Consistently low oil prices will hamper Nigeria’s bid to boost output to 4 million barrels per day (bpd), Oil Minister Diezani Alison-Madueke was quoted as saying on Tuesday.
“Flexibility in capex and funding in general will be further constrained in the year 2015,” the minister said in a speech read out by Joseph Dawha, group managing director of the Nigerian National Petroleum Corp. “Consistently depressed oil prices will limit industry’s scope to manoeuvre … and reaching the target of 4 million bpd,” she said. “The industry must challenge itself to raise funding in order to meet these targets.”
Alison-Madueke is also president of the Organization of the Petroleum Exporting Countries (OPEC). Adding to the funding uncertainty, Nigerian lawmakers have recommended in a report on a new bill that the president’s power to grant oil licences should be removed.
Speaking to an annual oil and gas conference in Abuja, Markus Droll, Shell vice-president for Nigeria and Gabon, said the company was extremely concerned about the impact of low oil prices on 2015 funding. “Today most of the available funding in the industry is required to keep with the pace of decline. There is very little left over for growth,” he said, adding that oilfield decline rates were as high as 15-20 percent. And oil thefts were increasing costs. “We have adapted well but at great cost. These costs are not sustainable. Operating costs in Nigeria are substantially higher than in other environments. The funds don’t stretch to cover all,” he said.
“Last year, Shell replaced 300 theft points.” And adding to low funding, there was a lack of fiscal predictability, Droll said. “Multi-year predictable funding is needed. We can’t start projects to only stop half-way through. It’s just a waste of everybody’s efforts.”
Wale Tinubu, group Chief Executive of Nigeria’s Oando PLC told the conference that with high oil prices: “we became complacent … very few fields have been brought online in the last few years.” “I expect to see downsizing, which worries me.” Tinubu said he believes oil thefts will worsen as the industry lets more of its workers go.
