The rig count in Nigeria surges by 75%, signaling a positive outlook for 2024.

IN SPITE of numerous challenges, Nigeria, a prominent African oil and gas producer, achieved significant milestones in 2023, propelled by the positive influence of the The rig count in Nigeria surges by 75%. Anticipations for the country’s outlook in 2024 appear promising in both the medium and long term, as indicated by reports and expert analyses.

Meanwhile, Nigeria’s rig count, a key metric for gauging upstream sector activities, witnessed a year-on-year surge of 75%, reaching 14 in November 2023 compared to eight recorded in the corresponding period of 2022. Monthly data from the Monthly Oil Market Reports (MOMRs) of the Organisation of Petroleum Exporting Countries (OPEC) also revealed a 7.6% increase in Nigeria’s rig count from 13 in October 2023 to 14 in November 2023.

Oil output experienced a 1.7% year-on-year rise to 1.4 million barrels per day (bpd) in November 2023, up from 1.2 million bpd in October 2023, excluding condensate, such as Bonny Light. This increase was partially attributed to the reintroduction of Nembe crude by Aiteo, the operator of the NNPC/Aiteo Oil Mining Lease (OML) 29 Joint Venture, with significant exports to France and the Netherlands.

NNPC Ltd continued its oil exploration efforts in the Lake Chad Basin, marking a resurgence after a five-year hiatus due to regional insurgency. Positive signals emerged with the discovery of oil in commercial quantities in the Kolmani River, reinforcing efforts in Lake Chad.

In terms of quotas, OPEC and non-OPEC Ministerial Meeting (ONOMM) established Nigeria’s oil quota at 1.5 million bpd for 2024. This decision followed Nigeria’s Production Plan projection of 1,578 kbd, subject to verification.

Noteworthy gas projects, including the Ajaokuta Kaduna Kano (AKK) gas pipeline and the NLNG Train 7 project, aimed at leveraging the nation’s abundant gas for both domestic consumption and export, were implemented. In the midstream, NNPC Ltd completed the rehabilitation of the Port Harcourt Refinery, with tests underway to assess its readiness for commercial operations.

Despite these advancements, challenges such as pipeline vandalism, oil theft, and illegal refining persist in some parts of the Niger Delta, affecting operations, production, and revenue generation. The downstream sector grapples with foreign exchange crises and instability, hindering investments despite sector deregulation.

Looking ahead, the Nigerian Upstream Regulatory Commission (NUPRC) projects a positive outlook for 2024 and plans to conduct an oil licensing round as part of the PIA’s implementation.

The licensing round aims to attract fresh investors, boosting investment to raise Nigeria’s oil reserves to approximately 40 billion barrels, up from the current 37 billion barrels. Aligned with Section 73 of the Petroleum Industry Act (PIA), the comprehensive legislation seeks increased investment, industry restructuring, and enhanced transparency and accountability.

Engr. Gbenga Komolafe, the Chief Executive of the NUPRC, affirmed that future licensing rounds, starting in 2024, will follow a Licensing Round Plan and modern acreage licensing practices. This strategic approach will incorporate predictable timelines and align with long-term national economic and developmental agendas.

In 2024, the NUPRC plans to enhance automation systems for improved oil monitoring and streamlined business processes. The use of productivity tools and electronic communication channels will enhance customer interaction, reduce logistics, and facilitate compliance.

The NUPRC is committed to ensuring the full utilization of automation tools such as the National Production Monitoring System (NPMS), Annual Work Programme Portal, Dynamic Acreage Management System (DAMS), HOSTCOMPLY, and Oil and Gas Industry Service Permit (OGISP).

The commission, in collaboration with relevant government entities, aims to optimize operational efficiency and enable high-impact projects, with the goal of increasing oil production to 1.8 MMBOPD to 2.6 MMBOPD and gas to about 10 BSCFD.

Additionally, NNPC Ltd plans to offer its shares to the public, stimulating economic growth. Mele Kyari, the Group Chief Executive Officer, emphasized that the PIA allows for the sale of the company’s ordinary shares to Nigerians or international partners through an Initial Public Offering (IPO).

The NNPC is also undertaking the rehabilitation of the Warri and Kaduna refineries. The rehabilitation process will be carried out in stages, with the goal of initiating fuel production before the completion of the entire 36-month project cycle.

Regarding the AKK gas pipeline, the NNPC aims to connect 11 West African countries to Nigeria’s gas sources, potentially extending into Europe. This ambitious project, costing over $25 billion, is expected to foster economic prosperity in the region.

NJ Ayuk, Executive Chairman of the African Energy Chamber, commended Nigeria’s initiatives, particularly the Dangote Refinery, as a significant milestone. Dr. Diran Fawibe, Chairman of International Energy Services, emphasized the need for continuous investment in Nigeria’s oil and gas industry, with a focus on refining to meet domestic demand.