Experts advise govt to create special fund for oil exploration

Nigeria’s oil reserves remain stagnated at 36.18 billion barrels of crude oil reserves despite a target of 40 billion barrels reserves of crude oil which was set in 2010, a decade ago. The country is currently off its target as the only major recent discovery was ExxonMobil’s Owowo oil field of about one billion barrels of crude oil reserves which was discovered in 2016.

This remains a sore point for the country and industry stakeholders who gathered at the recently concluded Nigerian Association of Petroleum Explorationists (NAPE) conference reiterated the importance of renewed exploration activities in the country’s oil and gas industry, urging the government to create a special fund to spur exploration activities.

Exploitation and exploration of hydrocarbons (crude oil and natural gas) is no longer as attractive as the pre-2015 period because the global energy market is growing increasingly complex with the emergence of renewables and the pressing need to cut emissions, however, oil still has a central role to play in the country’s economic development.

The experts said that unless the country is able to strike a balance between business imperatives and medium term goals, “the target of 40 billion reserve base which would translate to 3 million barrels of daily production which would translate to processing and internal consumption is not going to happen.”

Kehinde Ladipo the Senior Advisor of Lekoil, who moderated a panel said that “the imperative for new exploration growth is there, particularly in Africa. We need to do two essential things, one is finding new oil, there has to be a deliberate strategy for new exploration and we also need to reduce the time for decision making especially for FIDs, the situation where FIDs take upwards to 10 years, is not sustainable.”

“For us as a nation to meet the target of 40 billion barrels reserves of crude oil and 3 million barrels daily production, we have re-energize exploration activities which has been deteriorating in the last couple of years, particularly by the lack of investors,” Ladipo said.

He also stressed the importance of quickly adapting to digitization because “the days of digital transformation are already here, and it is meant to digitize our strategies, and make decisions with more robust data, coming from less than 2 percent to a much more significant percent, that is what the digital world is all about. It is also enabler for good business decisions,” Ladipo explained. 

The adoption of digitization would help in increasing the availability of data in the industry because lack of data is majorly responsible for failure of most decisions made which results in slow growth in the industry.

Digitization or big data as it is referred to, has been receiving a lot of attention because of its capabilities and transformative tendencies. Large oil and gas companies are leveraging the use of big data in exploration activities because vast amount of data can be analyzed quickly and efficiently.

“Statistics show that 70 percent of decisions fail because they are based on incomplete and unavailable data, and looking at the current reality, almost 65 percent reduction in exploration globally within the last 3-4 years, what is the future if we are to meet that 40 billion reserves and 3 million barrels daily production,” he lamented.

Andrew Ejayeriese, President of Nigerian Association of Petroleum Explorationists (NAPE) also said that while global demand for reliable and affordable energy would continue to rise in the foreseeable future as the world is moving toward a low carbon era, oil and gas companies would find it expedient to review long – term strategies and innovate, and recognise the possibility that oil is on the brink of suffering a fate similar to coal.

The stakeholders called on the government to create a conducive environment by providing an enabling legislation, namely signing the petroleum industry bill (PIB) because huge amount of capital is required to achieve the aforementioned target. and a determination as a country to pass the PIB, finance capital needs to be there”

“We need to change the narrative, not just from producing oil and gas in this country but processing and making it available, to a wealth creating business for Nigerians,” he added.