Amid escalating concerns over insufficient domestic crude oil supply to the Dangote Petroleum Refinery and other indigenous refiners, the Independent Petroleum Producers Group (IPPG) has urged President Bola Tinubu to declare a state of emergency on crude oil production in Nigeria. This call comes in response to a prolonged crisis affecting the sector.
IPPG, comprising 28 members including Oando Plc, Aiteo, Seplat, Energia, Eroton, and others, engages with the government and industry stakeholders on sectoral issues. The group has expressed fears that the 2024 budget might face partial implementation due to recent low crude production levels in Nigeria.
The Nigerian National Petroleum Company Limited (NNPC) recently announced an aggressive strategy to tackle the challenges hampering oil production, including collaborations with International Oil Companies (IOCs). However, the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has urged oil producers to boost investments in upstream operations to enhance output.
The statements were made at the Nigeria Oil and Gas conference in Abuja on Tuesday. Nigeria’s oil production has declined from over 1.4 million barrels per day (excluding condensates) in January to approximately 1.2 million barrels per day in April. Industry experts believe Nigeria needs to produce about 2 million barrels per day to meet local refinery demands and export commitments.
Operators of the Dangote refinery and modular refineries have voiced concerns over inadequate crude oil supply from IOCs and NNPC. Experts note that most crude volumes from IOCs and NNPC are pre-contracted, exacerbating the supply issue amid declining production.
IPPG Chairman, Abdulrazaq Isa, in his keynote address at the conference, emphasized the urgent need for extraordinary measures to address the sector’s sustainability concerns. He called for a national emergency declaration in the oil and gas sector to expedite recovery and ensure industry stability.
Isa highlighted Nigeria’s substantial hydrocarbon resources, with over 37 billion barrels of proven crude oil reserves and significant gas reserves. However, current daily production stands at about 1.3 million barrels of oil and 8.5 billion cubic feet of gas, far below capacity and global standards. He warned that this shortfall could lead to partial budget implementation and potential inability to meet domestic refinery demands.
To address these issues, Isa outlined several priority areas, including the immediate conclusion of pending IOC divestment transactions, addressing deepwater development challenges, and implementing a national value-retention strategy to sustain domestic refining and petrochemical capacity. He stressed the need to increase daily production to 2.5 million barrels of oil and 10 billion cubic feet of gas to meet domestic and export demands.
NNPC Group Chief Executive Officer, Mele Kyari, announced a state of emergency on oil production, declaring a “war” on challenges affecting crude output. Kyari detailed efforts to improve production, including tackling procurement delays and replacing outdated pipelines. He urged industry collaboration to reduce production costs and boost output to target levels.
The oil minister, Lokpobiri, called on IPPG members to increase their production, suggesting that each member producing at least 5,000 barrels daily could significantly raise Nigeria’s oil output.
The ongoing crisis highlights the urgent need for coordinated efforts to stabilize and enhance Nigeria’s oil production capabilities.
