From a record low of 23 in December 2016, the number of the nation’s active oil rigs rose to 35 in February this year, a level last seen in early 2015.
The upturn in the rig count was mostly triggered by the recent rally in global crude oil prices and the suspension of militant attacks on oil facilities in the Niger Delta.
The country recorded the second biggest increase in the number of rigs among its peers in the Organisation of Petroleum Exporting Countries in February, as four rigs were added to the 31 active in January.
Data obtained from Baker Hughes Incorporated and OPEC on Wednesday showed that the nation’s rig count stood at 38 in January 2015.
The slump in oil prices, which started in mid-June 2014, forced many companies operating in the Nigerian oil industry to slash their capital budgets and suspend some projects, resulting in a drop in the number of rigs.
One of the nation’s major independent oil companies, Seplat Petroleum Development Company Plc, said its rig-based activity at three oil blocks in 2017 was limited with just one rig deployed for a work-over well in the Orogho field.
The company, in its full-year 2017 financial results, said, “It is now selectively considering production drilling opportunities in the existing portfolio with a view to reinstating a work programme designed to capture the highest cash return production opportunities while diligently preserving a liquidity buffer.”
Rig count is largely a reflection of the level of exploration, development and production activities occurring in the oil and gas sector.
Contrary to the Federal Government’s target of increasing crude oil reserves, the country recorded a decline of 961.47 million barrels in the four years to 2016 on the back of low investment in exploration by oil companies.
The oil reserves fell from a high of 32.23 billion barrels in 2012 to 31.27 billion barrels in 2016 while the condensate reserves stood at 5.47 billion barrels from 4.91 billion barrels in 2012, according to data from the Department of Petroleum Resources.
The Federal Government in 2010 set the target of 40 billion barrels of crude oil reserves and a production of four million bpd by 2020 but exploration activity has slowed in recent years.
Nigeria saw the fourth largest drop in rig count among its peers in OPEC in 2016 as the number of rigs averaged 25, down from 30 in 2015 and 34 in 2014. It averaged 28 last year.
Industry stakeholders have continued to raise concerns as the regulatory uncertainty in the industry has also dampened companies’ appetite to embark on new projects.
“Regulatory uncertainty has resulted in fewer investments in new oil and natural gas projects, and no licensing round has occurred since 2007. The amount of money that Nigeria loses every year from not passing the PIB is estimated to be as high as $15bn,” the United States Energy Information Administration said in its ‘Nigeria Brief’.
Nigeria has the second largest amount of proven crude oil reserves in Africa, but exploration activity has slowed in recent years.
The EIA said, “International oil companies are concerned that proposed changes to fiscal terms may make some projects commercially unviable, particularly deepwater projects that involve greater capital spending.”
The Director, Department of Petroleum Resources, Mr. Mordecai Ladan, said in the latest Nigeria Oil and Gas Industry Annual Report that the Nigerian petroleum sector had been affected by the disruption occasioned by the 2014 price crash.
He said the speedy enactment of the petroleum industry governance law, and the pending bills, would place the Nigerian oil and gas sector on better pedestal to compete in the increasingly complex global energy terrain.
In February, the Group Managing Director, Nigerian National Petroleum Corporation, Dr. Maikanti Baru, said the passage of the PIB would unlock $10bn worth of oil and gas investment in the country.
The first part of the bill, Petroleum Industry Governance Bill, has been passed by the Senate and the House of Representatives, awaiting the President’s assent.
“When the other sections of the bill are finally passed, it will unlock over $10bn of investment held up due to uncertainty,” the NNPC GMD said.
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