As unbiased oil producers intensify and strengthen their footprints within the onshore phase of Nigeria’s upstream petroleum sector, stakeholders have hinted at choices to curb the rising challenges which will hamper the sustainability of their operations.
Nigerian oil corporations have acquired a number of property from worldwide oil corporations (IOCs) to turn out to be the nation’s dominant oil producers. This comes within the face of weak pipeline infrastructure, which has compelled corporations to depend on vessels, tankers, and barges whilst rising prices of transportation, diesel, overheads, and safety push the price of oil manufacturing to a report excessive. To beat most of those challenges, Abiodun Adesanya, former president of the Nigerian Affiliation of Petroleum Explorationists (NAPE), has emphasised the necessity for Nigerian operators to undertake modern methods to scale back operational prices and improve productiveness within the sector. Talking on the challenges and alternatives throughout the trade, Adesanya recognized a number of areas the place value optimisation and operational effectivity could possibly be achieved, highlighting the important function of neighborhood engagement, regulatory streamlining and technological adoption. Adesanya famous the overhead prices of oil corporations, including that they might solely short-change themselves and the nation in the event that they operated like massive IOCs they took over from. In line with him, whereas ExxonMobil operations are usually extra pricey than these of Seplat, decreasing these bills, together with human capital, workplace infrastructure and power consumption, may considerably decrease general prices. “When inheriting infrastructure from earlier operators, operating prices switch as effectively, however alternatives for optimisation should be explored. The objective is to trim pointless bills whereas sustaining security requirements,” he stated. In line with Adesanya, Nigerian-operated corporations have a definite benefit in neighborhood engagement and safety. By leveraging their native information, these operators may mitigate points akin to vandalism and sabotage, which have lengthy plagued the trade. “Nigerian operators can negotiate higher phrases in contracting and procurement, driving down prices and growing productiveness,” he defined. He added that the philosophy of operations performs a key function in value discount, stressing that whereas a international operator may accomplish a job for N10, the native entity may obtain the identical end result for N6 by optimising processes and specializing in necessities. Adesanya additionally emphasised the necessity to deal with bottlenecks in allow approvals and operational requests. He advocated constructing skilled networks to foster smoother interactions with regulatory our bodies, decreasing delays with out compromising transparency. The previous NAPE president identified that the crude evacuation course of stays a big value driver main many operators to depend on tankers as an alternative of pipelines attributable to outdated infrastructure weak to vandalism. He proposed adopting horizontal directional drilling (HDD) know-how to enhance pipeline sturdiness and scale back sabotage dangers. Adesanya highlighted the significance of creating host communities stakeholders in operations. Using locals as safety personnel and involving them in useful resource advantages, akin to gasoline initiatives, may improve goodwill and operational safety. “Programme that interact and empower native communities important for decreasing opposition and guaranteeing smoother operations,” Adesanya famous. Chairman of Worldwide Vitality Companies Restricted, Dr Diran Fawibe, stated oil theft stays a important problem to Nigeria’s onshore oil operations. In line with Fawibe, theft happens at a number of factors within the provide chain, from oil fields and wellheads to terminals the place oil is transferred to vessels. He famous that whereas partnerships with the Navy to safe Nigeria’s territorial waters are important, these efforts don’t straight increase manufacturing.
“The Navy’s inefficiency or negligence in securing Nigeria’s property has allowed oil theft to escalate, threatening the nation’s financial fortune. Safety lapses have undeniably contributed to the size of theft,” he said.
Fawibe added that addressing oil theft requires a extra sturdy technique past maritime safety, together with enhanced surveillance of pipelines and wellheads, funding in anti-sabotage know-how, and higher neighborhood engagement.
A big concern for onshore oil operations is the skyrocketing value of manufacturing. Fawibe defined that Nigeria, as soon as referred to as a low-cost producer within the Seventies, now faces prohibitive bills pushed by insecurity within the Niger Delta.
“Militancy, harassment, and high-security prices have outpaced the technical value of manufacturing, making onshore oil more and more unviable,” Fawibe stated.He highlighted that oil corporations are compelled to allocate substantial assets to guard their property, together with hiring personal safety corporations and sustaining surveillance.
Fawibe recommended the federal government’s technique of divesting onshore and shallow water property to indigenous corporations, permitting IOCs to focus on deepwater operations. This shift, he stated, permits native corporations to navigate neighborhood engagement challenges extra successfully whereas empowering them to develop their capability.
“The Tinubu administration’s method to encouraging strategic investments within the oil and gasoline sector is a constructive step. Nevertheless, profitability for onshore operators is nowhere close to what it was within the Seventies and Nineteen Eighties,” Fawibe famous.
Nigeria’s present oil manufacturing hovers between 1.5 and 1.6 million bpd, effectively under the under-two million bpd benchmark.
“Oil manufacturing is tied to what’s technically possible in varied terrains, from deepwater to inland areas. Whereas addressing oil theft will guarantee extra oil is accessible for export, it won’t essentially enhance manufacturing ranges,” he stated.
