The Society of Energy Editors (SEE) – a professional association dedicated to promoting excellence in media coverage of the energy sector – has predicted that uncertainty will characterise Nigeria’s oil production in this fourth quarter (Q4) of the year due to ongoing challenges in the oil and gas industry.
The Society made the projection in its 2024 Fourth Quarter Outlook for the Nigerian Energy Sector released in Lagos, stating that the country’s oil production had been on a decline, and that the trend would likely continue unless there were significant reforms in the sector.
The fourth quarter Outlook is the third to be issued by the SEE this year following the second and third quarter editions released earlier in the year.
The Society stated in the Outlook that while investments, and oil and gas exploration and production were at an all-time low, shortcomings on the part of the Nigerian National Petroleum Company Limited (NNPC) and the Ministry of Petroleum Resources would negatively impact the success of projects.
“Investments are at an all-time low and this may remain unchanged in the fourth quarter. Oil and gas exploration and production (E&P) are at an all-time low and may remain that way in Q4. The NNPC Ltd is not able to take decisions on moving projects along and indications are that this will remain so in Q4.
“Similarly, the NNPC Ltd cannot ensure that the International Oil Companies (IOCs) divestment program doesn’t negatively impact Joint Venture operations, and this may remain so in Q4.
“The Ministry of Petroleum Resources is also unable to move stalled projects along and this may remain so in Q4,” the Outlook projected.
It indicated that Nigeria currently has 14 oil rigs operating, according to the latest data from August 2024, and stated that the number had remained unchanged from the previous period and would likely remain so in Q4. Putting this into perspective, it revealed that the country’s oil rig count averaged 10.75 from 1995 until 2024, with a record high of 23 in February 2020 and a low of 3 in January 2000.
On domestic refining of crude oil and fuel imports, the Society of Energy Editors maintained that the commencement of petroleum refining at the Dangote Refinery is expected to boost domestic refining capacity and reduce fuel imports, but, added that “indications are that the refinery’s operations may be impacted by the disputes between its management and NNPC Ltd regarding crude oil supply, petroleum products off-take, and pricing.”
“This will have a significant impact on fuel supply stability in Q4,” the Outlook projected.
It also asserted that the revamp and commissioning of the NNPC Ltd-owned refineries might remain a mirage in Q4 and that similarly, there was no indication that the 21 petroleum depots and over five thousand kilometres of petroleum distribution pipelines across the country will be revamped in Q4 2024.
On the African continent, the Society estimated refining capacity at 3.6 million barrels per day (mb/d), maintaining that this reflected domestic demand growth.
The Outlook reported: “On the African continent, refining capacity is estimated at 3.6 million barrels per day (mb/d), a reflection of domestic demand growth. In West Africa, new refining capacities will largely use local crude oil supplies, augmented by imports. The revamp of existing refineries, construction of new ones, as well as the resolution of financing and technical issues, remain a challenge on the continent.”