Nigerian oil & gas output to expand but regs have impact

Nigerian oil output is expected to rise exponentially towards 2021 according to a new report.

The figures, from Business Monitor International's "Nigeria Oil & Gas Report Q4 2012" show encouraging signs for the African nation which has recently benefitted from increased investment by domestic producers and local lubes manufacturers.

Amongst the key findings, BMI forecasts the following:

• Oil production is likely to increase at an annual average of more than 6.2% between 2011 and 2021. Several projects are in the pipeline or due to come onstream over the next few years including the Usan (180,000b/d) and Egina (150,000b/d-200,000b/d) plants.
• Gas demand is set to rise as a result of government power sector plans and large export engagements. Estimated figures are 5.22bcm in 2011 to 13.17bcm by 2021.
• Gas production will also be boosted if the practice of gas flaring is reduced and companies begin monetising associated gas resources.
• Nigerian oil reserves are forecast to peak at about 40.05bn barrels in 2015-2016, before reducing to 36.00bn barrels by 2021. Gas reserves are expected to peak at 5.95trn cubic metres (tcm) in the 2014-2016 period, before falling back to 5.80tcm in 2021.
• Liquefied natural gas (LNG) and refining remain a key part of the Nigerian authorities' planning but the downstream sector is still highly inefficient and requires further development.

The expected rise in Nigeria's oil and gas production could be tempered, however, by uncertainties surrounding OPEC quotas, the risk of project delays and, most importantly, Nigeria’s internal politices relating to the Petroleum Industry Bill (PIB) which faces its Second Reading in the country's Parliament and could become law by September 2013.

The PIB is aimed at overhaul Nigeria’s oil industry which has been a victim of corruption, crude theft on a significant scale and the sale of fake lubricants for many years.  The Bill is also likely to open the country's hydrocarbon resources to further overseas investment to provide more oil earnings to the government's coffers.