Nigeria’s oil output surges as rig count up 75%; 2024 outlook seems bright

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DESPITE many challenges, there are indications that Nigeria, a leading African oil and gas producing nation, recorded many feats in 2023, due to the positive impact of the Petroleum Industry Act, PIA.

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This is even as the nation’s 2024 outlook looks bright in medium and long term, according to available reports and experts.

Meanwhile, the nation’s rig count, an index of measuring activities in the upstream sector, increased year-on-year, YoY, by 75 per cent to 14 in November 2023, from eight recorded in the corresponding period of 2022, according to data obtained from the Monthly Oil Market Reports, MOMRs, of the Organisation of Petroleum Exporting Countries, OPEC.

Also, on month-on-month, MoM, Nigeria’s rig count increased by 7.6 per cent to 14 in November 2023, from 13 recorded in the preceding month of October 2023.

Output rises by 1.7%
Similarly, on YoY, Nigeria’s oil output rose by 1.7 per cent to 1.4 million bpd in November 2023, from 1.2 million bpd in October 2023, based on information obtained from secondary sources.

According to OPEC, this excludes condensate, light crude like Bonny Light, which Nigeria has the capacity to produce between 300,000 and 400,000 bpd.

The rise in output was partly fuelled by the return of Nembe crude produced by Aiteo, the Operator of the NNPC/Aiteo Oil Mining Lease (OML) 29 Joint Venture (JV), to the international crude oil market. Already, many cargoes of 950,000 barrels each have been exported to France and the Netherlands.

NNPC Ltd continues oil search
Port Harcourt Refinery still testing – NNPC
The NNPC Ltd continued oil search in the Lake Chad Basin in Borno State after it was stalled for over five years due to insurgency in the North East.

The company noted that the discovery of oil in viable commercial quantities in Kolmani River (upper Benue trough) between Gombe and Bauchi states last November gave positive signals for more efforts in Lake Chad.

OPEC puts quota at 1.5m bpd
Meanwhile, OPEC and non-OPEC Ministerial Meeting, ONOMM, has put Nigeria’s oil quota at 1.5 million bpd in 2024.

Previously OPEC had stated that, “Noting that Nigeria’s stated Production Plan in 2024 is 1,578 kbd subject to verification, and if verified then the number will be reflected as required production for 2024.”

Nigeria executes major gas projects
Also, Nigeria that adopted gas as a transition fuel, moved on to implement major gas projects. These include the new Ajaokuta Kaduna Kano (AKK) gas pipeline project and the NLNG Train 7 project.

The gas projects aim at commercialising the nation’s abundant gas for domestic use and export.

NNPC, Dangote move to start refining
In the midstream, the NNPC Ltd technically completed the rehabilitation of Port Harcourt Refinery, adding that some tests, targeted at ascertaining the readiness of the plant to run commercial operations are ongoing.

The Group CEO, NNPC Ltd., Mr. Mele Kyari, said: “We are aware of our nation’s challenges in terms of fuel supply. But we are not here to give excuses. We are focused on delivering this rehabilitation project, our two other refineries, and all other investments towards revamping the nation’s refining capacity.”

Already, the $19 billion Dangote Oil Refining Company, which the NNPC Ltd., has 20 per cent stake, has taken delivery of about five million barrels of crude as part of preparation to commence test running and commercial operations.

According to the company, “Dangote Oil Refinery is 650,000 barrels per day (BPD) integrated refinery project under construction in the Lekki Free Zone near Lagos, Nigeria. It is expected to be Africa’s biggest oil refinery and the world’s biggest single-train facility.”

However, a visit to some parts of the Niger Delta by Vanguard indicated that pipeline vandalism, oil theft and illegal refining continue to affect operations, production and revenue generation.

The NNPC Ltd., confirmed that it recorded 112 incidences of crude oil theft in the Niger Delta, adding that the incidents were recorded between December 23, 2023 and December 29, 2023.

Checks by Vanguard also indicated that the industry, especially the downstream is haunted by foreign exchange crisis and instability that discourage investment despite the deregulation of the sector.

Expect oil licensing round in 2024 — NUPRC

The Nigerian Upstream Regulatory Commission, NUPRC, said 2024 looks bright as it has concluded plans to conduct oil licensing round as part of the implementation of the nation’s PIA.

The licensing round is targeted at attracting new investors and increasing investment that will ultimately raise Nigeria’s oil reserves toward 40 billion barrels, from the present 37 billion barrels.

The planned licensing round is in line with Section 73 of the nation’s Petroleum Industry Act, PIA, a comprehensive legislation aimed at achieving increased investment, restructuring as well as transparency and accountability in the industry.

The Commission Chief Executive, NUPRC, Engr. Gbenga Komolafe, stated: “The Commission shall, beginning 2024, conduct all future licensing rounds based on a Licensing Round Plan and modern acreage licensing practices, to include the periodicity of licensing based on predictability of timelines and long-term national economic and developmental agenda.”

Improved oil monitoring, Ease of business

He said: “In 2024, the Commission will optimise the functionality of automation systems by enhancing the efficiency of existing optimising tools and the streamlined deployment of new ones. The use of productivity tools and electronic communication channels will be entrenched to improve customer interface, reduce logistics, and deepen ease of compliance.

“The NUPRC will ensure 100 per cent use of the National Production Monitoring System (NPMS), the Annual Work Programme Portal, the Dynamic Acreage Management System (DAMS), the HOSTCOMPLY, and the Oil and Gas Industry Service Permit (OGISP) automation tools by the Commission and the industry.”

Output to hit 1.8m bpd, prices

On the planned low cost of crude production, NUPRC, stated: “The commission, in collaboration with relevant government entities, is pursuing measures to complement the kinetic efforts of security forces, to grow oil production progressively to 1.8 MMBOPD to 2.6 MMBOPD and gas to about 10 BSCFD within the period. These interventions include operational optimisation and enablers to delivering high-impact projects within the portfolios of producers.”

NNPC plans public offer

Also, the NNPC Ltd has concluded plans to sell its shares to the public, a development that will stimulate growth in the economy. The Group Chief Executive Officer of the company, Mele Kyari, said: “So, the over 200 million Nigerians are the shareholders of this company today. These shares are held in trust by the Federal Ministry of Finance Incorporated, and the Federal Ministry of Petroleum on behalf of the federation.

“What the Petroleum Industry At 2021 (PIA) provided for is that within three years, this company’s ordinary shares can be sold to other Nigerians or interested international partners that combine shared values. There’s a process for this- that means you must take it to an Initial Public Offering (IPO) level.”

Rehabilitation of Warri, Kaduna refineries

On the refineries, he said: “We are also borrowing to fix the Warri and Kaduna refineries.

Kaduna will kick up, it is a 36-month project but what happens in the rehabilitation is that you do them stage by stage. We will replicate the same thing in the Warri refinery and the contractor is on site and Daewoo is on site working; mobilised to site, equipment being delivered to site and we believe also that within that 36-month cycle, it will also complete the rehabilitation but we’ll start fuel before that time.”

Gas pipeline to connect nations, economies

The NNPC boss, said: “The AKK component is just one leg of it starting from Ajaokuta through Abuja, Kaduna into Kano, and potentially what we’re trying to do now is to see if there’s excess capacity, which can make it across the Sahara into Europe.

“That’s one of the most ambitious projects that we have and is going to cost over $25 billion, but more than anything, it is going to connect 11 West African countries to our gas sources and that way, we will be creating prosperity around Nigeria.”

Nigeria has a great future — Ayuk

Reacting, the Executive Chairman, African Energy Chamber, NJ Ayuk, commended Nigeria for the bold steps taken to execute key projects, including Dangote Refinery, said: “Nigeria has a great future. We were excited to see that the Dangote Refinery has secured its first crude cargo. This is a significant milestone, both for the country and the West African region at large. With a capacity to produce 350,000 barrels per day, the refinery holds particular significance for the country, where reliance on fuel imports has been a defining feature for decades, despite its over 37 billion barrels of proven reserves.”

Similarly, Chairman of International Energy Services, Dr. Diran Fawibe, said: “Nigeria needs to continuously invest in the oil and gas industry. Also, adequate provision should be made for refining in order to meet domestic demand.”

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