• Saturday, December 09, 2023
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Plunge in global oil prices, political uncertainty threaten FG’s push for increased oil output

BP's ETAP oil platform in the North Sea

The Federal government’s plan to increase crude oil production in the country from just over 2 million barrels per day to 4 million barrels per day by 2020 is under threat over current oil prices as well as the uncertain political future in the country. The Federal government also aims to lift its reserves to 40 billion barrels from 32 billion barrels.

The political uncertainty also poses a significant risk to the vitality of the nation’s oil sector as in- vestment indecision lingers according to recent report from IHS, a leading global source of critical information and insight. IHS forecasts crude oil production in Nigeria will drop from the 2 million barrels per day in 2011 to below 1.5 million bpd by 2020 without substantial investments in the off- shore sector. The steep de- cline in oil prices is already hurting the country’s finances, the report finds.

The latest report from the Organization of Petroleum Exporting Countries (OPEC) finds oil production from member state Nigeria declined 3.2 percent from January to February to a monthly average of 1.9 million bpd. According to the Petroleum Minister, Alison-Madueke, at the Nigeria Oil & Gas 2015 conference in Abuja, “Persistent depressed oil prices may limit industry scope to manoeuvre in growing long-term production and reaching the target.” Oil companies would need to come up with radical changes including innovative financing mechanism for new and ongoing projects, Alison- Madueke added.

Industry operators at the conference said global oil prices were not the only problem, with oil theft, growing insecurity challenges, and the uncertain political feature in the country also as factors hindering growth in Nigeria.

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Roderick Brice, the author of the report on Nigeria for the analytical group IHS, said election is a disruptive force in the oil- rich country. Regardless of who wins, investors will face an uncertain future. “That uncertainty has already constrained deep- water exploration and development,” he said in a statement.