Nigeria plays catch-up as global exploration surges

There is a surge in global offshore oil exploration this year, but Nigeria, which recently lost its status as Africa’s top producer to Angola, is missing out despite having more than half of its oil and gas blocks idle.

Forecasts by Rystad Energy, a global energy intelligence group, showed the drilling success rate is set to rebound this year with the potential to result in one of the highest recorded hydrocarbon volumes totals.

“Drilling of high-impact oil and gas prospects is set to rebound this year after a disappointing 2021, when success rates plunged towards record lows. So far this year, these critical wells have found hydrocarbons 47 percent of the time, up from a measly 28 percent for 2021,” Taiyab Zain Shariff, Rystad Energy’s senior analyst, said.

Rystad Energy research showed discovered volumes from high-impact wells have nearly quadrupled to over 1.7 billion barrels of oil equivalent (boe), signalling a positive sign for global hydrocarbon supply – with more than four months still to go in 2022.

It outlined that of the 33 expected high-impact wells this year, 19 have already been completed, four are in progress, and 10 are scheduled to be completed before next year.

Rystad underscored that the global oil majors and other exploration and production companies account for more than 60 per cent of the high-impact wells completed this year.

“As majors have drilled eight high-impact wells, four resulted in commercial discoveries: TotalEnergies’ Venus and Shell’s Graff oil discoveries in Namibia, ExxonMobil’s Fangtooth oil find in Guyana and Eni’s XG-002 gas discovery in the UAE,” Rystad Energy said.

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The energy intelligence firm disclosed that more than 45 percent of wells completed so far in 2022 are in South America and Africa, followed by Australia and Europe with 16 percent completed wells.

“Looking at individual countries, Australia accounted for the most completed high-impact wells with three, followed by Guyana and Namibia with two wells each,” Rystad Energy said.

With international oil companies such as Shell and Chevron accounting for more than 70 percent of Nigeria’s daily crude production, the country currently has about 13 billion barrels of oil equivalent presently untapped in its deep offshore area.

“Poor economic choices by the government and a snail’s pace movement in the implementation of the Petroleum Industry Act have marred the first half of 2022 for Nigeria’s oil and gas sector,” Ola Alokolaro, partner, energy and infrastructure at Advocaat Law Practice, said.

According to data obtained from Baker Hughes Incorporated and the Organization of Petroleum Exporting Countries (OPEC), Nigeria’s oil rig count, which depicts the level of oil production activities by operators, moved from eight in the first quarter of 2022 to 11 in the second quarter.

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

Nigeria’s oil output dropped 11.47 per cent year-on-year in the second quarter of 2022.

In its July 2022 Monthly Oil Market Report obtained by BusinessDay, OPEC disclosed that on average, the nation produced 1.343 million barrels per day (mbpd), in Q2 2022, compared to 1.517 mbpd produced in Q2 2021. This also compares negatively with the OPEC quota of 1.4 mbpd.

Innocent Uzoma Eluke, a UK-based project manager in oil and gas field development, said rigs keep depleting on the back of the inferiority complex of many field owners.

He said: “There are so many opportunities to boost the rig count in Nigeria from low-cost drilling to a consortium capable to support well operations technically and financially at no cost.

“But most of these field owners are waiting for international partners to come in with loads of money.”