A NEW report published by the Business Monitor International has predicted a bleak future for Nigeria’s oil and gas reserve base. While the oil reserve has been estimated to peak at about 40.05 billion barrels in 2016, it will later decline to 27.90 billion barrels by 2021.
The 46 per cent decline may have been premised on the speculations that Nigeria’s oil and gas reserves will decline and may eventually dry up in the next 45 years.
However, the recent trend of investment in the industry due to uncertainty over the delayed Petroleum Industry Bill (PIB) may be postulating the same.
Besides, the BMI report predicted the same trend for the gas reserves, which it said are expected to peak at 5.95 trillion cubic meter (tcm) in the 2014-2016 period, before falling back to 5.80tcm in 2021.
Although, the report noted that attempts to cut gas flaring bolstered the outlook for gas production, it postulated that, “OPEC quotas, the risk of project delays and Nigeria’s political environment, particularly vis-à-vis the PIB, still imply a significant amount of uncertainty.”
Oil production is expected to experience significant increase in the short and medium term due to development of new oil fields, such as Usan and Egina.
“With several projects added or coming on stream in the next few years, such as Usan (180,000bpd) and Egina (150,000bpd to200,000bpd), we see Nigerian oil output rising substantially over our forecast period to 2021”, it stated.
BMI expects oil production to increase from an estimated 2.5 million bpd in 2011 to 2.75 million bpd by 2021.
Consumption of crude is forecast to rise at an annual average of 6.29 per cent rate between 2011 and 2021, boosted by anticipated strong Gross Domestic Product (GDP) growth. It therefore forecast that consumption would rise from an estimated 293,000 bpd in 2011 to hit 563,000 bpd by 2021.
Meanwhile, gas production, according to the report, will increase from an estimated 34.71 bcm in 2011 to 82.61 bcm by 2021, as the authorities and companies reduce the practice of flaring and start monetising associated gas resources.
“Gas demand is set to rise at an annual average growth rate of 12.60 per cent. Booming demand from the government’s ambitious power sector plans and large export engagements will thus bolster production growth. We see Nigerian gas consumption rising from an estimated 5.72 bcm in 2011 to 17.19 bcm by 2021”, it added.
In terms of infrastructure, the report lauded the Federal Government’s ambitious plans in liquefied natural gas and refining.
However, it lamented that the downstream sector remains “highly inefficient” adding that, despite a nameplate capacity of 505,000bpd, actual output is often around 100,000bpd.
“Many projects have been proposed, but there has been no update indicating that any of them is actively going forward”, it stated.
It added: “Considering the country’s past woes in the sector, we have decided not to include these projects in our forecasts. Nigeria’s dependence on oil prices leads to high volatility in the country’s export revenues. Our assumption of tight supply due to booming demand in emerging markets is clearly an opportunity for the country. As a result, we forecast that OPEC basket oil prices will increase from an estimated $107.52 per barrel (bbl) in 2011 to $111.47pbbl in 2012, thus creating an upside risk for the Nigerian macroeconomic outlook.”
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