Nigeria’s oil production to hit 2.70mbpd by 2020, says report

THE latest international report in the industry has projected a brighter future for the nation’s oil output, which is estimated to hit 2.70 million barrels per day (mbpd), by 2020.

The United Kingdom based Business Monitor International (BMI) also suggested that 2013 oil production would be lower than 2012 output, linking the possible drop to continued vandalism and crude theft that has critically affected the industry in recent months.

It however bemoaned the regulatory uncertainty that has caused major setback for the industry.

“We expect feeble production from 2013 and for the following two years. Output should ramp-up more significantly as many large fields come online after 2014, more than offsetting current depletion,” said the report.

 

“We, therefore, forecast that 2013 production will be slightly lower than 2012 estimates, reaching 2.50 million barrels per day (bpd),” BMI said.

It, however, indicates optimism for increased oil production to 2.70mn bpd by 2020, as ambitious projects such as Usan (180,000bpd) peak and Egina (150,000-200,000bpd) come on stream in the coming years.

In BMI’s view, adoption of the Petroleum Industry Bill (PIB), which is expected around the fourth quarter of 2013 and the first quarter of 2014, would be a strong signal for investors that Nigeria’s hydrocarbon sector is ready to move forward.

However, disturbances and outages due to oil theft have continued throughout 2013, with Shell having declared force majeure on Bonny Light exports several times since the beginning of the year.

“We therefore forecast that 2013 production will be slightly lower than 2012 estimates, reaching 2.50 million barrels per day (bpd),” BMI said, but indicating optimism for increased oil production to 2.70mn bpd by 2020, as ambitious projects such as Usan (180,000bpd) peak and Egina (150,000-200,000bpd) come on stream in the coming years.

Consumption of crude is forecast to rise at a compound annual rate of seven percent year-on-year between 2012 and 2022, boosted by anticipated strong GDP growth.

“We forecast consumption rising from an estimated 252,000bpd in 2012 to 495,000bpd by 2022,” BMI said in its report, while forecasting a more than twofold increase in gas production from an estimated 36.4billion cubic metres (bcm) in 2012 to 85.3bcm by 2022, as the authorities and companies reduce the practice of flaring and start monetising associated gas resources.

It also expects that booming demand from the government’s ambitious power sector plans and large export engagements will thus bolster production growth.

BMI saw Nigerian gas consumption rising from an estimated 5.8bcm in 2012 to 15.0bcm by 2022.

In terms of infrastructure, authorities in the West African country have ambitious plans in liquefied natural gas (LNG) and refining.

However, the downstream sector remains highly inefficient and, despite a nameplate capacity of 505,000bpd, actual output is often around 100,000bpd.

The report also indicated that many projects have been proposed, but there has been no update indicating that any are progressing.

The Nigeria National Petroleum Corporation (NNPC) is aiming to more than double its annual production of LNG, from 22mn tonnes per annum (tpa), or 30.36bcm, to over 52mn tpa (71.76bcm).

NNPC is the state oil corporation through which the Federal Government of Nigeria regulates and participates in the country’s petroleum industry.

In October 2012, Nigeria’s Petroleum Minister Diezani Allison-Madueke announced that the government was planning to direct more than US$1.6 billion towards the repair of three of its refineries.

Maintenance work started in late 2012 and is due for completion in October 2014. The three refineries are located in Port Harcourt and Warri in southern Nigeria and Kaduna in the north.

The Port Harcourt refinery is currently halted indefinitely, as oil thieves damaged the feeding pipeline in early 2013.

“Nigeria’s dependence on oil prices leads to high volatility in the country’s export revenues. Continuing tight supply, due to booming demand in emerging markets, is clearly an opportunity for the country,” the BMI report added