Another Mirage in the Offing?

The Nigerian National Petroleum Corporation (NNPC) again last week said that it would increase crude oil reserves by one billion barrels yearly to meet 40 billion barrels target by 2020.

Group Managing Director of the NNPC, Maikanti Baru, made the announcement at the just concluded Nigerian Oil and Gas (NOG) conference and exhibition in Abuja.

He emphatically said the NNPC’s focus was to shore up crude oil reserves “by one billion barrels year-on-year from the current 37 billion barrels to 40 billion barrels by 2020 and also increase national oil daily production to three million barrels per day.”

The Corporation had in 2004, set ambitious targets to grow oil production to 4million barrels per day and reserves to 40billion barrels by 2010. But when it became obvious that these targets would not be achieved, it set a fresh 2020 deadline.

Indication again that this would also not be achieved emerged when the Department of Petroleum Resources (DPR), which regulates the sector, revealed that the reserves were on the declined. Specifically, the agency revealed recently that the reserves dropped by 961.47 million barrels between 2012 and 2016 alone.

The massive drop had been attributed to uncertainties in the oil and gas sector, owing to the delay in the passage of the Petroleum Industry Bill (PIB), the spate of violence in parts of the country, rising corruption rating, among others.

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, had also in March this year, admitted that inherent challenges were frustrating investment in the sector. However, he said the country could meet the reserves and production targets, if all aspects of the PIB were passed.
But an oil industry expert, who would not want his name in print, posited that this might yet be another mirage, as according to him, no major oil discoveries have been made in the last 10 years, reflecting a slowdown in exploration activity as oil majors seek to conserve cash.

In reaffirming the 2020 targets, Baru did not give details as to where and how the one billion barrels yearly addition would come from, as recent checks revealed that Nigeria’s oil reserves without barrels of equivalent (BOE) have dropped to all time low of 30 billion barrels from 37 billion BOE in 2010 as exploration wells have not been drilled in recent years.

“There are no major oil discoveries in the last 10 years. Our reserve without BOE is about 30 billion barrels. It is a shame. We had 37 billion Barrels BOE reserve when Angola had less than 2 billion barrels and today Angola has proven reserves of more than 9.5 billion barrels of oil and 11 tcf of natural gas while Ghana has grown from zero to about 0.7 billion barrels today”, said a highly placed industry source.
He stressed the need for increased oil exploration in order to shore up the dwindling reserves.