• Tuesday, July 23, 2024
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Declining oil rigs shows investors’ apathy in Nigeria

Lagos earns N3.9bn from 13% oil derivation

Continuing decline in the number of rigs in the Nigerian oil and gas industry may be a pointer that investors are no longer keen about investing their funds in the industry.

There have been no active rig operations in the nation’s oil and gas industry in the last six years.

According to the Department of Petroleum Resources (DPR) on its website, the last time the industry recorded any rig operation was in April 2015 with just 25 rigs. There were 11 land rigs, 1 swamp, 5 shallow offshore, and 8 deep offshore.

Indeed, latest information on rig operations in Nigeria from OPEC shows there were only 17 rigs in 2019 as against 32 recorded in 2018, a decline of 46 percent.

The decline in rig operations means it would be difficult for Nigeria to increase its oil reserve. The oil and gas sector is the mainstay of the nation’s economy, as the bulk of its external reserve comes from the sector.

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The number of rigs working in any country, whether drilling on land or offshore for oil, natural gas or for other purposes, measures the level oil and gas exploration activities in that country.

Nigeria is known for oil and gas exploration and production activities, but these activities have suddenly plummeted because of the non-passage of Petroleum Industry Bill (PIB).

According to Alan Foum, consultant geophysicist, the future productivity of the Nigerian oil is dependent on drilling more wells and bringing them onto production to replace declining production from existing wells due to depletion.

“Production will increase when more wells are drilled and completed but may stagnate or decline when this momentum falters”.

Nigeria for many years has targeted achieving 40 billion barrels of crude oil reserve to no avail as it continues to stagnate between 36 billion and 37 billion barrels because of investors’ lack of interest in exploration and production activities.