By Yemi Olakitan
As a part of its strategic plan for the oil sector spanning 2024 to 2026, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has set a condensates production target of 2.6 million barrels per day by 2026.
According to Nature News Sources, the National Upstream Petroleum Regulatory Commission (NUPRC) disclosed in its 2024-2026 action plan, a focus on increasing condensates production. This strategy aims to steer the development of oil assets towards regions less susceptible to theft and vandalism.
Additionally, it includes regulatory measures to support alternative routes for crude oil evacuation. The reported projections from Reuters suggest a planned increase in crude oil production — from 1.8 million barrels per day in 2024 to a targeted 2.6 million bpd by 2026.
Reducing oil production cost per barrel
Concurrently, the NUPRC is striving to reduce the cost of oil production significantly.
Their goal is to drive production costs down to about $20 per barrel, a reduction from the previous range of $25 to $40 per barrel.
This effort involves providing incentives to crude oil producers to enhance efficiency and cost-effectiveness.
During a September 2023 interview with the media men Madaki Ameh, managing partner at BBH Consulting said that the unit OPEX for a barrel of crude oil has significantly inflated, ranging between $25 to $30 per barrel presently.
He underscored the fact that achieving a production cost of $30 per barrel necessitates deliberate inefficiencies, indicating a concerning situation.
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He alleged that presently, certain operators artificially inflate oil production costs to accommodate various inefficiencies, thereby creating a burden for the Nigerian public.
At the time, he said: “In my view, no matter how inefficiently any of the companies produce, they should not produce anything higher than a unit OPEX of $7 to $10 per barrel maximum. If that is the case, then the input cost into the cost of products at the pump must be $10 because we produce the crude, we do not buy it in the international market.”
More NUPRC-led cost reduction action steps
Quoting the NUPRC, Reuters highlighted the Commission’s plans to establish a structured framework for transportation and handling costs associated with crude oil and gas. They intend to implement an open access regime for upstream oil and gas pipelines and their accompanying facilities.
To attract more investment and stimulate increased oil production, the Commission also aims to reduce high signature bonuses—fees paid upfront to secure exploration blocks.
In essence, this comprehensive strategy by the NUPRC intends to streamline production, lower costs, and encourage more investment in Nigeria’s oil sector to foster substantial growth and efficiency over the next few years.
The oil and gas sector has seen a decline in investment lately due to various reasons. Factors include the global push for renewable energy and Nigeria’s status as a legacy crude oil producer compared to emerging hotspots in Africa.
According to the African Energy Chamber’s 2022 State of African Energy report, countries like Libya, Chad, and Egypt are forecast to experience significant gains in crude oil production by 2030, while Nigeria, Ghana, Algeria, and South Sudan might witness reductions.
Notably, some international oil companies have divested their Nigerian assets, such as Equinor’s sale to the local company Chappal Energies in 2023. Despite this, Nigeria remains an active crude oil and gas producer on the continent.
To attract oil and gas investments from stakeholders still interested in fossil fuels despite renewable energy advocacy, Nigeria must implement the Petroleum Industry Act (PIA) and address crude oil theft comprehensively.
