‘Poor exploration threatens oil reserves, production targets’ - THE NATION
• Ultra deepwater licensing round coming
It was the gathering of oil and gas industry chief executives and stakeholders at the Nigerian Association of Petroleum Explorationists (NAPE) conference, where the wellbeing of the industry took the front burner. As the special guest of honour, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, spoke on the amended Deep Offshore Act, oil bid rounds and Nigeria’s oil reserves and production targets, among others, EMEKA UGWUANYI was there
Nigeria’s aspiration to achieve 40 billion barrels of oil reserves and three million barrels of oil per day production by 2023 may be a mirage until industry players go back to exploration, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, has said.
Kyari, who was the special guest of honour at the ongoing 37th Annual Conference and Exhibition of the Nigerian Association of Petroleum Explorationists (NAPE) in Lagos, identified unresolved fiscal policies and investor apathy, among others, as the cause of the lull in exploration for oil.
He also noted that this year’s theme “Expanding Nigeria’s petroleum landscape: Digitalisation, innovation and emerging new technologies”, is apt considering the current realities in the industry.
Kyari said: “Our target is to hit 40 billion barrels by 2023, but not until we go back to exploration, we may not achieve that target. Despite the fact that oil production is ongoing, the additions are not matching production. With lack of exploration, the country will be on the verge of depleting its oil reserves, which currently is 37 billion barrels.
“The lull in exploration activities by oil companies was responsible for the inability of the country to meet the 40 billion barrels reserve target it set some years ago. The inability of oil companies to go into fresh exploration activities was due to lack of a fiscal regime for the industry.
“Since 1999, we have been trying to work on a new legislation for the oil industry to no avail and this has negatively impacted the oil sector because a lot of investors are just sitting on the fence watching the direction the country will embrace. I assure you all that all issues around the fiscal regime should have been sorted out latest by middle of 2020.”
The NNPC chief said the reserves have remained at 37 billion barrels over the years because of the lull in exploration, adding that investor apathy is another reason for lull as they ask critical questions relevant to their operations and interest. Some of the questions are: Can I recoup my investment or get reasonable figures on Return on Investment? If the answers to these are not in the affirmative, they tend to explore other investment havens.
He expressed worry that competition from other energy sources, such as renewable, has made it difficult for oil companies to look more deeply into exploration activities. However, Kyari said he didn’t believe oil would become insignificant by 2040. He said: “There will still continue to be need for fossil fuel. Though, there is competition against fossil fuel, especially coming from renewable but that cannot replace the place of fossil fuel. Crude oil will still remain relevant beyond international agencies’ forecast of 2040. Increasing population and growing demand will always remain a factor, which implies there will still be at least an oil consumption of 100 million barrels per day by 2040.”
On innovation and latest technology in oil exploration, he said the recent discovery of oil in Kolmani Well 2 in the Gongola Basin remained the biggest indication that modern technology helps in accelerating oil find. He said for over 35 years, the industry could not find oil in the frontier basin but with the deployment of latest technology and innovation using the best and latest digital solutions, the NNPC was able to strike oil in that region.
The NNPC chief also stated that Nigeria will conduct bid round in the ultra-deepwater province, adding that the ultra-deepwater area is completely unexplored, a development that may soon create investment opportunities for players in the sector. “The ultra-deepwater is completely unexplored today but the end of next year there will be some form of bid rounds in ultra-deepwater terrain,” he added.
Deepwater fields are water depths of more than 1,000 feet while ultra-deepwater fields are in water depths greater than 5,000 feet.
NAPE President, Mr. Ajibola Oyebamiji, said the association would not relent in its efforts aimed at ensuring that all hands are on deck to grow exploration activities in the country. He said the job of explorationists was to find oil wherever it may be, assuring the government and the industry that NAPE would step up the game in the quest to develop the industry.