Saturday, May 15, 2021

Nigeria say rig count plunged by 55.34% in Q1 ‘21

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Naija247news, Nigeriahttps://www.naija247news.com/
Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

By Udeme Akpan

THE rig count of Nigeria has dropped by 55.34 per cent in the first quarter, January–March, 2021 to 19, according to data collated from recent reports of the Organisation of Petroleum Exporting Countries, OPEC.

The rig count, a major index of measuring activities in the upstream sector, had stood at 65 in the corresponding period of 2020 before sliding to 19, mainly due to the delay in the passage of the nation’s Petroleum Industry Bill, PIB, and coronavirus pandemic.

A breakdown showed that Nigeria utilised six, seven, and six rigs in January, February, and March 2021, respectively, against 21, 23, and 21 used in the corresponding period of 2020.

Consequently, in its report obtained by Vanguard, the Department of Petroleum Resources, DPR, puts the nation’s oil reserves at 37 billion barrels, even as the government had earlier planned to hit 40 billion barrels by 2020.

Commenting on the development, Victoria Ibezim-Ohaeri, Director, Spaces for Change, who stressed the importance of the early passage, including enhancing investment, stated: “The PIB 2020 is a proposed law seeking to introduce far-reaching industry reforms in the Nigerian oil and gas sector.

“Among other objectives, the bill aims to establish good governance, best practices, and ease of doing business in the industry by clarifying roles and responsibilities of officials and institutions, to enable frontier exploration, mandate improved environmental compliance, and transform NNPC into a commercially viable enterprise.

The laws regulating the oil and gas industry date back to pre-Independence and pre-Democracy rules in Nigeria when laws were made without inclusion and in the light of the peculiarities at that time.”

She added: “With the advancements in technology, the volatility of oil prices, climatic changes influencing the driving forces of the global economy, it has become imperative to review extant laws to bring them in alignment with current realities.”

African nations

Meanwhile, unlike Nigeria, other African oil and gas producing countries, such as Algeria, Libya, Gabon, Angola, and Congo, examined in the study, increased their rig deployment, and by extension, exploration in 2020.

Specifically, Algeria increased its rig count to 509 in 2020 from 398 in 2019, showing an increase of 27.9 per cent.

Libya increased its rig count to 164 in 2020 from 149 in 2019, thus showing an increase of 10.1 per cent, while Gabon increased its rig deployment to 68 in 2020 from 50 in 2019, indicating an increase of 36 per cent.

Also, Angola and Congo increased their rig deployment to 60 and 46 respectively in 2020 from 38 and 12 in 2019, thus showing an increase of 57.9 per cent and 283 per cent respectively.

However, Equatorial Guinea, which deployed 12 rigs in 2020, against 16 in 2019, witnessed a 25 per cent decline.

Factors
Investigation by Energy Vanguard, weekend, attributed the negative situation in Nigeria to factors, especially low investment, prolonged delay in the passage of the nation’s Petroleum Industry Bill, PIB, and Coronavirus pandemic, which has also caused some operators to work remotely.

Implications

In a telephone interview with Energy Vanguard, Dr. Bala Zaka, a Port Harcourt-based Energy analyst, said: “The development showed that Nigeria, which failed to hit its 40 billion barrels reserves target by 2020, due mainly to low investment, might also fail to realise the target in 2025.

It also means that the nation’s current 37 billion barrel reserves might be depleted much faster than expected if the nation does not invest much in exploration, required to make new finds and increase reserves.

Furthermore, it also means that other emerging African oil nations could overtake Nigeria, especially in terms of reserves, production capacity, and global ranking.”

However, in an interview with Energy Vanguard, weekend, Prof. Omowumi Iledare, Ghana National Petroleum Corporation (GNPC) Professorial Chair in Oil and Gas Economics and Management, Institute for Oil and Gas Studies, University of Cape Coast, Ghana, said: “The rig count is far below expectation, bearing in mind that Nigeria is a leading producer with 30 billion barrels reserves and over 200 trillion standard cubic feet of gas.”

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