Federal government has modified its target for the upstream petroleum industry to include growing the country’s gas reserves and production alongside parallel targets in oil production and reserves development by 2020. With a profile of biggest African producer and reserves holder that hosts an annual upstream investment of over $40 billion, government is exploring opportunities that would translate the country’s hydrocarbon resources to public wealth.
Initially, government’s concern for gas had focused on flare reduction which inferred suppressed production and monetization of associated gas through export projects that gave rise to liquefaction and regional gas pipeline investments. Key targets were however to increase oil reserves to 40 billion barrels (40 Bbbls) and raise production to 4.0 million barrels per day (4.0 Mbd).
The time deadline for all the targets set for 2010 were all missed, informing the shift to a new deadline by 2020. According to the Managing Director of Seplat Petroleum, Mr. Austin Avuru, policy formulators did not factor growing domestic need for gas into calculation, pointing out that rising demand pressure on lean domestic gas volumes has resulted in current acute internal gas shortages.
Faced with huge internal supply deficits, government has been altering policy targets for the industry, a development that has since shifted focus from export projects to domestic gas obligation on all upstream producers in the country. The domestic gas obligations are also supported with commercial incentives that pushed domestic gas prices from previous 50 cents per 1000 cubic feet to current $3.30/1000scf.
Also, a national gas masterplan and Gas Revolution programme designed to give effect to the masterplan are all advanced in implementation to develop a robust infrastructure base conceived to deepen the market. According to a presentation made by a key industry player at the 2015 Annual Conference of the Society of Petroleum Engineers (SPE) in London, the upstream petroleum industry players in Nigeria are pursuing government’s mandate to raise gas production from current 4 billion cubic feet to 20 billion cubic feet by 2020.
Corporate Planning Manager, Seplat Petroleum Development Company, Mr. Kazeem Raimi, declared at the conference that Nigeria plans to quintuple daily gas production and almost double daily oil production by 2020. He stated that the country’s current gas output stood at 4 billion cubic feet per day, with gas reserves at 180 trillion cubic feet, and Nigeria’s current oil production rate was 2.2 million barrels per day, with reserves at 37 billion barrels.
The 2020 target for the country’s daily gas and oil production is 20 billion cubic feet per day and four million barrels of oil per day, respectively, according to Raimi. He also added that Nigeria’s gas reserves are also targeted to increase to 300 trillion cubic feet and oil reserves to 40 billion barrels.