Why oil reserves remain stagnant — NAPE

NNPC begins oil exploration in Gongola Basin

The inability of Nigeria to achieve its projected 40 billion barrels oil reserve after years of setting the target has been attributed to more than 10 years shortfall in the joint venture, JV, funding.

Speaking on the sidelines of the Sub-Saharan African Oil and Gas Conference, held in Houston, Texas, President of the Nigerian Association of Petroleum Explorationists (NAPE), Abiodun Adesanya, said that when there is a shortfall in JV counterpart funding from the Federal Government, the area that takes the first hit is exploration.

He expressed worry that the budget earmarked for exploration activities as a result of the shortfall in JV funding has dwindled over the years leading to low discoveries in exploration activities.

‘‘If you don’t spend money, you don’t get anything back. It is risky quite alright which is why when the issues of budget cut comes up, the most hit is exploration because of the associated risks. But since the present administration came up with a formula to work on JV funding, we are beginning to see interest.

“As you produce, you deplete. As you promote certain contingents into reserves, you increase. So, what has happened is that it is better to be flat than go down. I guess the strategy is to keep it flat if we cannot make it to go up. That is why you are seeing 37 billion barrels when production is ongoing. Depletion is going on and replenishment is going on simultaneously as well. And when you have that kind of scenario, the figure could go up or down,’’ he explained.

Adesanya, assured that the 40 billion barrels of reserves target by 2020 is achievable because the country has been able to identify where the resources to achieve the target are, adding that there are quite a number of fields that have been discovered but not yet certified by the Department of Petroleum Resources (DPR) to be called reserves.

According to him, a formula has been found to address that challenge and it appears to be working as the country has witnessed a reduction in the vandalism of production infrastructure, thereby increasing the confidence of the operators to go into more exploration.

The NAPE boss also advised the Federal Government to make provisions for incentives for prospective investors willing to explore the hydrocarbon potentials in the frontier basins to increase the depleting reserves in the country.