Nigeria’s oil exploration has taken a hit, decreasing by 22% year-on-year in August 2024, according to the Organisation of Petroleum Exporting Countries (OPEC).
This decline is largely attributed to low investment in the upstream sector of the petroleum industry.
The number of rigs deployed for operations dropped to 14, down from 18 in the corresponding period of 2023. However, on a month-on-month basis, oil exploration remained steady at 14 rigs in August 2024, unchanged from July 2024.
Algeria leads the pack in terms of exploration, with an impressive 42 rigs, while Equatorial Guinea trails behind with zero rigs. Nigeria’s proven oil reserves stand at approximately 37 billion barrels, alongside 209 trillion standard cubic feet of natural gas reserves. Despite efforts to boost these numbers, progress has been sluggish.
The global oil market is experiencing uncertainty due to geopolitical tensions, causing crude prices, including Nigeria’s Bonny Light, to hover above $73 per barrel. The Nigerian government based its 2024 budget on 1.7 million barrels per day and $77 per barrel.
To address the investment shortfall, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has removed entry barriers to attract significant investments. Commission Executive Gbenga Komolafe believes this will stimulate oil and gas production, enhance Nigerian content development, and create employment opportunities.
NJ Ayuk, Executive Chairman of the African Energy Chamber, noted that Nigeria has established a framework to attract foreign exploration companies with competitive fiscal terms for deepwater exploration.
According to Ayuk, ““Nigeria has established a framework that is set to attract foreign exploration companies with modernised fiscals that are competitive for deepwater exploration.
“We believe the most lucrative balancing point between creating a welcoming environment for international companies and achieving Nigeria’s own national goals is important.”
This balanced approach aims to reconcile international companies’ interests with Nigeria’s national goals.
As Nigeria strives to revive its oil exploration sector, the impact of global uncertainties and investment dynamics will be crucial to its success.
