved to 2020, after several unsuccessful attempts in the past, the PETAN boss said.
The uncertainty over regulatory issues on account of the non-passage of the Petroleum Industry Bill (PIB) has been the reason for the lack of reserves addition.
But the other members of the Organisation of Petroleum Exporting Countries (OPEC), such as Venezuela, Saudi Arabia, and other have been busy expanding their reserve base despite the low crude oil prices.
Also reacting to this, Eddy Wikina, managing director of Treasured Energy Resource, said, “the implication of not exploring for crude oil is that when the situation improves at the international oil market and countries are allowed to pump as many volume as they could to meet up demand, Nigeria would not be ready.”
Wikina said for a long time the Nigerian National Petroleum Corporation (NNPC) had concentrated on the downstream and left the upstream attended to, hence the current level of depletion the country was experiencing.
Okoroafor, who was recently elected chairman of PETAN, therefore urged the government to encourage more investments in oil exploration activities, adding that the best way to do this was to stabilise the fiscals of both the IOCs and the national oil company, as represented by the NNPC.
Fiscal stability can be achieved if government paid off its joint venture cash calls, and make it a first line charge going forward, he said.
He also charged government to create an environment that would attract foreign direct investment, saying: “Investment money now has choices because it can be taken to any country; even in Africa, practically every country has found oil.”