The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), Mallam Mele Kyari, has said the firm expects the country’s oil production to rebound to 1.8 million barrels per day (bpd) by the end of the year and to increase further in 2023.
“Output could reach 1.8 million bpd by the end of December, but hopefully by the end of November, up from 1.45 million bpd now, with a further increase to 2.2 million bpd any time from the middle of next year,” he added.
Kyari spoke on the sidelines of the just concluded oil summit, tagged Adipec 2022 in Abu Dhabi, the United Arab Emirates (UAE).
Infrastructure issues, pipeline leaks and oil theft have squeezed Nigeria’s output this year, leaving the country consistently below its Organisation of Petroleum Exporting Countries (OPEC) output targets.
Nigeria’s submission to the OPEC Secretariat put September crude oil output at just 938,000 bpd, just over half its quota for the month, while total liquids production was only 1.14 million bpd.
Argus estimates that Nigeria produced 1.17 million bpd of crude in September, 40,000 bpd higher than in August. The discrepancy is partly down to differences in the classification of the Agbami grade as crude or condensate.
Improved security conditions and contract terms are helping to restore interest in Nigeria’s upstream sector from international oil firms, Kyari said, adding that the Petroleum Industry Act (PIA) of 2021 — which laid the groundwork for fiscal, regulatory and legal reform — has been supporting investment.
In June, President Muhammadu Buhari gave the oil ministry a mandate to ensure energy security by the end of August, and Kyari revealed recently that NNPC will deploy a protection model similar to Saudi oil giant Aramco’s to curb oil theft.
If Nigeria is successful in increasing its oil production, it may again broach the subject of adjusting the baseline production figure that determines its quotas within the OPEC+ group.”
Engagement is based on the capacity to produce,” Kyari said. OPEC+ is “not going to stop you from production, as long as that capacity is there. That’s not the issue. The issue is the baseline, and that baseline will change, immediately, as we bring back more production,” he said.
Five OPEC+ members — Saudi Arabia, Russia, Iraq, Kuwait and the UAE — were granted baseline increases in 2021, effective as of May this year.
“Everyone is coming back to the table now,” Kyari said, about potential investments from International Oil Companies (IOCs). Companies are reassured by “improved security and also improved fiscal terms, it’s a perfect opportunity for businesses so the companies are coming back, particularly in the deepwater,” he added.
Should investments move ahead, Kyari said Nigeria would reach 3 million bpd within two to three years, and then 4 million bpd in five years.
Although Nigeria’s production fell below 1 million bpd in recent times, there have been some promising signs, with Forcados now back online. “Force majeure will be lifted from Bonny,” the NNPC boss further assured.
The NNPC head was bullish about the possibility of new investments. However, he declined to shed any light on his company’s efforts to halt the sale of ExxonMobil’s local onshore unit to Seplat Energy. NNPC is targeting Exxon assets for itself.
Nigeria LNG declared force majeure in mid-October, but Kyari said that the floods were now receding and that operations were resuming.
“The world is looking for energy”, Kyari said, striking an upbeat tone on future LNG production from additional projects. NLNG is progressing with Train 7, he said, with a target startup date of 2025.
The NNPC head noted that NLNG shareholders were keen to add more capacity, with Train 8. “There’s so much gas, the possibilities are endless,” Kyari said.
The NNPC had declined to comment on the possibilities of Brass LNG or OK LNG but said there were plans for various floating LNG (FLNG) projects.
The Nigerian government, with NNPC, has set out plans to build an offshore pipeline round to Morocco, in addition to an onshore link through the Sahara to Algeria.
Nigeria has the resources, Kyari said, but there is an issue with how to access financing for such projects, he pointed out.
With the Dangote refinery expected to come on stream after some delays, and the expected restoration of production from Nigeria’s dysfunctional four refineries, this development could transform the country into a net exporter.
According to him, this would take the country from “calamity to opportunity.” “We see the potential for robust flow (of products) from Nigeria,” he added.