Between 2022 and 2023, the Federal Government has allocated approximately $22.82 billion towards the implementation of 1,068 approved oil and gas projects. These nationwide projects signify a crucial turning point for the industry, offering significant economic advantages and improved manufacturing capacities. At the 7th Nigeria International Energy Summit in Abuja, a panel revealed an important announcement regarding Nigeria’s efforts to optimize its oil production capabilities. Gbenga Komolafe, the CEO of Nigeria’s NUPRC, highlighted the country’s production potential of 2.26 million barrels of crude oil daily.
Komolafe discussed Nigeria’s efforts to adhere more closely to the oil production limits established by OPEC, highlighting the country’s continuous work and notable advancements within the oil industry. Reflecting on the progress made thus far, Komolafe remarked that in 2022-2023, there were 51 Field Development Plans that received approval, projected to bring in $17.64 billion in investments. These plans are also expected to result in the recovery of approximately 2.12 billion barrels of oil and 13.13 trillion cubic feet of gas over the course of the next five years.
Maximizing oil production can create many investment opportunities.
In the years 2022-2023, there was approximately $2.5 billion allocated for drilling 175 new wells. Additionally, an investment of $2.68 billion was dedicated to 842 well workovers and similar interventions, leading to a rise in average oil production. The number of rigs has increased by 275% over the past year, going from just eight in 2021 to an average of 30. Some fields have already started producing oil quicker than expected due to accelerated FDPs. The fields that were part of the Extended Well Tests program are diverse, ranging from Ikike to Efe (Newcross), Utapate to Akubo, and Oyo to various others like Ethiope, Omefejo, Ofa, Olure, Ibom, Apani, Kalaekule, and more.
Also, Komolafe highlighted the disparity between the real oil output of Nigeria, which stands at an average of 1.33 million barrels per day, and its full capacity. He sees this as a prime opening for investors to capitalize on, providing an opportunity to boost the country’s income, close the foreign currency difference, and strengthen economic stability. Maximizing the oil production of the country to meet its technical potential can create a multitude of investment opportunities for investors.
FG to increase Petroleum Profit Tax (PPT) collections in 2024.
This has the potential to generate additional revenue for the country. It is also capable of helping to address the foreign exchange gap and bolster the economic resilience of the country. Thus, every obstacle presents an opportunity for growth and development. The CEO of Nigeria’s NUPRC additionally mentioned that the commission is increasing its initiatives to partner with International Oil Companies in order to expedite the maturation and advancement of certain large deep water assets.
The Nigerian economy relies heavily on its oil industry, which is facing a variety of obstacles at the moment. These challenges have sparked conversations both at home and abroad, prompting the government to take action. Despite these difficulties, the Federal Government is working hard to overcome barriers and push the sector towards progress. The Federal Government is aiming for a significant increase in Petroleum Profit Tax (PPT) collections in 2024, reflecting their positive outlook for the oil sector’s future performance.
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Furthermore, the government is aiming to increase its revenue by collecting ₦9.96 trillion from PPT, according to data from the Federal Inland Revenue Service (FIRS). This target marks a substantial rise of 214% compared to the ₦3.17 trillion generated in 2023 and an 89% boost from the initial projection of ₦5.26 trillion for the same period. In order to achieve their ambitious revenue goal, the government has established a benchmark oil price of $77.96 per barrel for 2024, along with an estimated daily production of 1.78 million barrels.
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