Nigeria oil sector faces existential threats, explorationists warn -

Declining exploration activities leading to inability to replace reserves, sabotage of oil and gas installations, illegal refining and poor fiscal and regulatory terms are some of the risks facing Nigeria’s petroleum sector.

The Nigerian Association of Petroleum Explorationists is warning this situation including inefficient contract, procurement awarding process and oil theft coupled with declining oil prices poses a big risk to the sector, warns Ajibola Oyebamiji, president of NAPE at a press conference.

The procurement and contracting cycles in Nigeria are around 36 months on average—the longest and most inefficient globally, dampening business climate because contractors can’t properly plan costs, NAPE’s president said.

“Insecurity, oil theft and illegal refining are bigger threats to the oil and gas industry in Nigeria than the declining price of oil,” the head of the oil exploration association noted.

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Earlier this month, the Nigerian National Petroleum Corporation (NNPC) raised the alarm that oil pipeline vandalism in Nigeria is soaring, with the number of incidents of breached pipelines surging by 115 percent in July compared to June.

Pipeline vandalism, as well as pipeline, sabotages by militants in Nigeria’s oil-rich Niger Delta area, has plagued Nigeria’s oil production and exports for years. Over the past year and a half, militant activity has subsided, allowing Nigeria to boost its crude oil production, and also making Africa’s largest oil producer a full-fledged participant in the production cuts of the OPEC+ coalition.

But since it became part of the pact in January 2019, Nigeria has been one of the largest overproducers and non-compliant OPEC members in the deal. Nigeria pledged in September to fall within its respective cap while the cartel and its allies are trying to rebalance the oil market. Nigeria may face an easier task to finally fall in line with its share of the OPEC+ production cuts after OPEC has recently raised the African producer’s oil output ceiling.

Isaac Anyaogu

Isaac Anyaogu is an Assistant editor and head of the energy and environment desk. He is an award-winning journalist who has written hundreds of reports on Nigeria’s oil and gas industry, energy and environmental policies, regulation and climate change impacts in Africa. He was part of a journalist team that investigated lead acid pollution by an Indian recycler in Nigeria and won the international prize - Fetisov Journalism award in 2020. Mr Anyaogu joined BusinessDay in January 2016 as a multimedia content producer on the energy desk and rose to head the desk in October 2020 after several ground breaking stories and multiple award wining stories. His reporting covers start-ups, companies and markets, financing and regulatory policies in the power sector, oil and gas, renewable energy and environmental sectors He has covered the Niger Delta crises, and corruption in NIgeria’s petroleum product imports. He left the Audit and Consulting firm, OR&C Consultants in 2015 after three years to write for BusinessDay and his background working with financial statements, audit reports and tax consulting assignments significantly benefited his reporting. Mr Anyaogu studied mass communications and Media Studies and has attended several training programmes in Ghana, South Africa and the United States