Babatunji Wusu –
- Target Increase: Nigeria aims to increase oil production by one million bpd within 12-24 months.
- Current Production Dip: Production fell to 1.544 million bpd in September.
- Government Support: The initiative emphasizes sustainable growth and domestic energy security.
- Higher Aspirations: Calls for short-term targets of 2.5 million bpd and long-term goals of four million bpd.
- Divestment Decisions: Shell’s divestment blocked; four significant deals approved.
- Infrastructure Issues: Aging infrastructure and vandalism hinder production capacity.
- Need for Modernization: Industry leaders stress the importance of upgrading infrastructure to combat declining production trends.
The Federal Government of Nigeria has unveiled an ambitious initiative aimed at boosting the country’s crude oil production by an additional one million barrels per day (bpd) within the next 12 to 24 months. This initiative is a response to ongoing challenges in the oil sector, including theft, pipeline damage, outdated infrastructure, and the urgent need for new investments.
Current Production Status
According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), oil production has recently dipped from 1.571 million bpd in August to 1.544 million bpd in September, representing a 1.68% decline. The government’s new plan, named “Project 1MMBPD,” aims to reverse this trend through targeted measures to enhance output.
Key Details of the Initiative
During the announcement of Project 1MMBPD, President Bola Ahmed Tinubu, represented by Senator George Akume, the Secretary to the Government of the Federation, underscored the initiative’s significance for national economic growth. He stated, “This is a giant step forward for our oil and gas industry, designed to grow sustainably and enhance domestic energy security.”
Aspirations for Production Goals
Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, while supportive of the new target, argued that it is below Nigeria’s potential. He urged stakeholders to aim for a short-term production target of 2.5 million bpd, with a long-term goal of reaching four million bpd. “The current target is unacceptable; we should be aiming higher,” he emphasized.
Divestments and Regulatory Approvals
NUPRC’s Commission Chief Executive, Engr. Gbenga Komolafe, addressed recent divestment decisions. The government has blocked Shell’s $2.4 billion divestment of onshore and shallow water assets to local group Renaissance but approved four significant deals, including ExxonMobil’s sale of Mobil Producing Nigeria Unlimited to Seplat Energy.
Infrastructure Challenges
Mele Kyari, Group CEO of NNPC Limited, highlighted critical challenges to production increases, particularly aging infrastructure and pipeline vandalism. He noted that many of the infrastructures in use are over 50 years old, complicating efforts to evacuate additional production from onshore assets.
Call for Modernization
Tony Elumelu, Chairman of UBA Group, echoed the need for modernization of the oil sector. He pointed out that production has fallen from over two million bpd to less than 1.5 million bpd due to infrastructure deterioration, regulatory uncertainty, and security issues in the Niger Delta. “We must modernize our oil and gas infrastructure to safeguard our economy,” he urged.
Conclusion
As Nigeria embarks on this ambitious plan to increase oil production, addressing infrastructure challenges and regulatory issues will be critical for achieving sustained growth in the sector and ensuring the country’s economic prosperity.
