Decreasing Oil Exploration Threatens To Unsettle Economy

LAGOS – There are growing apprehensions among stakeholders in the nation’s oil and gas industry over oil rigs that have become inactive partly as a result of the ravaging corona­virus.

Stakeholders are also wor­ried that the development would eat deep into oil exploration and production, thereby unsettling the economy if nothing concrete is done to reverse the downward trend in the activities of the oil rigs in the country.

Last week, the number of active oil rigs in the country fell by 23.8 percent to 16 in April amid the coronavirus-induced collapse in demand and prices of crude.

Data from Baker Hughes Incorporated and the Or­ganisation of Petroleum Ex­porting Countries (OPEC) on Tuesday showed that Nigeria’s rig count stood at 21 in March.

The country recorded the second biggest decline in the number of rigs among its peers in OPEC in April, after Venezuela whose rig count plunged by 11 to 14.

Rig count in Iraq dropped by four to 70; fell by three in United Arab Emirates to 65; and dipped by two in Gabon to six.

But Algeria’s rigs rose by eight to 42, while those of Kuwait and Saudi Arabia rose by four and two to 54 and 116, respectively.

Rig count is largely a reflection of the level of ex­ploration, development, and production activities occur­ring in the oil and gas sector.

The slump in oil prices caused by the coronavirus pandemic has forced many companies, including in­ternational oil companies, operating in the Nigerian oil industry to slash their capital budgets and suspend some projects, according to the data.

Besides, Nigeria ended last year on a slightly neg­ative note as its rig count witnessed a decrease to 17 as against 20 rig count last December when the 14-mem­ber Organisation of Petro­leum Exporting Countries (OPEC) recorded an addi­tion of 12 rig counts while the total world rig count in­creased by just one. Baker Hughes Incorporated and OPEC data showed that all through 2019 Nigeria’s oil rig hovered around 16 rigs count, a sharp decline from a three-year high of 35 rigs count recorded in February, 2018.

According to OPEC’s re­port, Africa biggest oil-pro­ducing country recorded 17 oil rigs in the last month of 2019, which was three rigs less of what was obtained in November, 2019 – an indica­tion of decreasing explora­tion activities.

The Nigerian Association of Petroleum Exploration­ists (NAPE) had hinted the nation about the danger of low exploration activities in the petroleum industry as well as the continuous depletion of the country’s crude reserve.

The group warned that the reduction in hydrocar­bon exploration and steady depletion of oil reserves could drive Nigeria into the risk of long-term disruption to oil and gas supplies, pow­er generation, the collapse of industries, and signifi­cant loss of revenue.

Its former president, Aji­bola Oyebamiji, stated that the nation’s oil and gas busi­ness was being hampered by several factors, including long procurement and con­tracting cycles, insecurity, oil theft, and illegal refining, saying the latter even poses a bigger threat to the sector than the fall in oil price.

President of Nigerian Association of Petroleum Explorationists, Alex Tarka, told reporters in Lagos that his members were already feeling the heat of the dwin­dling oil rig counts, adding that the development would impact on oil exploration in the country.

The Chief Executive Offi­cer of International Energy Services Limited, Dr. Diran Fawibe, said: “The oil ser­vice sector will be badly affected because if these projects are suspended or cancelled, there is no way the oil companies will make use of service companies.

“Already, there are some projects being undertaken by international oil compa­nies that had been suspend­ed.”

Chief Martin Onovo, a renowned engineer, told Daily Independent that the dwindling oil rig counts in the country was deplorable and emphasised the need for a change.

But speaking on ‘Invest­ment Opportunities in the Nigerian Oil and Gas Indus­try’ at the Oil and Gas Train­ers Association of Nigeria, OGTAN’s webinar in Lagos, recently, the Director/CEO, DPR, Engr. Sarki Auwalu, said investors had shown much interest in Nigeria, and are expected to enhance the engagement of addition­al rigs.

According to him, “Near­ly 200 percent of proven reserves produced in Nige­ria from 1970 have been re­placed by new reserves.

“Oil and gas industry is oiling the wheels of the nation’s economy. It sup­ports agriculture, finance and business services, real estate and hospitality, con­struction, manufacturing, wholesale and retail, as well as telecommunications.

“It contributes approx­imately 10 percent of the nation’s Gross Domestic Product (GDP). It is the principal source of foreign exchange earnings and the major source of Foreign Direct Investments (FDIs).”

Source: independent.ng