Aging infrastructure, security challenges in the Niger Delta, stalled investments, regulatory uncertainties, and a global shift towards renewable energy that has compounded the investment challenge have been identified as key challenges hampering Nigerian oil production.
The Chairman of Heirs Holdings Group, UBA Group, and Transcorp Group, Mr. Tony Elumelu, made these observations while delivering a goodwill message at the 3rd anniversary of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), held at the Transcorp Hilton, Abuja, themed “Transformation, Innovation & Excellence”.
Elumelu noted that Nigeria’s oil production has been on a downward trajectory, falling from peaks of over 2 million barrels per day to recent lows, below 1.5 million.
This decline, he further noted, translates to lost revenues, reduced global market share, and missed opportunities for national development.
He listed Infrastructure Modernization, Security Enhancement, Regulatory Streamlining, Investment Attraction and Technology Adoption as some of the critical steps that could be adopted to address the challenges facing the oil sector and boost oil output.
Elumelu lauded NUPRC’s bold “Project 1MMBOPD,” an initiative aimed at increasing Nigeria’s oil production by 1 million barrels per day, stating, ”Project 1MMBOPD is so critical, a crucial part of the solution to unlocking the next phase of our development.”
He added: “By targeting to grow production by 1 million barrels of oil per day from current levels, we are setting a clear and challenging goal; one that I believe is achievable as see all stakeholders are at the table and will commit to play their parts and bring the needed collaboration, innovation, and excellence to make this project a success, for the benefit of our country.
“To be sustainable, this initiative should go beyond just increasing production; it should catalyse a comprehensive strategy to revitalize our entire upstream sector.”
Elumelu also highlighted the importance of gas in Nigeria’s energy mix, particularly in electricity generation.
“The path to 1MMBOPD must be constructed on strategies that maximize the value of our gas resources, reducing flaring and increasing utilization for domestic and export markets.
“This dual focus will help diversify our energy portfolio and mitigate the risks associated with over-reliance on oil”, he remarked.
“We know the criticality of gas in improving access to electricity in Nigeria. Access to electricity is the single most important factor in our quest for industrialization. You can now see that our oil and gas sector is pivotal to the development of our country”, he stressed.
He also highlighted Heirs Energies’ achievements in boosting Nigeria’s oil production, citing the company’s success in increasing production at its OML-17 asset and collaborating with NNPC to tackle crude theft.
“At Heirs Energies, we are actively contributing to this solution. In the first 100 days after we took over operational control of our OML-17 asset in 2021, we doubled our production from 28,000 to over 50,000 barrels per day.
“We suffered a setback with unabated crude theft, which caused us to shut-in and work collaboratively with the NNPC Limited to better secure the pipeline system. From a low of 5% terminal receipts in December 2021, year-to-date in 2024, we have recorded an average terminal receipt of 85%; a remarkable improvement and a good example of what a purposeful collaboration between NNPCL and operators underpinned by rigorous execution can deliver”, he said.
He further noted: “With the improvement in the operating environment, we have restarted our investment and production growth journey, and have now successfully reversed the fall in production that we suffered in 2022 and 2023, as a consequence of the evacuation challenges. A few days ago, OML-17 attained over 51,000 barrels per day, and we continue our production growth journey.
Relatedly, we are also working to grow our gas production that feeds many power generation plants and gas-based industries.
“These achievements indicate what is possible, where there is a strong industry collaboration, and in particular, when regulatory support meets private sector drive and innovation.”
On his philosophy of Africapitalism, Elumelu called for greater collaboration between international oil companies and indigenous firms, even as he stressed the importance of shared prosperity and environmental sustainability.
He declared: “I have a very clear vision of where Africa should be and needs to be.
“A vision to address the promise of our enormous youth population and to ensure Africa reaps the rewards, finally and fittingly, of her resource wealth. That younger generation is why I invest in entrepreneurs.
“My belief that the private sector has the power to transform the continent through long-term investments, but that it must work collaboratively with the public sector.”
He called for increased collaboration between the international oil companies and the indigenous firms.
He said: “Firms, such as Heirs Energies, that have taken your traditions of best practice and global standards and integrated them into proudly indegenious capabilities, and others, are truly capacitized partners.
“By combining your global expertise with our local knowledge and commitment, we can drive innovation and excellence across the entire value chain, effectively addressing the challenges we face.”