Nigeria’s oil output could drop by as much as 15 per cent in 2017 unless government attracts more investment and resolves cash shortages at state oil firms, Aurelien Mali, a senior Moody’s senior analytical adviser, Africa has announced.
Nigeria, Africa’s biggest economy, produces about 2.1 million barrels of oil per day longsides foreign and local companies through production sharing contracts and joint ventures. These multinational exploration and production companies are operating predominantly onshore Niger Delta, and coastal offshore areas now lately in the deep waters.
As with many other developing countries, the multinationals in Nigeria have been operating under what is called a concession system, with the Nigerian National Petroleum Corporation (NNPC) being the concessionaire, while the companies are the operators. The NNPC also is responsible for the management of the exploration bidding rounds for all oil and gas. Now many projects have been held up because these corporations need parliamentary and regulatory approval for funds. Officials and lawmakers are to be blamed, it takes as much as much as six months to obtain their assent, and this makes proposals irrelevant as costs often exceed original budgets. This results in unpaid bills and pile up.
“By 2017, if there’s no more investments oil, production will drop by 15 percent and this will affect government revenues, so cash call funding issues for joint ventures and long term funding to drive the deep offshore fields is something that will have to be addressed to maintain at least the production levels of 2.1 million,” Mali stated.
Recently, stakeholders in the oil sector had called on government and its agencies to withdraw from the industry and restrict itself to proper revenue collection and management in the interest of this and future generations.