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Oil rigs declined by 30% as exploration drops

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The number of active oil rigs in Nigeria declined by 30 per cent in October, with stakeholders lamenting the reduction in exploration activities in the nation’s oil and gas sector.

This was revealed in a data obtained from the Organisation of Petroleum Exporting Countries which showed that Nigeria’s rig count fell to seven in October from 10 in September.

It stood at 21 in March before the COVID -19 pandemic started taking a huge toll on the nation’s oil industry.

The rig count is largely a reflection of the level of exploration, development and production activities occurring in the oil and gas sector.

The global oil benchmark, Brent crude, plunged to as low as $15. 98 per barrel in April, its lowest since June 1999. It traded around $44 per barrel on Wednesday.

The collapse in crude oil demand and prices occasioned largely by the coronavirus pandemic has forced many operators to put exploration on the back burner.

Seplat Petroleum Development Company Plc said in its 2020 half-yearly financial results that “Drilling of oil wells has been suspended, with all non -essential capital expenditure under review, to consider only activities that can be supported in the new oil price environment,”.

The Nigerian Association of Petroleum Explorationists last week, warned that the continued reduction in oil and gas exploration activities in Nigeria would have huge consequences for the country.

“Nigeria is at risk of long-term disruption to oil and gas supplies, power generation, a collapse of industries and significant loss of revenue due to continued reduction in hydrocarbon exploration activities, NAPE said.

“Reduction in hydrocarbon exploration and exploitation has dire consequences for a country like Nigeria with a mono-economy hinged on crude oil.”

The Vice-President, Prof. Yemi Osinbajo, said on Tuesday that in order to grow Nigeria’s oil and gas reserves, the Federal Government had proposed fiscal incentives that would attract the investments in the nation’s basins in the Petroleum Industry Bill.

Osinbajo said a key mandate of the Ministry of Petroleum Resources is to ensure the growth of the nation’s reserves base to at least 40 billion barrels of crude as well as the production capacity to three million barrels of crude per day.

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