Mobil Producing Nigeria has said Nigeria needs to develop its potential in the oil and gas business by taking advantage of its hydrocarbon endowment under competitive fiscal terms.
The company maintained that a robust and fiscal regime was essential to develop the countryâ€™s vast hydrocarbon resources.
Addressing journalists in Lagos while presenting the companyâ€™s Energy Outlook report, the General Manager, Operations Technical Geoscience, Mobil Producing Nigeria, Mr. Andrew Ejayeriese, said key decisions would soon be made on the policies and laws that guide the industry, and the decisions would have a major impact on Nigeriaâ€™s aspiration to remain a major hydrocarbon producer and exporter for several years to come.
The Energy Outlook is a report prepared by ExxonMobil which analyses the trends that will shape global energy supply and demand over the coming decades.
Ejayeriese said natural gas and crude oil would continue to make up a significant share of the energy mix for the foreseeable future, adding that this was important for an oil and gas resource-rich country like Nigeria and provided continuous incentive to grow production for export to capture market share of this demand.
Nigeria, he noted, was one of Africaâ€™s leading resource holders, with oil reserves estimated at 37.2 billion barrels â€“ the tenth largest in the world â€“ and natural gas reserves of 5,110 billion cubic meters â€“ Africaâ€™s largest and ninth in the world.
He added, â€œAccording to the International Energy Agency, on a global basis, it is the 5th largest exporter of crude oil, and fourth largest exporter of Liquefied Natural Gas, with export capacity of about 22 million tonnes per year.
â€œThe growth in Nigerian hydrocarbon exports is an achievement which the country should be very proud of, and one achieved on the back of fair dealings, strong working relationship and confidence in the honouring of agreements in spite of political upheavals over the years.
â€œHowever, having huge reserves is only a piece of the puzzle. To sustain a leadership position, Nigeria must recognise growing competition for industry investment from emerging success stories in East Africa, South Africa and Ghana here in West Africa. A commercially competitive fiscal and regulatory environment and a favourable investment climate are crucial to long term success at attracting capital.â€
He said virtually all of Nigeriaâ€™s oil growth over the last decade came from the deepwater region.
However, he noted that delays in project approvals, restrictions in Nigerian National Petroleum Corporation funding and tortuous contract award process had slowed overall reserve replacement and put pressure on long-term production and growth.
â€œWe all know the story of the impact of militancy and oil bunkering/illegal refinery on the maintenance and growth of JV volumes. The point here is that successful regimes must match hydrocarbon resources with clear regulatory and fiscal terms and provide a safe and secure operating environment,â€ he added.
He said although gas production for sales was forecast to grow in the future, Nigeria must focus on creating a clear policy and fiscal incentives to drive development of both domestic and export markets.
Nigeria has a good vision of where it wants to be, he said, but maintained that the effective execution of the vision had not occurred due to inconsistent and conflicting plans, shortage of funding and incentives, slow development of domestic market and significant competition for export market share, with new entrants and new resources such as the North America Shale gas boom.
To sustain the momentum for continued leadership, he said Nigeria needed to look further ahead.
Ejayeriese said, â€œWe no longer find and produce oil and gas in the easy places. Our industry has evolved over time; and planning and the right application of technology will be critical to Nigeriaâ€™s continued success in the future, especially for new and economically challenging areas like deepwater and to extract optimum recoveries from older fields.
â€œWe must invest in and match the appropriate technology â€“ cutting-edge technology for complex, frontier regions, and fit-for-purpose technology for more mature onshore/shallow areas.
â€œTaking this long-term view in policymaking decisions is, therefore, an imperative for the country where the application of technology supplied by global players and investment go hand in hand.â€
He said the current draft PIB proposed fiscal and non-fiscal recommendations that would not encourage investment in the industry, or offset natural decline as fields mature.
â€œAn operator needs to reinvest about 50 per cent of annual cash flow to keep production flat. Without new investments, Nigeriaâ€™s production will decline by 40 per cent by 2020, while it could potentially grow by nearly 50 per cent within same period, with continued (and planned) investments of $110bn,â€ he said.