Nigeria Can Produce 2bn Barrel Of Crude Oil In 10 Years— African Energy Report
Kunle Harmony
According to a report recently published by the African Energy Chamber (AEC), Nigeria would be able to produce a total of two billion barrels of crude oil between 2020 and 2030, with a caveat of higher crude oil price of $50 per barrel, and additional investments of up to $10 billion.
The AEC, in its African Energy Outlook 2021, also disclosed that Nigeria stands to lose $24 billion investments in the oil and gas sector over the next five years on the back of decreasing demand due to COVID-19. The opposing scenarios would depend on the prevailing market conditions over the period.
The report said Nigeria would account for 30 per cent of the total of $80 billion loss of investments that would be recorded in the petroleum industry across Africa.
“The detrimental impact of COVID-19 on global energy markets is also expected to have an impact on African activity. Compared to pre-COVID-19 expectation, about $80 billion less investments are expected in Africa towards 2025, with the years 2020 to 2022 carrying the brunt of the difference.
“Out of the $80 billion, Nigeria will be by far the most adversely impacted country with about $24 billion moving out of the 2020-2025 window,” the report said.
The AEC further projected a delay in the Nigerian Liquefied Natural Gas (NLNG), Train 7 project, as well as other gas projects in the country, occasioned by the pandemic, which had also negatively impacted the price and demand of crude oil in the international market.
According to the chamber, upcoming gas projects would take a hit and run a risk of delays, while it noted that some oil majors operating in the country had already started shifting the timelines for their gas projects.
“The majority of the projects in Africa that were up for sanctioning were planned assuming an oil price of between $55 and $60 per barrel. The oil price currently hovering around $40/barrel therefore spells bad news, especially as the top upcoming Final Investment Decisions (FID), in Africa have a breakeven crude price of over $45/barrel, with some even close to $60/barrel.
“ENI and ExxonMobil have both stated that they will focus on developing projects with a breakeven crude price of less than $35/bbl. “In its latest announcement, Shell distanced itself from deep-water mega-projects off the coast of Nigeria, placing the Bonga Southwest-Aparo, a 150,000 barrels of oil per day (bpd) floating, production, storage and offloading (FPSO) development that was soon coming up for FID, on the backburner for now.
“Upcoming gas projects will also take a hit and run a risk of delays. Although Nigeria approved the development of NLNG train 7 last year, the upstream gas developments that were planned to supply feedgas to this development might now take a back seat,” said the report.
