Nigeria is set to reactivate eight major idle oil fields with the potential to increase the nation’s crude oil production by 900,000 barrels per day (bpd).

This initiative, if successful, could provide a much-needed boost to the economy of Africa’s largest oil producer, which has been grappling with declining investments and production inefficiencies.

Despite sitting atop 36 billion barrels of crude oil reserves and 206 trillion cubic feet of proven gas reserves, Nigeria’s oil sector has struggled in recent years.

Many lucrative oil and gas projects have lain dormant, jeopardizing the country’s long-standing goal of increasing reserves to 40 billion barrels.

Reactivating Major Projects

The fields slated for reactivation include high-capacity projects such as Zabazaba (150,000 bpd), Shell’s Bonga South West (225,000 bpd), Bonga North (100,000 bpd), Chevron’s Nsiko (100,000 bpd), ExxonMobil’s Bosi (140,000 bpd), Satellite Field development phase (80,000 bpd), and Ude (110,000 bpd).

These fields, once operational, could significantly bolster Nigeria’s oil production, which is crucial for the national budget.

Economic Potential

Oil experts believe that optimizing these idle assets is essential for Nigeria’s path to economic prosperity.

“Efficient management and investment in these projects could transform Nigeria’s energy landscape,” said Austin Avuru, Executive Chairman and Founder of AA Holdings Limited. “We need an annual investment of $25 billion over the next decade to stabilize production at 2 million barrels per day.”

This ambitious plan, however, hinges on disciplined planning, comprehensive economic reforms, and consistent government policies that can attract and sustain investor confidence.

The recently passed Petroleum Industry Act (PIA) was expected to be a game-changer, but its implementation has been marred by bureaucratic obstacles and corruption.

Overcoming Challenges

“The projected benefits of the PIA have not materialized due to poor implementation,” noted a senior industry source. “Regulatory bottlenecks and demands for bribes continue to impede progress.”

The Nigerian National Petroleum Company (NNPC) Ltd has faced criticism for its role in the sector’s underperformance.

Critics argue that the state-owned company has not focused enough on improving technical efficiency, which is crucial for maximizing output from existing assets.

A New Hope

President Bola Tinubu’s administration has shown a renewed commitment to addressing these issues.

Last year, the government secured a $3.2 billion loan from the African Export-Import Bank (Afrexim) to support economic reforms.

This, coupled with Tinubu’s assurance to resolve investment-related issues, has raised hopes for a turnaround.

“We are determined to make Nigeria a haven for large-scale investment in key sectors,” Tinubu assured a delegation from Shell last December.

Industry Optimism

Oil industry stakeholders are cautiously optimistic. “The resolution of legal disputes surrounding assets like OPL 245 is a positive step,” said Ayodele Oni, energy lawyer and partner at Bloomfield Law Firm. “It signals to investors that Nigeria is serious about creating a stable and attractive investment climate.”

As Nigeria prepares to bring these dormant fields back online, the world will be watching closely. Successful reactivation could not only stabilize Nigeria’s oil production but also set the stage for sustained economic growth and development.

For now, the potential surge in energy output from these fields represents a beacon of hope for the country’s struggling oil sector.

During the Asian trading session on Friday, oil prices sustained their upward increase to set the stage for a third consecutive weekly gain.

This rise is fueled by growing optimism that the U.S. Federal Reserve will soon begin cutting interest rates and improving refining margins.

Brent crude oil, against which Nigerian oil is priced, saw an increase of 48 cents, or 0.56% to settle at $86.87 a barrel.

The U.S. West Texas Intermediate (WTI) crude oil gained 52 cents, or 0.64% to settle at $82.26 a barrel.

This positive trend persists despite unexpected increases in U.S. crude inventories, which had been anticipated to decline during the peak summer demand period.

“Crude oil edged higher despite weak near-term fundamentals,” commented ANZ analysts. They attributed the price rise to a broader market risk-on tone, triggered by data signaling further weaknesses in the U.S. labor market.

The market’s optimism has been further buoyed by rising expectations of an imminent Federal Reserve easing cycle.

Traders are now pricing in a 64% chance of a rate cut by September, up from 50% just a month ago, according to the CME FedWatch tool.

Lower interest rates could potentially stimulate oil demand by reducing borrowing costs for consumers.

The recovery in physical refining margins has also supported the oil markets. The Singapore complex refining margins have averaged $1 higher in June compared to May, standing at around $3.60 a barrel.

Ivan Mathews, head of Asia refining at FGE, said, “Heading to Q3, we expect refining margins to remain around current levels. We anticipate gasoline prices to continue rising through August, offset by easing diesel cracks amid lengthening East of Suez balances.”

Despite the overall positive sentiment, market analysts are cautious about several downside risks. Fluctuations in the U.S. dollar, which is at a two-month high, and political uncertainty in France could impact oil demand.

Kelvin Wong, a senior market analyst at OANDA, highlighted, “The downside risk factor at play is related to USD volatility, bearing in mind the U.S. core PCE inflation data due later today.”

Wong also noted that oil prices might face short-term profit-taking at the start of next week if the first-round results of the French legislative election on June 30 show lower public support for a far-right group advocating a halt to green energy development.

In a bid to unlock Nigeria’s vast but underutilized heavy crude oil reserves, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) convened a pivotal industry workshop in Abuja.

The event, attended by key stakeholders from the oil and gas sector, focused on strategizing ways to accelerate the development of the country’s heavy crude assets through collaborative efforts.

Mr. Gbenga Komolafe, CEO of NUPRC, underscored the urgency and potential of Nigeria’s heavy crude reserves, which stand at approximately 1.6 billion barrels, with only a mere 5% currently developed.

Addressing participants, Komolafe said there is a need for a paradigm shift from traditional approaches to a more integrated and collaborative model involving all industry players.

“Heavy crude oil presents a significant opportunity for Nigeria’s energy sector,” Komolafe stated during his keynote speech themed “Entrenching Accelerated Development of Petroleum Prospecting Licenses (PPL) Assets and Heavy Crude Reserves Through Strategic Partnerships with Technology Drivers and Industry Service Providers.”

He highlighted the distribution of these reserves across different terrains and ownership structures, with a substantial portion located in onshore acreages.

Despite the challenges posed by the high viscosity and sulfur content of heavy crude, Komolafe expressed confidence that with the right technological innovations and collaborative frameworks, Nigeria can effectively harness these resources.

The workshop, a platform for intensive dialogue and knowledge-sharing, also addressed the regulatory frameworks introduced under the Petroleum Industry Act (PIA) of 2021.

This legislation aims to modernize the upstream oil and gas sector, streamline licensing processes, and attract new investments.

Participants discussed practical steps to enhance operational efficiency, ensure regulatory compliance, and foster sustainable development practices within the sector.

The event concluded with a commitment to implement agreed-upon best practices that prioritize efficiency, transparency, and environmental sustainability.