Nigeria’s oil reserves get 64-year lifeline with 37.24bn barrels

Experts and stakeholders in the oil and gas industry said transparency and compliance with regulations is key in attracting the necessary investment to unlock the crude oil and gas reserves, which have hit a record high of 37.24 billion barrels and 210.5 trillion cubic feet, according to the Commission Chief Executive of the Nigerian Upstream […]

Experts and stakeholders in the oil and gas industry said transparency and compliance with regulations is key in attracting the necessary investment to unlock the crude oil and gas reserves, which have hit a record high of 37.24 billion barrels and 210.5 trillion cubic feet, according to the Commission Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Engr Gbenga Komolafe.

Just as President Bola Ahmed Tinubu gave a target to Bayo Ojulari, the new Group Chief Executive Officer of the Nigeria Nigerian National Petroleum Company Limited (NNPC Ltd) to upscale crude oil production share through the Joint Ventures (JVs) and Production Sharing Contract (PSC) assets with independent and international oil companies (IOCs), the NUPRC on Saturday gave the 2025 crude oil reserves index, saying Nigeria’s oil reserves are projected to dry up in a mere 64 years if the current rate of production and exploration persists.

Komolafe is not unfamiliar with the weight of his statement. He witnessed how panelists and stakeholders at the last year’s edition of the Nigeria Oil and Gas (NOG) Energy Week in Abuja clamoured for strict adherence to regulatory frameworks in the Petroleum Industry Act (PIA), including transparent declaration of annual oil and gas reserves figures, which could lead to an increase in exploration. 

As he gave his words before the world at the 2024 NOG Energy Week panel session, themed: ‘Accelerating Investment, Enabling Industry Growth, Meeting Energy Demand,’ Komolafe at the weekend officially released the annual reserves data, maintaining that Nigeria has 37.28 billion barrels as the total oil and condensate reserves and 210.54 trillion cubic feet (TCF) as total gas reserves in its official National Petroleum Reserves Position for 2025.

• Shittu: Nigeria’s Political Culture Rewards Transaction Over Vision
• Why we launched zero transfer fees – Sterling Bank

“The Reserves Life Index is 64 years and 93 years for Oil and Gas, respectively,” he declared, few days after Tinubu handed out an immediate action plan to Bayo Ojulari and his 11-man NNPC board to ramp up production, conduct a strategic portfolio review of NNPC-operated and Joint Venture Assets to ensure alignment with value maximisation objectives.

Though their outlooks may differ, the expectation expressed by Tinubu for production increase at a time when crude oil reserves index stands at 64 years, with the current 1.64 million barrels daily, means that Nigeria Oil Reserve Face imminent depletion (dry up) if the sector does not receive or make a commensurate investments into exploration to increase the reserves.

Komolafe said, “The Commission, in keeping with its mandate as enshrined in the Petroleum Industry Act, 2021 (PIA), is committed to driving the efficiency and effectiveness of the upstream oil & gas sector, enhancing the growth of oil and gas reserves and ensuring sustainable increase in oil & gas production for shared prosperity as articulated in the Regulatory Action Plan for 2024 and the Near Term (RAP).

“Against the foregoing, I am pleased to present to you an overview of the nation’s oil, condensate, associated gas, and non-associated gas reserves as of January 1st, 2025, as follows:

“Crude Oil and Condensate reserves stands at 31.44 billion barrels and 5.84 billion barrels respectively, amounting to a total of 37.28 billion barrels

“Associated Gas and Non-Associated Gas reserves stands at 101.03 trillion Cubic Feet (TCF) and 109.51 TCF, respectively, resulting in total Gas reserves of 210.54 TCF.”

“In view of the above, and in furtherance of Chapter 1, Part III, Section 7 (g), (i). i). (k), (m). (q). (r), and other powers enabling me in this respect, I, Engr. Gbenga Olu Komolafe, Commission Chief Executive, hereby declares the Total Oil and Condensate reserves of 37.28 billion Barrels and Total Gas reserves of 210.54 trillion Cubic Feet as the official National Petroleum Reserves Position as of 1st January, 2025.”

 

What experts are saying

According to Wunmi Iledare, a renowned professor of petroleum economics, “Nigeria needs to create a more attractive investment climate to lure investors into the oil and gas sector.” He emphasised the importance of stability in policies and regulations, as well as the need for transparency and accountability in the sector.

He said, “If you have a lot of reserves and you don’t use it, it is translated to nothing. Let me also explain the concept of reserve estimation, it’s a simple equation, reserves at the beginning of the year or reserves at the end of the year is equal to reserves at the beginning of the year plus new reserves addition minus production.

“So, if you don’t produce and you don’t discover and you are producing less then your reserves will grow, so looking at your reserve level does not explain anything because there are two components that are affecting your reserves at the end of every year, how much of new reserves did I have that year and two, how much of the reserves at the end of last year did I produce this year?

“So, if you look at Nigeria’s reserve today at 37.28, what was the reserve last year at about 37 billion at the end of 2023. So what we need to be talking about as a key performance indicator in Nigeria’s oil and gas is reserve production ratio and reserves replacement ratio, how much of my production did I replace this year, that is the only way reserves can grow. The only reason this reserve grew by just about how many percentage is because production is low.”

Another analyst, Bayo Alamutu said, “One key area that requires attention is the regulatory framework governing the oil and gas sector. The NUPRC has taken steps to streamline regulations and provide clarity on issues such as licensing and taxation. 

“However, more needs to be done to ensure that the regulatory environment is stable, predictable, and attractive to investors. A stable regulatory framework would provide investors with the confidence they need to commit to long-term investments in the sector.”

Another critical factor, Alamutu continued, “Is the issue of security. The Niger Delta region has been plagued by insecurity, including pipeline vandalism and kidnappings, which have discouraged investors and hindered the growth of the sector. The government must take concrete steps to address these security challenges and provide a safe operating environment for investors.

An energy policy analyst, Adeola Yusuf, added, “The government needs to prioritise local content development. By promoting local participation in the oil and gas sector, Nigeria can create jobs, build capacity, and retain more value from its natural resources. This can be achieved through initiatives such as training programs, mentorship schemes, and partnerships between local companies and international oil majors.”

“In addition, transparency and accountability are essential for attracting investments. The government must ensure that revenue from the oil and gas sector is managed transparently and that contracts are awarded based on merit rather than cronyism. This would help to build trust with investors and improve the reputation of the sector”.

Analysts say attracting investments into Nigeria’s oil and gas sector, as agreed by all stakeholders at the last NOG Energy Week and other conferences, requires a multifaceted approach. The government must create a favourable business environment, prioritise security and infrastructure development, promote local content, ensure transparency and accountability and encourage the adoption of technology.