As we head into a new year, it feels like a good time to look ahead to the coming 12 months and to consider what 2018 might have in store for the Nigerian oil and gas industry. Last year was one in which we saw a tentative recovery in the global oil price, and a stabilisation of Nigerian production that allowed us to return to play our full role as an important part of the OPEC family. So what is the outlook for the coming year?
“Moving into 2018, we’re building on some firm foundations in the sector,” says our Chairman, Onajite Okoloko. “Our government’s 2017 Appropriation Act – the so-called ‘Budget of Recovery and Growth’ – projected 2.2 million barrels per day in terms of crude oil output, and we have been far below that for a sustained period, I think that it bodes well for 2018 that this ambition is there. As a nation, we’re currently abiding by OPEC’s country-by-country quota cut in production of 1.8 million barrels per day, but, with what I hope continue to be more stable conditions in the Niger Delta region, it will interesting to see how our nation’s oil production can continue to grow over the next 12 months.”
New refining capabilities
Our government’s budget for this year has suggested a level of 2.3 million barrels per day of oil production, far above the current rates that have been limited by the OPEC agreement. So, it’s likely that the government is looking to increase the amount of refined oil products – which in turn suggests a continuation of the much needed investment we’ve already seen in domestic refining. The $11 billion Dangote refinery is set to produce something in the region of 650,000 barrels per day of refined petroleum products – but it’s not due to come on line until 2019. Greater domestic refining capability and a further reduction in gas flaring have to be priorities in 2018.
A fresh round of opportunities
This year also sees the government making a new round of marginal oil fields available for development in 2018. As an established Nigerian oil and gas operator this represents a hugely exciting step forward, and a sign of real progress in terms of the stability and robustness of our domestic industry. It’s believed that a number of the new fields will be offered on a discretionary basis to businesses that are owned by entrepreneurs who are from the Niger Delta itself – an encouraging indication of just how far our nation’s oil and gas sector has come since the first awards were made back in the 1990s.
A positive outlook
“I’m feeling cautiously optimistic about the outlook for the Nigerian oil and gas sector over the coming 12 months” says Mr Okoloko. “There are reasons to be cautious – not least the volatility of the global oil price (and the world economy as a whole), as well as the ongoing possibility of fresh tensions in our oil producing regions. But there is much to feel good about in terms of the way our government is setting ambitious targets for the sector, while continuing to support it with investment in our domestic refining capacity. This has to continue throughout 2018 in order for the progress we’ve seen to be sustained.”