Can Africa’s top oil producer stage a comeback? - Punch Newspapers

Nigeria remains the biggest crude oil producer in Africa, but its output is far less than the peak of 2.58 million barrels per day achieved 16 years ago. The country, whose production stood at 1.67 million bpd in August this year, is pushing ahead with reform efforts to ramp up its output and reserves. Several factors — from pipeline vandalism and crude oil theft to underinvestment and asset divestment by international majors — led to the steep decline in the West African nation’s output. The global oil price collapse between 2014 and 2016, as well as the oil price collapse during the COVID-19 pandemic in 2020, combined with delays in enacting a new law for Nigeria’s oil and gas sector, slowed investment in exploration and production. It was unfortunate that the Petroleum Industry Bill, which was first submitted to lawmakers in 2008, was not passed into law until July 2021. Those years of regulatory uncertainty saw international oil companies (IOCs) suspend big-ticket offshore projects, while security challenges in the oil-rich Niger Delta forced them to sell onshore and shallow-water assets to indigenous operators. I find it extremely difficult to understand why a sector that produces the bulk of government revenue and foreign exchange for the country would be allowed to become a shadow of its former self. In August 2022, the country’s crude oil production slumped below 1 million bpd, piling more pressure on government finances.See more Punch stories on Google.Add Punch on Google Although the Petroleum Industry Act was eventually passed into law in August 2021, the sector was still struggling to recover from the doldrums until the current government took fresh measures to boost investor confidence. The administration of President Bola Tinubu, who took office in May 2023, has introduced several executive orders aimed at repositioning the sector and attracting the much-needed investments. The government is seeking to boost oil production to 3 million bpd by 2030. That target is a tall order. It remains to be seen how the industry will be able to add 1.4 million bpd in four years to the country’s output, which increased by only about 100,000 bpd in the last two years despite the declaration of a state of emergency and the launch of a project aimed at increasing production by 1 million bpd. 2027: Explain how fuel subsidy plan will work, APC tells Atiku 2027: Ignore opposition, just tackle insecurity, APC chieftain urges Tinubu Tinubu mandates Shettima to lead Nigeria’s delegation to UNGA In July 2024, the state-owned Nigerian National Petroleum Company declared a state of emergency in crude oil production, with the then Group CEO, Mele Kyari, saying a detailed analysis of assets revealed that the country could conveniently produce two million bpd without deploying new rigs. “We have decided to stop the debate. We have declared war on the challenges affecting our crude oil production. War means war. We have the right tools. We know what to fight. We know what we have to do at the level of assets. We have engaged our partners, and we will work together to improve the situation,” he said. Less than four months later, the upstream petroleum regulator unveiled an initiative called Project 1 Million Barrels of Oil Per Day, targeting a production level of 2.5 million bpd by 2026. But the country’s output is nowhere near 2 million bpd, a level last seen in May 2020. It is, however, important to note that things are looking up in the sector, with several deepwater projects already sanctioned or on course for a final investment decision by oil majors, while indigenous operators that snapped up assets divested by IOCs are reviving idle wells and drilling new ones to boost production and reserves. But, all things considered, the country is unlikely to see its output return to the 2010 peak by 2030. Abioye is the Editor of The PUNCH Oyetunji Abioye

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