The Department of Petroleum Resources, DPR has revealed that the nation’s crude oil reserves of 37 billion barrels, two percent of which is being produced annually will be depleted in 49 years.
It highlighted the need for a corresponding increase in reserves to achieve the government’s aspiration of four million barrels per day production and reserves of 40 billion barrels.
Also, the organisation noted that if that was not done, the life index would fall from a sustainable long-term threshold to a less futuristic and durable medium to the short-term range.
According to the DPR data, the reserves, which stood at 37.45 billion barrels in 2014, fell to 37.06 billion barrels in 2015 and 36.74 billion barrels in 2016.
It, however, rose to 36.97 billion barrels in 2017 and 37 billion barrels in 2018.
The regulator further disclosed that the nation’s depletion rate and life indexes are 2.04 percent and 49.03 years, respectively.
DPR noted that the reserves depletion rate is a measure of 2018 total oil and condensate production divided by the reserves as of January 1, 2019.
It said, “This indicator gives a bird’s eye on an annual basis, what percentage proportion of the quoted reserves was produced.
The nation’s oil and gas production structure is majorly split between Joint Ventures onshore and in shallow water with foreign and local companies, and the Production Sharing Contracts in deepwater offshore.
It said the PSC companies had the highest depletion rate of 3.10 percent and the lowest life index of 32.15 years while accounting for about 36.08 percent of the nation’s total production.
“Perhaps, the companies may have taken advantage of the poor government take in the deep offshore terrain to deplete the reserves therein with little regard for long-term sustainable production as amplified by the life index,” the regulator said in a report.
It said the sole risk companies had the lowest depletion rate of 1.5 per cent and the highest life index of 65.49 years.
The regulator said these companies accounted for about 20.14 per cent of the nation’s total production in 2018, adding, “This depletion rate does not reflect the fact these companies hold the second largest reserves of about 26.90 per cent.”
The marginal field operators produced about 2.14 percent of the nation’s total production in 2018, with a depletion rate of about 2.7 percent, life index of 36.83 years and a national reserves portfolio of 1.61 percent.
The DPR said about nine operating companies, which it described as “unhealthy,” “have oil and condensate life index of less than 15 years.”
Earlier, the Minister of State for Petroleum Resources, Chief Timipre Sylva, said the nation’s oil sector had worsened as the uncertain fiscal environment put a damper on the investments badly needed to ramp up oil production and increase reserves.
He warned that most of the resources might have to be left in the ground if not explored and produced before the world moves away from oil.
He said, “If there is a lot of exploration, we believe that a lot of oil still remains to be found in Nigeria.