• Friday, March 29, 2024
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Nigeria’s rig count falls further to seven, lowest this year

Nigeria needs 45 new oil rigs to achieve ‘normal’ production- Avuru

Nigeria’s oil rig count has dropped to seven, a 30 percent decline from the previous month and the lowest this year according to OPEC data an indication of producer’s reluctance to produce oil.

The rig count is largely a reflection of the level of exploration, development, and production activities occurring in the oil and gas sector.

According to the 13-member oil cartel, the country’s oil rigs fell from 10 in August to 7 in September. Nigeria had the greatest decline amongst its OPEC members.

Experts blamed the decline on oil theft, lack of investment, and production shut-ins.
Ayodele Oni, energy lawyer, and partner at Bloomfield law firm said the oil rig declined because production was reduced substantially.

“Many oil companies shut in production. Hence, if there is no drilling or production you would not be needing oil rigs,” he said.

“The argument is that what is the essence of production when most of it is stolen before it gets to the export terminal?”

Read also: OPEC: How marginal fields can brighten Nigeria’s oil outlook

On the other hand, Jide Pratt, chief operating officer, of Aiona and country manager, of Trade Grid said, “The oil rig count declined because investment in drilling by international oil companies (IOCs) fell.”

The challenges of security, oil theft, decarbonisation efforts and lack of assurance for drilled wells, analysts say, to produce and ensure delivery to export facilities, investor confidence has dropped over the years and is further reflected in low rig counts in Nigeria.

So far in the year, the country has no new exploration acreage. According to Rystad Energy, Angola, Morocco, Egypt, and Zimbabwe are the only African countries to award new exploration acreage in 2022.
OPEC also revealed that Angola, Libya, and Algeria produced more crude oil than Nigeria in September as Africa’s largest economy saw its output dip below 1 million barrels for two months straight.
The Nigerian Upstream Petroleum Regulatory Commission, in its oil production status report for September, revealed that Nigeria’s oil production fell further to 937,000 bpd from 972,394 in August this year.
This is troubling as revenue is falling due to lower oil revenues, and a difficult environment that is reducing the capacity of businesses to pay more taxes.
Hopefully, Nigeria’s oil production could rise above 1.6 million bpd with the return of Shell’s Trans Niger Pipeline and the Forcados terminal as early as November.
This will help shore up the government’s declining oil revenue, analyst say.