By Bassey Udo
Nigeria is unable to meet its Organisation of the Petroleum Exporting Countries (OPEC) oil output quota due to lack of investments in the oil and gas sector of the economy, Minister of State for Petroleum Resources, Timipre Sylva, has said.
In 2020, at the peak of the COVID-19 pandemic crisis, which saw crude oil prices crash to below zero level, OPEC intervned forcefully to strengthen prices and stabilize the global oil market.
One of the intervention mechanisms was the drastic decision to compel its member-countries to cut back and limit their oil production capacities ro help recover over 10 million barrels of crude oil supplies from the market between May 2020 and April 2022.
As part of the decision, althought Nigeria’s oil production capacity rose about 2.54 million barrels per day in April 2020, OPEC pegged the country’s output at about 1.412 million barrels per day between May and June 2020; 1.495 million barrels per day between July and December 2020, and 1.579 million barrels per day between January 2021 and April 2022.
Considering that Nigeria also accounts for about 300,000 barrels of condensate, which is not part of the computation for OPEC output, the country’s current total production capacity is put at about 1.8 million barrels per day.
However, Sylva said on Tuesday that in the last few years, the country has been struggling to produce an average of between 1.3 and 1.4 million barrels per day.
The Minister who spoke at a ministerial plenary session at the ongoing Ceraweek event in Houston, Texas, said the speed with which international oil companies (IOCs) and other investors in the country’s oil and gas industry were withdrawing their investments in hydrocarbon exploitation and development has contributed significantly to Nigeria’s inability to meet its OPEC output target.
“The rate at which investments in the hydrocarbon sector were being taken away from the country by the IOCs was too fast. Lack of investments in the oil and gas sector contributed largely to Nigeria’s ability to meet its OPEC output quota. We are not able to get the needed investments to develop the sector and that affected us significantly,” Sylva told his audience.
He blamed the incessant security challenges in the oil bearing regions and other parts of the country as a major factor that contributed to the lack of significant growth of the sector, adding that the drive towards renewable energy by climate enthusiasts has also discouraged funding for the sector.
Sylva, however called for a change of attitude by investors, stressing that despite the clamour for energy transition and a shift from fossil fuel to renewable energy alternatives, decades to come, hydrocarbon would continue to play a central role in meeting the energy needs of the world.
The minister who is a strong advocate of gas as a transition fuel for Africa, said although Nigeria was in full support of the energy transition agenda, Nigeria and the African continent should be allowed to develop at its own pace, to be able to meet the energy needs of the over 600 million people who have no access to any form of power in Africa.
“There are about 600 million people in Africa without access to power. Of that number, the majority live in Nigeria. And of the over 900 million people without access to power in the world, the majority live in Africa. So, how do we provide access to power for these people if you say we should abandon the production of gas that we see as a strong enabler of energy security and Africa’s prosperity and development?
“We believe that gas is the way to go. We believe that gas is the way forward, and the one access to power and against poverty among our people,” the minister said.
For the energy transition agenda to be taken seriously, Sylva said the world needs to have an inclusive energy transition programme, that provides accommodation for the diverse interest of all, particularly the developing economies in dire need of support to grow.
“Yes, we believe fully in energy transition, but we as Africans. We have our peculiar problems, and we are saying that our energy transition should be focused on gas development, to bridge the energy gap with the advanced economies of the world. This is what we have been saying. We need a just, equitable and fair energy transition programme,” Sylva argued.
Nigeria, he maintained, was not in any way against any energy transition programme, urging the promoters of renewable energy as the only path to energy transition to give the less fortunate countries of the world the opportunity to achieve their energy sufficiency before doing away with fossil fuels.
“As Africans, we are saying that we must be allowed to transit at our own through gas development. We cannot achieve one energy base load through renewable alone. The rest of the world must listen to us. We are happy that our point of view is being taken note of,” he said.