Gains from the Petroleum Industry Act(PIA) appears to be gaining traction as Nigeria’s oil rig count has risen from 17 in 2019 to 31 as at last month.
The improvement in oil drilling activities was disclosed by the Commission Chief Executive(CCE), of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Mr. Gbenga Komolafe, on the sideline event of the World Petroleum Congress (WPC|) which ended in Calgary, Canada at the weekend.
The event jointly organised by Cabtree Consulting, the Gas Aggregation Company of Nigeria (GACN), and CarbonAi x-rayed the topic “Nigeria and Canada: Collaborating to Decarbonise Nigeria’s Oil and Gas Sector.
Komolafe who was Represented by the Executive Commissioner, Economic Regulation and Strategic Planning, NUPRC, Mr. Kelechi Ofoegbu, in his presentation lamented that, in the years preceding the enactment of the PIA, investments in the Nigerian oil and gas industry declined mostly due to regulatory uncertainty, de-funding of fossil fuel development occasioned by energy transition and the global call for decarbonization.
Most IOCs according to him, deprioritized Nigeria in their portfolios leading to the redirection of CAPEX to other countries with attendant dwindling investment in Nigeria’s upstream sector.
This, he said, led to a decrease in the total annual upstream capital expenditure from $27 billion in the year 2014 to less than $6 billion in 2022 representing a 74 percent decrease in CAPEX.
‘‘This under-investment impacted negatively on the country’s rig count. On average, Nigeria had seventeen (17) active oil rigs in 2019 representing one of the highest counts in the African continent as at then. The average rig count declined to eleven (11) in 2020, seven (7) in 2021, 10 in 2022, but recently grew to as high as thirty-one (31) by August 2023, a positive signal of new investments trickling into the country.
The relatively high crude oil prices may have also been attributed to the increase in activities in the petroleum upstream sector. We also see this as a reflection of investors’ acceptance of the PIA and its effective implementation by the regulator.
The projected outlook over the next few years looks promising, and as the regulator in the oil and gas upstream sector, we would leverage this opportunity by doing all that is necessary to attract more investments and revamp the Nigerian upstream sector.
He added that the PIA has repositioned the Nigerian petroleum sector by creating efficient and effective governing institutions, with clear and separate roles for the industry as well as provisions for enabling transparency, accountability, and fostering a business environment conducive to petroleum operations. He explained that since the enactment of the PIA, the (The Commission) has gone ahead to develop twenty-four (24) priority regulations that will give meaning and intent to the spirit of the PIA, and create a predictable regulatory environment for operators and other stakeholders.
On energy transition, he maintained that the need for oil and gas producers to embrace the reality of green transition and take strategic positions to leverage the opportunities presented by the unfolding era has indeed become more pressing.
‘‘With Nigeria’s huge gas reserves of 208.83 TCF and a potential for an increase to about 220 TCF within the next ten (10) years, Nigeria has adopted natural gas as our transition fuel in our stride at developing cleaner fuels and staying on track with our net zero emission commitment of 2050.
The unfolding event has equally shown that natural gas is our destination fuel, with a projection that gas will form a significant part of the energy mix for Nigeria by the year 2030 and beyond.
In recognition of this, the Government has designed the Decade of Gas program to ensure that gas actually plays a role in lifting us from the challenges that confront us in order to drive industrial development’.
Earlier in his presentation titled ‘‘Decarbonising Nigeria’s Oil and Gas’’, Chief Upstream Investment Officer, NNPC Upstream Investment Management Services (NUIMS), Mr.Bala Wunti, said reaching net zero will require improvements to the enabling environment as well as robust project preparation and tapping different sources of finance in a coordinated manner, taking into account each country’s context whether developed or developing.
Wunti who was represented by Asset Manager, Group PSC(Production Sharing Contract), NUIMS NNPC Limited, Mr.Justus Derefaka, hinted that pursuing a net-zero emissions pathway comes at a very high price tag.
He added that gas use for power would need to increase to meet rising electricity demand until 2030.
‘‘Delivering Nigeria’s current NDC requires strong gas uptake across the economy, including 80 percent of cars being powered by Compressed Natural Gas(CNG) and 50 percent of the population using Liquified Petroleum Gas(LPG) for cooking by 2050,’’.
Source- Sun Newspaper.