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Nigeria’s Rig Count Surges by 75% Amid Optimistic 2024 Outlook

Amidst many challenges, Nigeria, a key oil and gas producer in Africa, has seen several successes in 2023, with a promising outlook for 2024. The positive impact of the Petroleum Industry Act, PIA has been instrumental in contributing to these achievements.

The rig count in Nigeria, which measures activities in the upstream sector, increased by 75% year-on-year in November 2023, reaching 14 from the eight recorded in the corresponding period of 2022. This demonstrates significant growth and activity in the sector.

Furthermore, Nigeria’s oil output rose by 1.7% in November 2023, reaching 1.4 million barrels per day (bpd) from 1.2 million bpd in October 2023. This increase, excluding condensates such as Bonny Light, signifies a positive trend in oil production for the country.

The return of Nembe crude, produced by Aiteo, to the international market has contributed to this rise in output. Additionally, the discovery of oil in viable commercial quantities in the Kolmani River has given positive signals for increased exploration and production efforts in the Lake Chad Basin.

The Organization of the Petroleum Exporting Countries (OPEC) has set Nigeria’s oil quota to be 1.5 million bpd for 2024. This decision reflects the expectations for Nigeria’s oil production in the coming year.

Furthermore, the country is pushing forward with major gas projects, including the construction of the Ajaokuta Kaduna Kano (AKK) gas pipeline and the NLNG Train 7 project, aimed at commercializing Nigeria’s abundant gas resources for domestic use and export.

In the midstream, the Nigerian National Petroleum Corporation (NNPC) has completed the rehabilitation of the Port Harcourt Refinery, with plans for tests to verify its readiness for commercial operations. Additionally, the Dangote Oil Refining Company, in which NNPC has a 20% stake, is gearing up for test runs and commercial operations. The refinery, located in the Lekki Free Zone near Lagos, is expected to be Africa’s largest oil refinery.

However, challenges such as pipeline vandalism, oil theft, and illegal refining continue to affect operations and production in the Niger Delta. The downstream sector faces issues related to foreign exchange crisis and instability, which have discouraged investment despite sector deregulation.

Looking ahead, the Nigerian Upstream Regulatory Commission (NUPRC) plans to conduct an oil licensing round in 2024 to attract new investors and increase investment in the country’s oil reserves.

The Commission aims to optimize the functionality of existing automation systems, improve customer interface, reduce logistics, and deepen ease of compliance. It also seeks to monitor oil production and enhance operational optimization to achieve higher output and impact projects.

The NNPC also envisions plans to sell its shares to the public, aiming to stimulate economic growth and open up investment opportunities. Additionally, the rehabilitation of the Warri and Kaduna refineries is progressing, and plans to connect gas pipelines to multiple countries could create economic prosperity in West Africa.

In light of these developments, industry experts have expressed optimism about Nigeria’s future. NJ Ayuk, the Executive Chairman of the African Energy Chamber, and Dr. Diran Fawibe, Chairman of International Energy Services, have commended Nigeria’s efforts in executing key projects and stressed the importance of continuous investments in the oil and gas industry to meet both domestic and international demands.

Overall, Nigeria’s oil and gas sector appears to be evolving positively, bolstered by various initiatives and investments that promise to drive growth and contribute to the nation’s economic development.

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