The Independent Petroleum Producers Group has urged President Bola Tinubu to declare a state of emergency for crude oil production in Nigeria due to the lingering crisis, as concerns grow about a lack of domestic crude oil for the Dangote Petroleum Refinery and other indigenous refiners.
IPPG disclosed this at the ongoing Nigeria Oil and Gas conference in Abuja on Tuesday, according to The PUNCH.
IPPG is an association of Nigerian indigenous upstream exploration and production companies that works with the government and other industry players on sector-related problems. Its 28 members include Oando Plc, Aiteo, Seplat, Energia, Eroton, First E&P, Frontier Oil, Green Energy, and others.
Oil producers also expressed concern that the 2024 budget may only be partially implemented due to Nigeria’s recent low crude production.
This is as the Nigerian National Petroleum Company Limited said it had declared war on the barriers of oil production in the country, and that it was now engaging its partners, including international oil companies.
Meanwhile, the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has urged oil companies to enhance their investments in the upstream sector of the industry, as this will help to boost oil output.
Nigeria’s oil production has been declining since this year, from more than 1.4 million barrels per day (excluding condensates) in January to around 1.2 million barrels per day in April.
Dangote refinery and modular refinery operators have expressed concern about the low crude oil supply from IOCs and NNPC. However, industry experts claim that due to poor domestic production, the IOCs and NNPC have already outsourced out the majority of their crude volumes to dealers.
In his address at the conference, the Chairman, IPPG, Abdulrazaq Isa emphasized that the industry required tremendous commitment to address legitimate worries about its long-term viability.
He emphasized that “as a matter of national importance, Nigeria must act quickly and accelerate the pace of recovery across the entire industry, even if it means Mr. President declaring a state of emergency in the oil and gas sector!” We must be viewed as doing all necessary to liberate the industry.
Unlocking this incremental production is achievable only through collaboration and commitment between the industry regulators (NUPRC and NMDPRA) and industry operators (NNPC, OPTS and IPPG) and this must be done for the sake of our country,” Isa said.
Isa stated that despite Nigeria’s world-class hydrocarbon resource base, which includes over 37 billion barrels of proven crude oil reserves and 207 tcf (trillion cubic feet) and 600 tcf of proven and contingent gas reserves, the country’s daily production has significantly decreased and now stands at approximately 1.3 million barrels of oil and 8.5 bcf (billion cubic feet) of gas.
“This is way below our capacity as a nation and by all globally acceptable standards, this reserves to production ratio is extremely low and a clear indicator that the industry is in a dire situation. In addition, we now run the risk of partial implementation of our national budget considering an estimated deficit of 400,000bpd from the forecasted 1.78 million bpd.
“This trend in production portends another frightening dimension when we consider that in the not-too-distant future our overall installed domestic refining capacity, currently closing in on about 1.2 million barrels per day, may soon outstrip our current crude oil production level with the risk of Nigeria finding itself in a position where it is unable to meet its domestic refinery crude demand or even become a net importer of crude oil, God forbid!,” he stated.
The oil producers chairman noted that it was against this scary backdrop that the IPPG was calling for urgent measures to be undertaken by all relevant stakeholders to immediately arrest this dwindling production level and under-investment by focusing on some priority areas.
Outlining the priority areas, he said, “The immediate conclusion of all pending IOC divestment transactions: IPPG strongly advocates that our member companies – Seplat, the Renaissance Consortium and Oando – have the proven track record to successfully take over and manage these onshore and shallow water assets to realise incremental production in the region of 100,000 – 200,000 barrels of oil and over 1.5bcf of gas per day within 24 months and well over 500,000 barrels of oil per day in the long term.
Recall, AmBusiness reported earlier that NNPCL had declared war on the challenges affecting our crude oil production.
While speaking at the conference, the Group Chief Executive Officer NNPC, Mele Kyari, said in order ro increase Nigeria’s crude oil production and grow its reserves, NNPC has declared a state of emergency on production in Nigeria’s oil and gas industry.
According to him, a detailed analysis of assets revealed that Nigeria can conveniently produce two million barrels of crude oil per day without deploying new rigs, but the major impediment to achieving that remains the inability of players to act in a timely manner.
