According to AA Holdings Chairman Austin Avuru, the global demand for Nigerian crude oil will fall by 61% by 2060. This was discussed at the pre-conference workshop for the 2023 Nigerian Association of Petroleum Explorationists conference in Lagos, with the theme “Unlocking Nigeria’s Remaining Energy Potential to Fuel Economic Growth and Diversification: Opportunities and Challenges.” By 2060, the nation’s oil demand is expected to decline from 103 million barrels per year to 40 million barrels annually, as said by the former co-founder of Seplat Petroleum, which is now known as Seplat Energy.
The world is shifting toward using renewable energy sources, and this is the primary reason why the demand for Nigeria’s crude oil will fall below its current level. In addition, he mentioned that the process of transitioning to a new energy source would begin with the removal of coal, which would be followed by fossil fuel and, finally, gas. One may observe that the Federal Government announced it was embracing gas as the country’s transitional fuel due to the fact it would be the last fuel to fade out.
Government should invest $21bn per year to increase crude oil production.
Bonny Light, Nigeria crude grade, has a low sulfur content and is, therefore, one of the most sought-after grades on the global market. In order to improve the country’s economy before 2060, he suggested that the government increase exploration and fully utilise the country’s vast natural resources. To increase crude oil production, he suggested the federal government invest about $21 billion per year. This would allow the country to reach its goal of producing 3 million barrels of crude oil per day by 2027.
Furthermore, the inability of international oil companies to invest in Nigeria oil industry is the reason behind the country’s inability to produce more than 1.3 million barrels of crude oil per day rather than theft. The major IOCs have decided to stop funding oil and gas exploration and instead invest their capital expenditures in renewable energy. According to what Avuru has observed, in order for Nigeria to increase its annual oil production in 2027, It will need significant investment to accomplish this goal.
Investment will decrease in the sector as a result of the transition.
In addition, he mentioned that an investment of 7.6 billion dollars would be necessary in order to achieve a production level of 2.1 million barrels per day by 2024 or 2025. According to him, the level of capital being invested in the oil and gas sector would have decreased dramatically as a result of the transition in the energy sector, which renders only TotalEnergies in a Joint Venture partnership with the government by the end of the year 2025.
Banks are no longer lending money to the oil and gas industry. He contended that multinational corporations had ceased spending and that independent oil companies had been denied access to assets given by the international oil companies. Statistics from the Organisation of the Petroleum Exporting Countries show that crude oil production has been falling since COVID-19 in 2020, when it fell to a low of 900,000 barrels per day in September of that year before increasing to about 1.3mb/d last month.
Security issues and other challenges must be addressed.
Lastly, speaking at the pre-conference press briefing, Eliot Ebie, who is the President of the Association, pointed out that Nigeria would keep experiencing low oil production if the country did not address its security problems, pipeline vandalism, and theft that have been occurring. He also suggested that the slow pace at which the Petroleum Industry Act was being put into effect was one of the factors contributing to the lack of investment in crude oil exploration.
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