Nigeria's evolving oil and gas sector - CNBC Africa

Nigeria's evolving oil and gas sector

Western Africa

by Dara Rhodes 0

Nigeria holds the largest gas reserves in Nigeria. PHOTO: Getty images

“The landscape is changing and in 2013 we saw an acceleration in the change,” Scott Aitken CEO of Atlantic energy told CNBC Africa.

In November 2013, the Federal Government began a licensing round for marginal oil fields aimed at increasing the participation of indigenous oil companies in the upstream sector of the industry.

“The international oil companies have been reviewing their portfolios ahead of thier licence expiry dates. They can see their balance sheet strength, their access to technology and project management skills which allow them to differentiate themselves in energy and deep offshore projects.”

Nonetheless, according to a London based research group, Chatam House, oil in the country is being stolen on an industrial scale. An estimated average of 100,000 barrels are stolen daily. At a hypothetical per-barrel price of 100 US dollars would mean an annual loss of 3,65 billion US dollars creating a huge problem for the West African country.

“This is a challenge for all Nigerians. Every barrel of oil that is not produced in the way that it was expected to be produced or is misappropriated, there’s another dollar of royalty that is not paid and for the investor both locally and internationally, it’s a loss as well,” he said.

According to him, as the challenge affects all Nigerians, more local and community levels of partnerships, increased surveillance and participation that allows citizens to detect such problems earlier as they also result in environmental damage.

“The earlier the detection, the more distributed metering that we can achieve with less centralised control as was the case for these offshore blocks under the IOC management who gave us faster and more local access to the challenges and we can develop more local solutions to those challenges so I’m more optimistic going forward,” he explained.

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This year, with the aim of encouraging indigenous players, the Federal Government plans to offer 31 marginal oil fields with 16 of them located onshore while the remaining 15 in the continental shelf. The last time this was done was 12 years ago and there is concern that the indigenous players may not have the technical capacity to make the investment that it would take to ensure the fields are properly harnessed.

“That will be a key event this year particularly in the local sector. When I first entered Nigeria, 10 years ago, there were only opportunities available where some of these marginal fields were very small in size and many of them were green fields,” he added. 

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