Nigeria’s oil, gas sector may continue struggling in 2023, says expert

Experts in the Nigerian oil and gas sector have argued that the industry may continue to struggle in 2023 having failed to maximize opportunities provided by higher crude prices in 2022.

Although several deals on new floating liquefied natural gas (FLNG), gas export pipelines to Europe and a lot of projects were announced in 2022, energy analysts fear that some of these projects will not come to reality amidst challenges like a lack of finance and political willpower.

Forecasting for 2023, oil and gas analyst, Etulan Adu, said Nigeria’s oil and gas sector struggled for survival right from the first quarter of 2022, despite surging crude oil prices and major oil-producing countries raking in profits.

He said the challenges of oil theft, pipeline vandalism and under-investment in upstream activities has brought Nigeria’s oil production to a 30-year low mark.

Another analyst, Kayode Oluwadare, argued that the Russia-Ukraine war has had a significant impact on oil pricing since the first quarter of 2022, and Nigeria has not been able to maximize rise in the price of crude.

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“It is quite unfortunate that Nigeria was not able to maximize or take advantage of the price increase which went up to $100 per barrel at some point. We lost some ground, unlike Saudi Arabia, Qatar and even the United States were posting high profits from crude oil sales.

“Looking at the oil industry performance of 2022, we saw how Nigeria’s crude production hit an all-time low, at a point we recorded just a little over 900,000 barrels per day. Although some concerted efforts have been made through the joint task force spearheaded by former Niger Delta militant, Tompolo, checking around the Niger Delta region for illegal pipelines and other installations which have helped to forestall the crude oil theft which has been going on for decades.”

The Nigeria Liquefied Natural Gas (NLNG) Limited has had a good 2022 by taking advantage of the global increase in LNG price, although at some point, production dropped when the company was operating at 60 per cent capacity due to feed-gas challenges, and crude oil theft.

The outlook for 2023 is good for Nigeria’s gas market because the NLNG is efficiently run. The price cap for Russian oil also affects Russian gas, so, the drop in Russian gas production also provides an opportunity for Nigeria to take advantage and increase its gas production and increase its profit margin.

Meanwhile, a production engineer, James Akwaji said it could get better for the industry as the Nigerian National Petroleum Corporation Limited and security agencies have made remarkable strides in halting crude oil theft and other nefarious activities in the south-south region of Nigeria where oil and gas companies are located.