Posted by By Mike Oduniyi on
Oil industry operators yesterday alerted that Nigeria's crude oil resources is being depleted without a corresponding addition to reserves. They also warned that the country risk not being able to meet the target of 40 billion barrels of oil reserves by 2010 .
Oil industry operators yesterday alerted that Nigeria's crude oil resources is being depleted without a corresponding addition to reserves. They also warned that the country risk not being able to meet the target of 40 billion barrels of oil reserves by 2010 .
The warning by the Nigerian Association of Explorationists (NAPE) came just as oil prices dropped for the second day running at the international market as production began to pick up in the Gulf of Mexico which was ravaged last week by the rampaging Hurricane Katrina.
NAPE President, Mr. Gilbert Odior said yesterday in Lagos that analysis by the industry operators in the last one year had revealed that oil companies now focused more on production activities to the neglect of exploration for more finds.
Odior said while exploration activities in the deepwater added six billion barrels to the Nigerian reserve portfolio in the last 10 years, the country has not found up to 1.0 billion in the last one year to compensate for the crude that had been produced.
"We know most of the production is still going to come from the Continental Shelf, but we are not doing exploration in the shelf. We are not actively exploring in the Shelf, on land and in the swamp," said the NAPE President.
The oil industry and the Nigerian government, he added, must urgently look into what can be done to bring back exploration to an active stage.
The Federal Government hopes to raise the country's oil reserves to 40 billion barrels by 2010 from the current levels of about 35 billion barrels and production capacity to 4.5 million barrels per day (bpd) from 2.5 million bpd now.
According to NAPE, "a year-long upswing in world demand for oil and gas has severely tilted the supply/demand as well as oil price scales and called to question Nigeria's ability to achieve our target reserve base of 40 billion barrels anytime soon."
"The balance of new discoveries/production in the last 10 years does not strongly suggest a reserve accretion sufficient to meet our national aspirations," the group said, while calling on the Federal Government to take a critical look at new policies, practices and procedures necessary to re-invigorate a comprehensive exploration strategy to produce new plays across the nation's sedimentary basins.
Odior said the targets might not be met due to reduction in exploration activities. "Everybody is producing because oil price is pretty high at $70 per barrel you can produce energy now and make a profit.
"Rigs are not available. Nobody is concentrating to do exploration wells to meet the objective of the government," he added.
He listed three key issues that now posed serious threat to meeting the targets. These were the changing technological skills, funding and community problems.
"For the funding problem, if you wanted to shoot seismic of 20 square kilometers in the deepwater a year or two ago, you would probably spend like $1 million or $1.5 million, but today it cost $5 million," he said.
Oil accounts for more than 90 percent of Nigeria's foreign exchange earnings and about 80 percent of Gross National Product.
Also speaking to newsmen on the issue, NAPE President-Elect, Mr. Austin Avuru, said Nigeria had produced eight billion barrels of crude oil in the last 10 years but had only added six billion barrels in reserves from the deepwater
Avuru said the concern of operators now was that the country might not be able to meet any call for more oil as it is currently stuck at the maximum production capacity of 2.4 million bpd.
"Suddenly it started occurring to us that three years ago, we thought OPEC constraint production was our problem, that we had so much to produce. In less than two years we found out that really, we might be called upon for production that we can't really afford. We are constraint at 2.4 million bpd," he said.
According to him, the country needs to make those reserve additions that are really necessary and technically practicable to take it to the 40 billion barrels reserve target.
Avuru said the rising community crises still portend the greatest hurdle to quest to raise Nigeria's oil reserves. He said while producers are moving away from the onshore areas to deepwater because of the problems, the potentials in the former zones are being lost.
"We have found out that the reason there is so much race by the operators to deepwater is not so much because there is no more discoveries to be made in the traditional terrain of onshore and the Shelf. It is largely due to community crises.
"People largely see it as more easy to operate in deep offshore and get away with community crises so every body is jumping into deep water and then we are ignoring the traditional terrain, which is just possible that if we take another look at the traditional terrain, look deeper than we have done before, we might have bypassed a lot of juicy assets," he added.
Meanwhile, US light crude fell 32 cents or 0.5 percent to $65.64 a barrel yesterday at the New York Mercantile Market after equally dropping $1.61 a barrel on Tuesday. The London Brent crude also shed 33 cents to $64.34 per barrel.
Prices have fallen more than $5.00, or 7%, from a record-high of $70.85 hit Tuesday last week following the Hurricane Katrina that rampaged through the Gulf of Mexico.
High crude prices have been cited as reason for the recent 30 percent hike in the pump prices of petroleum products in Nigeria.