Nigeria May Miss 3 Million Barrels Per Day Oil Target, PETAN Warns

Nigeria may not hit its target of producing three million barrels of oil per day by 2030, the Petroleum Technology Association of Nigeria (PETAN) has warned, citing inadequate equipment, funding constraints and a shortage of experienced personnel.

PETAN Chairman Wole Ogunsanya said the country needs about $6bn worth of equipment and hardware to lift production to the targeted level. He spoke in Lagos on Monday at a briefing on the state of the oil and gas industry.

Production gap

Nigeria currently produces about 1.7 million barrels of oil daily. Ogunsanya said the country has never produced more than 2.6 million barrels per day.

He pointed to a widening gap between the crude the country needs and what its wells, surface equipment and midstream pipelines can deliver.

“If you do the maths correctly: we're producing 1.7mbpd; we have a refining capacity of 3 million barrels potential; and OPEC allows us to sell 1.5 million barrels of oil. So when you add the numbers up, we need over four million barrels of oil production in Nigeria. We've never produced more than 2.6 million barrels in this country. And that's very important,” he said.

“It means that the wells, the surface equipment, the midstream pipelines that will take those productions to wherever we want to take them, we don't have them. We've never reached that capacity in the country.”

Refineries drive crude demand

Ogunsanya said expanding refining capacity is raising the need for more crude. He listed the Dangote refinery at 650,000 barrels per day, with plans to raise it to about 1.4 million barrels per day, BUA Group's proposed 350,000-barrel-per-day refinery, and NNPC's refineries in Kaduna, Warri and Port Harcourt with an aggregate capacity of about 450,000 barrels.

Added together, that points to potential refining capacity of about three million barrels per day if the projects and rehabilitation are realised.

“We're not going to stop drilling when the oil price goes down because we need to feed our refineries,” he said.

Equipment costs and funding

PETAN sees the equipment gap as an investment opportunity for indigenous oilfield service companies, but limited access to finance is holding them back. A land drilling rig costs between $30m and $40m. A swamp rig costs $160m to $170m, while a jack-up rig runs between $300m and $400m, depending on specifications.

Ogunsanya called for innovative financing so local service companies can buy equipment without relying solely on bank loans that demand heavy collateral. He also urged the Nigerian Content Development and Monitoring Board to direct more resources from the Nigerian Content Development Fund towards oilfield equipment.

On skills, he warned that the divestment of onshore and shallow-water assets by international oil companies means indigenous operators must now train young Nigerians, a role multinationals historically played through international assignments and specialised programmes.

“You can see clearly that there is a huge gap between training new Nigerians today coming into the industry versus those that are 50, 60 years old that have been trained largely by the multinational companies,” he said.

What it means for the economy

Lower crude output limits the oil revenue that underpins the naira and government budgets. Rising domestic refining capacity also means Nigeria will need more of its own crude at home, making the production shortfall a costlier problem for fuel supply and foreign exchange earnings.