Analysts warn Nigeria’s oil income may drop as multinational oil firms (IOCs) dominate offshore oil production.
From January to April, Nigeria produced 22.4 million barrels offshore, 12.2 million onshore, and 1.5 million from shallow-water fields, according to NUPRC data.
Nigeria’s conventional onshore oil fields, whose production has stagnated owing to terrorism, pipeline damage, and oil theft, are shifting.
The Nigerian National Petroleum Corporation Limited (NNPC) is battling to preserve its share of oil output as IOCs dominate offshore production, prompting concerns about the industry’s long-term sustainability.
Nigeria’s oil and gas production is mostly JV with NNPC onshore, shallow water, and PSC in deepwater offshore.
When oil pipeline vandalism and theft became common, IOCs abandoned onshore fields. NNPC’s failure to pay oil production costs worsened the issue.
“The fall in JV output is worrisome for Nigeria’s economy as it deprives the country of much-needed revenue,” said Federal University of Technology Owerri petroleum engineering lecturer Ndubuisi Okereke.
“To maintain Nigeria’s oil industry’s long-term sustainability, urgent action is needed to address onshore production challenges and attract investment.”
Okereke claimed that Niger Delta youths and other community issues, including pipeline sabotage, drove IOCs offshore. Nonetheless, NNPC has reduced oil theft.
According to Midwestern Oil and Gas Corporation petroleum production engineer Uwaye Omijie, Nigeria would need help exporting crude oil if all production facilities were on land. Low oil earnings will hurt the economy.
NUPRC data shows Nigeria’s average crude oil output decreased to 998,602 bpd in April, the lowest in seven months.
The stoppage of Nigeria’s JV Forcados oil terminal, one of its key export ports, has been blamed for the recent decrease. Experts say the oil terminal has been closed for two weeks, and ExxonMobil’s Nigerian unit’s walkout has halted production.
From January to April, Forcados oil terminal crude oil production dropped 28% to 4.8 million barrels, according to NUPRC data.
Read also: Nigeria’s oil rig falls for the first time in 8 months as production slips.
Offshore oil is more profitable for IOCs. “No community difficulties, minimal security treat, and most importantly, easier crude export,” Omijie remarked.
“These multinational-operated land locations were functioning well for Nigeria until too many community concerns, pipe vandalism, and oil theft emerged. This incurs government fees.”
Omijie stated that producing crude oil offshore is safer and more expensive. After selling troubled territory to the government and indigenous firms, IOCs focused on deepwater production.
Okereke stated IOC’s professionalism optimises offshore output. Indigenous marginal field operators must improve their professionalism and asset management.
