Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, yesterday, painted a gloomy picture for the Nigerian economy, stating that Nigeria’s crude oil production has dropped to 1.4 million barrels per day. This was a further decline from the 1.75 million recorded in July and 1.69 million recorded in June 2016. Kachikwu blamed the decline on the attacks on oil and gas assets by armed militant groups in the Niger Delta.
He also stated that the Federal Government is working with local communities and the armed groups to solve the problem. Kachikwu further stated that the Federal Government is working to reform the way it funds its cash-call obligations to its upstream joint venture partners, adding that the country requires over $2 billion annually to meet its cash call obligations to its upstream joint venture partners.
According to him, NNPC owes over $6 billion to its upstream joint venture partners, and the cost of meeting NNPC’s majority stake in these ventures is over $2 billion annually.
Kachikwu added that the NNPC is also working to improve its refinery operations so it could reduce its imports of refined products by 60 per cent by 2018 and end all imports by 2020. He noted that Federal Government is also drafting executive legislation that would also enable the passage of the long-delayed Petroleum Industry Bill.
Shell Nigeria, had a few days ago, disclosed that its crude oil production dropped sharply to 37,000 barrels per day in the second quarter, Q2, of 2016.
Shell in its Q2 2016 financial statement released to its investors said that production from its Nigerian subsidiary, Shell Petroleum Development Company, SPDC, dipped by 41 per cent to 37,000 barrels per day, bpd, during the period, down from the 63,000 bpd recorded in the same period of 2015, and 24 per cent lower than production in the first three months of the year.
Shell Group Chief Executive Officer, Mr. Ben van Beurden also warned that “Earnings could be further impacted if the security conditions continue to deteriorate.”
According to him, the security situation in Nigeria has impacted negatively on oil production, adding that sabotage incidents and repairs will cut its Nigerian oil and gas production by around 35,000 barrels per day of oil equivalent (boe/d) compared with the same period of 2015.
Van Beurden continued: “A further erosion of the business and operating environment in Nigeria could have a material adverse effect on us.
“An erosion of our business reputation could have a material adverse effect on our brand, our ability to secure new resources and our licence to operate.” He further noted that since many of Shell’s major projects and operations are conducted under joint venture agreements, “This could reduce our degree of control, as well as our ability to identify and manage risks.” He however disclosed that Shell had continued success in its exploration programme with 10 discoveries and appraisals in Nigeria, and a host of other countries without giving further details.
