Nigeria, along with Guyana and Namibia, has emerged as one of the top countries boasting the highest oil reserves, a result of significant investments made in the oil sector throughout 2023. This revelation comes as a result of research conducted by Rystad Energy, an authoritative energy research company.
Rystad Energy’s findings also indicate a significant surge in global spending on conventional oil and gas exploration, projected to exceed a remarkable $50 billion in 2023. This impressive growth is indicative of the sector’s robust expansion. Notably, upstream companies are strategically funneling their investments toward offshore projects, focusing on regions rich in geological insights that promise substantial returns.
According to Rystad Energy, a staggering 95 percent of the total expenditure in 2023 is being channeled into offshore initiatives. This trend underscores the determination of upstream companies to harness the increasing demand for fossil fuels and secure additional energy resources.
Aatisha Mahajan, Vice President of Upstream Research at Rystad Energy, emphasized the prevailing uncertainty that upstream companies are navigating. She underscored their eagerness to leverage heightened energy demand and uncover new resources to meet the global needs.
Major players in the energy sector, including ExxonMobil, bp, Shell, TotalEnergies, Eni, Chevron, and National Oil Companies, are projected to account for over half of the exploration spending. These giants are collectively set to invest around $7 billion in exploration projects throughout 2023.
Despite Nigeria’s significant oil and gas reserves, the Organization of the Petroleum Exporting Countries (OPEC) has noted that Nigeria’s economic growth rate in the first quarter of 2023 stood at 2.4 percent year-on-year. This indicates a slowdown compared to the growth of 3.6 percent witnessed in the fourth quarter of 2022, signaling potential economic challenges for 2023.
OPEC’s August Monthly Oil Market Report highlighted the issue of high inflation plaguing Nigeria’s economy. The report attributes this inflation to a combination of factors, including conflicts, climate change impacts, population pressures, and challenges in the agricultural sector, all of which have contributed to food scarcity and escalating inflation rates.
To address these economic concerns, the Nigerian government unveiled a comprehensive financial package worth N500 billion. In a bid to counter inflation, the Central Bank of Nigeria increased the key policy rate by 25 basis points to 18.75 percent in July.
Amidst these challenges, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) observed a decline of 12.56 percent in Nigeria’s crude oil production in July. This decrease is attributed to the temporary shutdown of the Forcados terminal due to suspected leaks.
The Forcados terminal, known for its daily average of 220,000 barrels loading, faced operational disruptions due to safety concerns. Although repair work on the terminal was anticipated to conclude in early August, it remained closed as of the mid-week point.
Earlier this year, the commission cautioned that Nigeria is producing one million barrels per day less than its production capacity. A lack of investments, scarcity of funding sources due to the energy transition, and prevailing insecurity were identified as key drivers of this situation.
The Nigerian government is taking proactive steps to address these challenges, recently announcing the impending launch of a roadshow aimed at attracting upstream investments to the country.
According to a senior official from the Petroleum ministry, Nigeria is striving to increase its daily oil production to 1.7 million barrels by November 2023.
Similarly, the Nigeria Extractive Industry Transparency Initiative (NEITI) revealed that Nigeria lost a staggering 619.7 million barrels of crude oil, valued at $46.16 billion or N16.25 trillion, between 2009 and 2020 due to theft and sabotage.
NEITI’s Executive Secretary, Dr. Ogbonnaya Orji, highlighted the urgency of addressing these losses, underscoring the significance of energy security and economic development for the nation’s prosperity. The report exposed the extent of the challenges posed by crude oil theft and sabotage, translating to a daily loss of over 140,000 barrels of crude valued at $10.7 million.
