- Nigeria’s Oil Industry Holds Recovery Prospects From 2017
Nigeria’S petroleum industry is still looking promising in the coming year with oil production projected to see a rebound at an average Brent benchmark of $55.00 per barrel in the international market, Business Monitor International, BMI Research, a Fitch rating company said.
This forecast is reinforcing the projections of Nigeria’s Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who indicated a growing output target even beyond traditional benchmark of 2.2 million barrels per day (mbpd).
These come against the backdrop of ExxonMobil discovery of a potential recoverable resource of between 500million to 1.0 billion barrels of oil at the Owowo field in October this year.
BMI risk analysis and forecasts as well as market research on leading industries and multinational companies are relied upon by corporate bodies, government departments and multilateral organisations in over 125 countries.
The research stated that oil production will record an incremental growth for the next three years.
According to the report, “Nigeria’s oil production will come back strongly in 2017 maintaining incremental growth for the next three years.
However, it also indicated that ”post-2019 the outlook is one of decline, with production falling below 2.0million barrels by 2022 due to a lack of investment as multinationals favour low-cost, low-risk projects to the disadvantage of Nigeria.”
The report also noted that while the problems in the Niger Delta are far from resolved, “we are positive about the outcome of the ongoing dialogue between the militant groups, Delta leaders and the Nigerian government.
“However, we note that until negotiations have been concluded, the risks of further attacks remain elevated as militant groups use sabotage to apply pressure to the government and extract favourable terms.”
On the country’s crude trade, it noted that Traders of Nigerian crude have requested that Nigerian grades trade at a discount due to inconsistency of supply.
Reacting to the data from the Nigeria National Petroleum Corporation, NNPC, monthly reports, which indicated that Nigeria’s refineries have continued to operate at abysmally low utilisations rates, BMI stated: ”We forecast this to persist until the refineries receive the necessary investment required to improve efficiency.”
However, on gas, the report hinted that consumption has been reversed due to the actions of the Niger Delta Avengers who are succeeding in starving gas power stations of their feedstock. “Our long-term view has turned negative as private investment dries up and infrastructure remains limited.
The BMI stated further: “The security situation in the oil producing Delta has improved since the height of the troubles in 2016; however risks of resurgence remain high and will weigh heavy on future investment.”
It further noted that while there have been some notable reforms to the NNPC, there is still a long way to go in order to create a transparent and profitable company that encourages investment and helps the country reach its hydrocarbon potential.
