By Adewale Sanyaolu
The Federal Government has slashed its oil production target from 4 million barrels per day (bpd) to 2.6 million bpd.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which confirmed the target cut on Tuesday, said the oil and condensates production target of 2.6 million barrels per day (bpd) by 2026, is an ambitious jump from 2023 production levels of around 1.6 million bpd.
The 4 million bpd output peg has been envisioned alongside 40 billion barrels reserves target prior to the administration of President Bola Ahmed Tinubu.
Africa’s biggest oil exporter has suffered declining production due to crude theft and vandalism of pipelines in the Niger Delta, as well as low investment in the sector, which has hit government revenue.
It had, despite this, not publicly announced reduction in the target until now.
The oil industry regulator also said oil majors have committed to invest $13.5 billion in the short-term, following meetings with senior executives from TotalEnergies, Shell and ExxonMobil by President Bola Tinubu recently.
The regulator said in its 2024-2026 action plan that it would direct development of oil assets to areas less prone to theft and vandalism and provide support for alternative crude oil evacuation routes.
Oil firms require NUPRC’s approval for new pipeline routes. Production is expected to rise from 1.8 million bpd this year and progress to 2.6 million bpd in 2026, NUPRC said.
To achieve the target, NUPRC said it was also working to cut the cost of oil production to about $20 a barrel, down from $25 and $40, by providing incentives to oil producers.
“The commission will set up a framework for crude oil and gas transportation and/or handling costs based on a standardised tariff (and) implement an open access regime for upstream oil and gas pipelines and ancillary facilities,” the regulator said. High signature bonuses – one-off fees paid to secure exploration blocks – would be reduced to attract more investment and raise oil production, it added.
The Nigerian National Petroleum Company Limited and the Nigerian Content Development and Monitoring Board, last year, signed a Memorandum of Understanding with international oil companies to reduce contracting cycle in the sector to an optimal level of not more than 180 working days.
All parties signed the MoU at the headquarters of the national oil firm in Abuja, according to a statement issued by the management of the company.
An optimised contracting cycle was expected to improve the ease of doing business, reduce cost and drive efficiency, which would eventually translate to production growth, increased revenues, and ultimately improved profitability.
The MoU was also expected to contribute significantly to the double-digit economic growth rate agenda of the Federal Government and generate value for all stakeholders, including investors, companies, host communities and Nigeria.