Oil & Energy

How The Oil And Gas Sector Fared In 2020

Published

6 years ago

January 4, 2021

The oil and gas sector in Nigeria faced massive economic turbulence both globally and locally in the year just gone by, 2020. At the beginning of the year, there were high expectations for the oil and gas sector in Nigeria, and then, the COVID-19 pandemic happened and EndSARS protests followed, leaving in their wake, a rippling effect on the developments in this sector and created a need to scale down initial projections, following the impact of the Covid 19 pandemic, resulting in a sharp decline in crude oil demand and prices.
Nigeria, an oil-dependent economy, is highly vulnerable to the impact of these external and internal shocks due to the country’s increased dependency on global economies for fiscal revenues, foreign exchange inflows, fiscal deficit funding and capital flows required to sustain the country’s economic activities.
Major factors driving the market were the investments in the upstream and downstream sectors of the oil and gas industry, which provided a significant portion of government revenue and foreign exchange earnings. Production, however, had been hampered in Nigeria in the past few years, due to the attack on oil and gas infrastructure by militants. The Covid-19 situation, however dealt a lethal blow to the country’s upstream oil and gas sector, as was evident in the reduction of the budget benchmark price of crude oil.
The resulting decline in crude oil prices had compelled the Government of Nigeria to reconsider the key budget assumptions for the 2020 budget, which was signed into law in January 2020. The budget had assumed an average benchmark crude oil price of US$57 per barrel (/bbl), while in April 2020, the Ministry of Finance and Budget Office revised this price to US$30/bbl1.
However, in recognition of the continued decline of oil prices and the continued effect of the pandemic in the global oil industry, the Minister of Finance, announced a further revision of this budget benchmark price to US$20/bbl, in May 2020.
Nigeria was obligated to accept cuts to planned production volume, as a result of the historic agreement by the Organization of Petroleum Exporting Countries (OPEC) and its allies (OPEC+) to cut crude oil output as part of its efforts to tackle the global oil crisis.
As part of this agreement, Nigeria agreed to cut its production to 1.412mb/d, 1.495mb/d and 1.579mb/d for the respective periods of May-June 2020, July-December 2020 and January 2021-April 2022. However, this does not cover the production of condensate, which is exempted from the OPEC curtailment, and which Nigeria utilizes to shore up its production capacity by about 360,000 to 460,000 barrels per day.
The sector also experienced a decrease in global and local demand for crude oil.
The United States (US) was a major purchaser of Nigerian crude oil, which contributed about 40% to 50% of Nigeria’s exports. However, over the years, the demand for crude oil from the US declined gradually. This was initially attributable to the boom of Shale oil in the US and then, the COVID-19 pandemic compounded it.
During the first half of the year, the US had slashed its imports to 9.37 million barrels, which was about 11.67 million barrels lower than the country’s purchase in the first five months in 2019.
As the country’s major export destinations battle the pandemic with enforced lockdowns and reduced economic activities, Nigeria had to slash her official selling price for its crude oil, offering discounts of up to $5/bbl in order to remain competitive in the crude oil market.
It was reported also that there were about 15 to 20 million barrels of unsold Nigerian crude in April 2020, which was about 25% of the country’s total obid rounds
The lockdown necessitated by the pandemic was also a depressing factor that militated against global oil activities. The lockdown was enforced by many countries in the world to mitigate the spread of the COVID-19 virus, leading to the closure of airports. This crippled the airline industry and consequently resulted in the drastic reduction in the demand for jet oil both locally and internationally.
The Oilfield servicing companies were also hit as a result of the COVID-19 pandemic.
Following the significant reduction in exploration activities by oil exploration companies, due to the collapse of crude oil demand and prices, there was also a reduction in the need for oilfield services and this brought about deferral or outright cancellation of drilling contracts, leading to significant losses for many drilling companies and jobs.
This decline is also evidenced by the country’s rig count, an important business indicator for the services industry, witnessing a rapid decline from a high of 23 rigs in February 2020 to a low of 6 rigs in July, reflecting the reality of the oil servicing subsector.
As at September, 2020, the serving subsector began to pick up by the rise of the rig count to 10 rigs as lockdown restrictions eased off, resumption of international flight operations in many parts of the world and a relatively steady crude oil price.
Foreign direct investment in the Nigerian oil and gas industry was also on a steady decline, in 2020 with the total capital inflow received in Q2 being $6.55 million (compared to $10.09 million received in Q1 2020). This amounts to 0.51% of the total foreign investments into the Nigerian economy received in the second quarter with the highest being from capital importation by shares with 35.88%.
Regrettably, despite the obvious opportunities in the oil and gas sector and the fact that the Nigerian economy is dependent on this sector, there seems to be hesitation by foreign investors to direct their investments into this sector. While the decline in 2020 could easily be attributed to the global economic challenges due to the COVID-19 crisis, industry stakeholders have continued to blame the lack of competitive regulatory and fiscal reforms as the reason for declining foreign investments.
It is, therefore, believed that the passage of the Petroleum Industry Bill(PIB) currently with the National Assembly, would herald a turning point for the outlook of foreign investment in the industry.
Oil theft was also one of the major issues that militated against the oil gas sector in Nigeria, which resulted in unprecedented losses to operating companies in the country.
Oil theft is the illegal appropriation of crude or refined oil products from the pipelines of multinational oil companies.
Oftentimes, it is carried out by collaborations between security forces, militia organizations, the local population, and oil company employees who use a variety of methods to steal oil from the multinational oil corporations that are stationed within the communities.
Currently, the Nigeria oil and gas sector is driven by five to six top players, accounting for the majority of the share, including Nigerian National Petroleum Corporation (NNPC), Royal Dutch Shell PLC, Total Exploration and Producing , Chevron Corporation, and Exxon Mobil Corporation.
Due to the lack of federal oversight and a large network of corruption, oil theft is primarily orchestrated by a number of players who use methods to perform oil bunkering and steal thousands of barrels of oil per day from established oil pipelines and also during the transportation of the crude oil product to the oil shipping terminals for export. The Muhammadu Buhari-led administration in attempt to reduce corruption in the country targeted suspected facilitators of oil theft through the prosecution of the leader of a local militia group, Mr. Government Ekpemuopolo for his role in the practice of oil theft in the Niger Delta region, was counter-productive and led to an increase in violence within the country, giving rise to the creation of the Niger Delta Avengers militant organisation. The group proceeded to sabotage multinational oil corporation pipelines.
Additionally, the oil spilled from these sabotage operations and the illegal refinery practices, popularly known as Kpofire, committed by the local population have also led to the severe pollution of the environment.
The year, 2020,for the oil and gas sector was also characterised by numerous pump price increases and reductions
The year opened with a pump price of N145.37, by April, it was reduced to N130.84. It was futher reduced to N129.65 in May, N128.88 in June and increased again to N143.63 in July, N148.78, in August, N161.06, in September, N145.94 and N163 in December.
Also plaguing the industry’s growth in the year under review, were lack of infrastructure, uncertainties in regulations, poor power supply and security concerns, which led the country to under-utilize its refining capacities, thereby pushing the country to become a net importer of refined petroleum products.
However, Nigeria hopes to alter refined products’ supply dynamics with the the coming on stream of Dangote Refinery, where it has grossly refused to salvage the nation’s ailing four refineries.
The Nigerian Government announced plans to conduct oil licensing rounds in mid-2020 for both offshore and onshore blocks with the objective of achieving its 3.0mb/d output target by 2023. The last oil licensing bid round was held in 2007, about 13 years ago
However, due to the instability of oil prices and collapse in global demand due to the COVID-19 pandemic, the Government announced, on May 5, 2020, that it would not hold oil bidding rounds for the country’s major oilfields until crude oil prices recoverd.
Nonetheless, the Government went ahead to implement its plans to conduct marginal oilfields bidding rounds this year, which President Buhari had earlier approved for the Minister of State for Petroleum Resources to schedule a bid round for marginal fields in the second quarter of 2020.
A total of 56 marginal fields would be up for auction, including 45 fields that have already been earmarked by the Department of Petroleum Resources (DPR) as well as the 11 fields that the DPR recently revoked the operators’ licences, due to non-performance. The Government claims that the marginal oilfields, which were expected to be taken up by indigenous producers, were less impacted by low crude oil prices.
However, investors could not be assured if the Government would be able to command significant value for these fields, as they may struggle to raise adequate financing to support participation in a bid round in the midst of global economic crisis and looming local economic recession.
As a survival strategy for the oil and gas sector in Nigeria, the Department of Petroleum Resources, DPR recently unveiled a survival and success plan for the industry in the post COVID-19 pandemic period. The agency observed the importance of strategic repositioning and business optimisation in ensuring that the industry comes out of the current market crisis unscathed.
The policy focuses on four key areas, which include:
i. cost control and management with the realignment of cost of production per barrel as well as corporate, business and financial stewardship;
ii. portfolio rationalization and asset optimization using project screening and maturation; and contract renegotiation;
iii. strategic repositioning and business optimization; and
iv. strategic partnership; contracting models; service provider open access; and shared risks and returns.
Also, gas production has become a major focus for the oil and gas companies, in response to strong investment in gas-to-power projects, across the region, this would help utilise flared gas and grow the sector.
Nigeria’s offshore oil and gas industry undoubtedly experienced expansion , thereby, opening up more market opportunities. The growth of the offshore exploration and production activities was mainly driven by the efforts of governments in their states, such as providing key incentives and supporting policies to unlock the investment opportunity, as well as a growing list of international oil and gas companies interested in exploring alternative fields to replace the maturing offshore producing sites. Here in Rivers State, the the state government established a harmonised tax regime and policies that promote the ease of doing business in Rivers State.
The industry adversely impacted by many issues and these issues were magnified by the economic crisis resulting from the COVID-19 pandemic.
Hopefully, the fortunes of the industry would improve especially with the on-going marginal field bidding process and the expected passage of the PIB in due course, which by the way has a scheduled public hearing on January 28, 2021. It is important for all the stakeholders to come together and formulate coherent policies and take steps that would help the industry stay afloat, above current challenges of the industry which have grown in leaps and bounds.

By: Tonye Nria-Dappa

Oil & Energy

‘Revamping Moribund Refineries ‘ll Address Rising Cost Of Petroleum Products’

Published

1 month ago

September 21, 2026

The Tide

An Energy Expert, Dr Joseph Obele, has called on the Federal Government and the management of the Nigerian National Petroleum Company Limited (NNPCL) to urgently restart the government – owned refineries insisting that it would help in curbing the rising cost of petroleum products.

He insisted that bringing back the moribund public refineries would further serve as a direct response to the plight of Nigerians as far as petroleum products is concerned.

Obele, who is also the Public Relations Officer (PRO) of the Petroleum Products Retail Outlets owners Association of Nigeria (PETROAN) and Lecturer at the Ignatius Ajuru University of Education, Port Harcourt, while reacting to the cost of petrol said the immediate and practical approach to addressing the current increase in petroleum prices is to restore production at the government-owned refineries and maximise every available refining capacity in the country.

“The immediate approach to the recent rise in petroleum prices is to restart the government-owned refineries”, he said.

Obele insisted that restoring functional government-owned refining capacity would increase domestic supply, reduce dependence on imported refined petroleum products and contribute to greater stability in the downstream petroleum market.

He urged the federal government to maximise all available refining capacity while continuing to encourage responsible private-sector Investment and healthy competition within the downstream petroleum industry.

Obele expressed concern over the continued rise in crude oil prices amid the ongoing tensions involving the United States and Iran and concerns around the Strait of Hormuz, warning that sustained supply risks could continue to put pressure on global petroleum prices.

He noted that Brent crude closed at about $105.83 per barrel on 16 September 2026, while WTI closed at about $102.43 per barrel.

The impact, the expert said, is already being felt in the Nigerian downstream market, with Premium Motor Spirit (PMS) reportedly selling in the range of ?1,400–?1,500 per litre in some locations, while Automotive Gas Oil (AGO) is selling above ?2,000 per litre.

“The immediate approach to the recent rise in petroleum prices is to restart the government-owned refineries”, Obele said.

According to him, restoring functional government-owned refining capacity will increase domestic supply, reduce dependence on imported refined petroleum products and contribute to greater stability in the downstream petroleum market..

He warned that a prolonged increase in petroleum prices would have a wider economic impact, particularly on transportation, food, medical services and other essential commodities.

“The continuous increase in the cost of petroleum products will invariably affect the prices of virtually all commodities and services. It will create additional inflationary pressure and deepen the financial hardship being experienced by Nigerians”, he stated.

Obele noted that the prolonged dormancy of government-owned refineries has had serious economic and employment implications across the petroleum value chain, affecting workers, contractors, marketers, transporters, businesses and other dependants of the sector.

According to him, a functional Port Harcourt and Warri Refinery would stimulate activities across the petroleum value chain, support employment and restore confidence among industry stakeholders.

In his words, ‘the Port Harcourt Refinery should become a measurable demonstration of government’s commitment to the welfare of Nigerians”

He further noted that the Port Harcourt Refinery had previously recorded production activities arguing that the focus should now be on resolving operational challenges and returning the facility to sustainable production.

“The time to restart the Port Harcourt Refinery is now. Nigerians cannot continue to bear the unbearable cost of petroleum products when domestic refining capacity is available. Every viable refinery should be optimally utilised in the national interest”

Obele emphasised that the objective should not be to undermine private-sector refineries but to ensure that all viable refining assets—government and private—contribute to national energy security, adequate supply and a competitive downstream petroleum market.

Lady Godknows Ogbulu

Oil & Energy

The Race To Cut Methane Emissions Is Exposing A Global Divide

Published

1 month ago

September 21, 2026

The Tide

Several countries worldwide have been working to reduce methane leaks, with some states making significantly more progress than others. The establishment of the Global Methane Pledge in 2021 at the COP26 climate summit has helped accelerate cleanup efforts; however, many countries are still falling behind on their methane-cutting pledges. Now, one of the world’s biggest methane polluters – Turkmenistan – is aiming to plug its mega leaks, which would help reduce global methane emissions and could encourage other countries to do the same.

The United States and the European Union led the Global Methane Pledge, which has since been signed by 159 countries that together contribute around 45 per cent of global human-caused methane emissions. The pledge aims to reduce methane emissions by at least 30 per cent below 2020 levels by 2030.

Many governments had already made ambitious pledges to reduce carbon emissions, but some had not previously sought to cut methane emissions, which heat the planet up to 80 times more than carbon dioxide over two decades. Methane has contributed around 30 per cent of the increase in global temperatures since the Industrial Revolution, and fossil fuels contribute around one-third of the methane emissions from human activity. Record production of oil, gas, and coal, combined with limited mitigation efforts, has kept emissions above 120 million tonnes (Mt) annually, according to the International Energy Agency (IEA).

The IEA’s annual Global Methane Tracker shows how much methane is emitted each year and tracks progress and failures. In 2024, abandoned wells and mines accounted for roughly 8 Mt of methane emissions, demonstrating the severity of leaving them unplugged. It is extremely hard to track methane emissions as they are widely underreported. Some parts of the world have little or no measurement-based data on methane emissions.

Therefore, the IEA has to rely on data from scientific studies, measurement campaigns, and large emissions events detected by satellites to estimate emissions each year. Some regions of the world, such as Europe, report their methane emissions far more accurately than other parts. The IEA estimated that global energy-related methane emissions are about 80 per cent higher than those reported by countries to the UN Framework Convention on Climate Change.

Some countries contribute heavily to the world’s methane emissions, particularly oil-rich countries that have not effectively decommissioned fossil fuel operations for decades, including Turkmenistan, the United States, Russia, Iran, and Venezuela. A 2023 Guardian assessment revealed that Turkmenistan was the worst country for methane mega-leaks. Some of Turkmenistan’s “super-emitters” leaked tonnes of methane every hour, from a single valve or pipeline, which is more than the emissions from an entire coal-fired power station. The assessment showed that the methane emissions alone from Turkmenistan’s two main fossil fuel fields contributed more to global heating in 2022 than the United Kingdom’s entire carbon emissions. The findings have led to significant public backlash and put pressure on the government to address the problem.

This year, Turkmenistan approved a massive clean-up project, as the country started plugging its mega-leaks. Turkmenistan has halted eight leaks by repairing corroded pipes, faulty wells, and failing flares, according to data from the United Nations. However, significant work is needed to reduce the country’s methane emissions. The UN Methane Alert and Response System (MARS) has delivered 192 alerts of methane plumes to Turkmenistan over the last year. According to the system, Turkmenistan had nine of the world’s top 50 worst methane leaks of the last six months.

Turkmenistan has improved its reporting systems in recent years and responded to around 20 per cent of the alerts with on-the-ground information about the leaks and potential plans to fix them. By comparison, the United States was sent 138 alerts and did not respond to any. The worst detected methane leak came from Mexico’s offshore oil and gas operations and measured a huge 37 tonnes per hour, equivalent to the emissions of over 7 million SUVs. Although Mexico responded to all 23 MARS alerts, it has yet to fix the leak.

Meghan Demeter, the programme manager of MARS, stated, “These mitigation cases are a proof point of what can be done with satellite data, especially in situations like Turkmenistan, where there are a lot of detections… This is a breakthrough in terms of having real documented mitigation action. But it is not yet a breakthrough in the overall magnitude of emissions. Eight cases is an incredible first step, but there are also a lot more sources in Turkmenistan that need to be addressed. We are in pretty constant communication, and the response rate is growing month by month. We’re seeing steady progress.”

UN tracking has also encouraged other countries in the region to plug leaks, with Kazakhstan, another former Soviet republic with ageing oil and gas infrastructure, stopping eight leaks following alerts. To date, Mexico, Brazil, and Argentina have 100 per cent response rates to MARS alerts, while Libya and Azerbaijan have high response rates. Meanwhile, the United States, Iran, Russia, and China failed to respond to any alerts.

By Felicity Bradstock for Oilprice.com 16

Oil & Energy

Delta Targets 120MW Power Boost, Moves To Cut Reliance On National Grid

Published

2 months ago

September 7, 2026

The Tide

The Delta State Government has intensified efforts to boost electricity generation and supply in the state with plans to add 120 megawatts (MW) to the national grid through a partnership with Supply Power.

The State Commissioner for Works (Rural Roads) and Public Information, Charles Aniagwu, disclosed this at a press conference in Asaba, weekend, noting that the initiative was part of wider reforms aimed at opening up the power sector to private investors.

Aniagwu, who was accompanied by the Executive Assistant to the Governor on New Media, Felix Ofou, said the state was exploring alternative sources of electricity to support businesses, households and communities while reducing pressure on the national grid.

He said the government was particularly interested in exploiting Delta’s abundant natural gas resources for power generation, pointing to the Kwale Free Trade Zone, which is part of the state’s special economic zone, as a major opportunity for investors.

According to him, prospective investors were taken to the zone during the state’s recent economic summit to enable them to assess the availability of gas as a key raw material for electricity generation. ComparePower Rates

The commissioner explained that generating more electricity locally would not only increase supply in Delta but also free up power on the national grid for use by other consumers.

Aniagwu cited the 8.5MW Independent Power Plant located behind the state secretariat in Asaba as an example of what could be achieved through alternative power sources.

He said the facility had enabled the secretariat complex to operate independently of the national grid, thereby making the electricity that would otherwise have been consumed there available to other users.

He added that the planned 120MW partnership with Supply Power would further strengthen the state’s electricity supply capacity and provide a more reliable power base for small and medium-sized enterprises.

Aniagwu said the state government was also intervening in areas traditionally regarded as the responsibility of electricity distribution companies because inadequate power supply could no longer be allowed to constrain economic development. LearnQuantum Physics

He identified the extension of the electricity grid from Abraka towards the Ndokwa axis as one of the interventions being undertaken to connect more communities to electricity.

The commissioner, however, raised concerns over the burden placed on communities that are often required to provide transformers and other electricity infrastructure, only for distribution companies to take over the facilities and subsequently collect electricity bills without adequately accounting for the investments made by the communities.

He said the state would continue to support efforts aimed at energising communities, noting that improved electricity supply would stimulate businesses, create jobs and help tackle social problems associated with unemployment and idleness.

On regulation, Aniagwu said the government was working with the Ministry of Energy and a committee set up to develop an appropriate regulatory framework for the state’s emerging power sector. SwitchEnergy Plans

He said the proposed energy commission would be responsible for regulating new electricity producers, determining appropriate tariffs and overseeing distribution networks.

The commissioner stressed that liberalising the sector required effective regulation to protect consumers and investors, adding that decisions on power distribution infrastructure, including the use of overhead or underground lines, must take into account the peculiarities and safety requirements of each location.

He warned that power expansion without adequate regulation could expose residents to electrocution and other hazards, stressing the need to protect electricity infrastructure while ensuring consumers were not subjected to unfair pricing.

Aniagwu said the state government’s broader objective was to build an efficient and sustainable electricity market driven by private investment and capable of powering businesses, households and communities across Delta State.