Nigeria risks disturbance in oil and gas supplies and power generation, as a consequence of declining exploration activity and draining oil reserves, the Nigerian Association of Petroleum Explorationists (NAPE) has warned.
Inefficient deal and procurement awarding course of oil theft and illegal refining are the key obstacles to Nigeria’s oil and gas sector, Ajibola Oyebamiji, president of NAPE, stated at a media conference, as carried by news outlet This Day. Oil theft and illegal refining are bigger perils to Nigeria’s oil than a slump in oil values.
The procurement and contracting processes in Nigeria are around 36 months (three years) on average—the longest and most inefficient around the world, dampening business climate since contractors can’t properly plan prices.
The (NNPC) Nigerian National Petroleum Corporation warned earlier this month that oil pipeline vandalism in Nigeria is hovering, with several events of breached pipelines rising by 115% in July compared to June.
Pipeline disruptions, as well as pipeline, sabotages by militants in Nigeria’s oil-rich Niger Delta region, has crippled Nigeria’s oil production and exports for years. Over the past year and a half, militant action has subsided, allowing Nigeria to boost its crude oil production, and further making Africa’s largest oil producer a full-fledged member in the production cuts of the OPEC+ coalition.
However, since it became a part of the agreement in January 2019, Nigeria has been one of the largest overproducers and non-compliant OPEC members in the agreement. Nigeria pledged in September to follow its respective cap while the cartel and its allies are trying to offset the oil sector. Nigeria could face an easier task to fall in line with its share of the OPEC+ production cuts after OPEC has recently raised the African producer’s oil output cap.