In the latest report by Ecobank’s Middle Africa Market Update; Oil and Gas, an extended winter period helped the oil prices rise above $105 per barrel in major importing countries and it could hold above this on supply concerns such as the crisis in Libya, South Sudan and Venezuela.
“Last year it was different in the sense that we had some of the major oil fields down by the first quarter of the year and so Q1 revenues in 2013 were significantly affected. I think we had about 15 per cent reduction compared to what the budget estimate was,” Dolapo Oni, Oil and Gas Analyst at Ecobank told CNBC Africa.
With Nigeria currently producing about 2.2 million barrels per day and oil prices still high at about 110, many experts are optimistic about the sector this year. Oni believes that this is good as it could mean that some of what the government is currently doing is working and production is stable.
“I think when we begin to see the end of some of these divestments that are still on-going and some of the productions actually shift to the independents, and they begin to ramp up on production, some of that production could still come back,” he explained.
The new marginal fields licensing round that is to see 31 oil fields up for sale by the Federal Government has been delayed as modalities and information on all the fields on offer have not yet been published by the ministry of petroleum resources.
“With the marginal fields, the government has realised that it didn’t really work well in the past. We licenced 24 fields and up till date only about eight of them are producing and so to avoid some of the issues we had with funding, with actual technical ability to explore the resources on those fields,” he said.
According to Oni, the delay is as a result of the government trying to ensure that the companies that are interested are companies that possess the funding capacity and setting out a process to ensure that all angles are properly processed.
“So it’s likely to be a more rigorous process to ensure that once the fields are awarded to you, you can actually take up on the field and start all your exploration activities as fast as possible,” he added.