US grew oil output in 2018 more than Nigeria’s total production

The United States this year has increased its oil production by 2.31 million bpd, which is higher than Nigeria’s current total output of 1.9million bpd, highlighting how poorly Africa’s biggest energy producer is performing when it comes to making its oil sector attractive for investments.

Analysts fear that the country is not making the kind of strategic decisions required to position itself in a competitive oil market.
“This is why government should not just embark on reforms but institutionalise them and draft a clear policy that can stand the test of time for years to give investors’ confidence,” Chuks Nwani, an energy lawyer told BusinessDay by phone.

Nigeria has ambitions to raise crude oil reserves to 40 billion barrels, pump 4 million bpd, and add 800 billion cubic feet of gas by the year 2020 but the fiscal and regulatory regimes that would activate it have not materialised.

“Investors are usually more concerned about fiscal terms and seeing that they can make money from their investment and don’t lose their money. They also are more concerned about stability, they want to know the rules, be sure it is stable and that they can enforce their rights,” Ayodele Oni, partner at Bloomfield law firm and an energy
lawyer told BusinessDay.

Oil sector bills that will drive investments have stalled even after being broken down into four aspects: the Petroleum Industry Governance Bill (PIGB), the Fiscal Regime Bill, the Upstream and Midstream Administration Bill and the Host Community bill.

On the other hand, oil drillers in the United States are using advanced technology, like hydraulic fracturing, to free oil and gas from rock formations. A pro-business president in the White House is driving the sector through reforms in regulations and taxes.
Investors are pulling in capital even though there is groundswell of opposition around big projects like the Dakota Access and the Keystone XL pipelines. On the contrary, big projects in Nigeria have stalled because of inaction on reforms.

American production has become critical to OPEC calculations such that in the cartel’s latest report, it forecasts the US would boost output to 11.43 million bpd in the last quarter of 2018 and continue ramping up production until it hits 12.5 million bpd at the end of 2019. But it is not just US that is turning on the taps.

Oil production outside OPEC will reach 59.86 million bpd this year, growing further to 62.09 million bpd in 2019, a growth rate of 2.23 million bpd for 2019 from 2018, according to OPEC’s November Monthly Oil Market Report.

“Nigeria really needs to wake up,”Nwani said. Already OPEC countries led by Saudi Arabia’s Oil Minister Khalid
al-Falih have started to talk about production cuts again for fear of another glut like the one that dragged prices below $30 a barrel four years ago.

Before the current dip in oil prices to around $67 per barrel, prices rose above $80 but Nigeria failed to take full advantage while the United States, Saudi Arabia, Iran and Russia pumped record volumes even with a supply cap.

This time, Nigeria will have a tough argument to make to be excluded from future cuts as the militant situation have largely been contained.

ISAAC ANYAOGU