Oil exploration declines as operators await PIB passage

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Oil production platform and supoort ships AlaskaThe exploration of petroleum has continued to decline as a result of delay in the passage of the Petroleum Industry Bill, PIB into law.

The low exploration characterised by the use of some rigs for exploration gives a clear indication that only a few firms were searching for crude oil and gas in the nation.

A source in the Department of Petroleum Resources who preferred not to be named stated that: “Only a few rigs are being used presently for exploration of oil and gas. Most oil firms are awaiting the completion of work on the PIB.

He said that: “The situation may continue to deteriorate as the PIB may not be passed soon as a result of the remaining works to be done at the national Assembly.

Another report by Baker Hughes showed that rig count fluctuated between 15 and 22 in the first half of this year. The latest authoritative Financial Derivatives Company Limited report stated that: “Baker Hughes rig count fluctuated between 15 and 22 in H1’13.

On the average, the report puts the Nigeria’s rig count in July and the remaining part of the second quarter of the year will be at about 19, meaning that many International Oil Companies, IOCs and their indigenous counterparts may not still increase their exploration activities.

While the nation continues to witness low exploration, investigations showed that other nations in the Gulf of Guinea, including Ghana have recorded increased exploration in the past few years.

The development is partly as a result of increased investment that is said to be driven by good policies, incentives and legislations as well as socio-political stability.

However, the Nigerian National Petroleum Corporation, NNPC, and the international oil companies, IOCs, have disagreed over some of the key provisions of the Petroleum Industry Bill, PIB, presently before the National Assembly.

The PIB, which seeks to introduce needed reforms in the oil and gas operations, will also increase the government’s control and earnings from the energy sector, especially in the offshore territories where the NNPC believes Nigeria is being shortchanged by the oil firms.

The Group Executive Director, Exploration and Production, Mr. Abiye Membere who expressed the position of government at the last Oil and Gas Conference in Abuja stated that it was necessary to focus more attention to offshore instead of mainly deep offshore as proposed by the IOCs.

He said: “We do not know why the IOCs intend to focus more on that terrain now, especially considering that we have a lot of reserves onshore.”

It should also be noted that it costs more for stakeholders to design and execute projects at high risk at the deep offshore than offshore.

But the IOCs think differently. For instance, the Managing Director of Total E&P Nigeria Limited, Mr. Guy Maurice, said that there was a great need to focus on the deep offshore because the IOCs had many pending projects in the area.

He said that the deep offshore had the promise of yielding more finds and by extension, output in the future, which had become more certain as a result of new technologies.

Maurice said Total had the experience and capacity to succeed in its deep offshore campaigns and contribute meaningfully to the nation’s quest of increasing crude oil reserves from about 37 billion barrels to 40 billion barrels in 2020.

Also, the Vice-President and Managing Director of Addax Petroleum Nigeria, Mr. Cornelis Zegelaar, said the PIB should encourage increased funding of projects, insisting that commercial oil finds were waiting to be made in the deep offshore and other areas.

 

Information from National Mirror was used in this report.