The Nigerian government is pointing fingers at upstream oil companies for the country’s struggling petroleum sector, saying their inefficiencies are holding back growth across the entire industry.
Speaking at the Nigeria Energy International Summit (NEIS) in Abuja, Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, criticized upstream operators for failing to meet production targets, which he said is starving local refineries of crude oil and stalling progress in the midstream and downstream sectors.
“The reason we are struggling across the industry is simple: the upstream is underperforming. If the upstream thrives, the midstream and downstream will follow,” Lokpobiri stated.
Despite contributing over 90% of Nigeria’s foreign exchange earnings, the petroleum sector makes up less than 5% of the country’s GDP, according to data from the National Bureau of Statistics. Lokpobiri emphasized that investment is the key to unlocking the sector’s potential, urging stakeholders to ramp up crude production to meet both domestic and international obligations.
Bridging the Gap: From Potential to Reality
In his remarks, the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Engr. Gbenga Komolafe, noted that while Nigeria currently produces 1.75 million barrels per day, the industry has the technical capacity to hit 2.24 million barrels daily. He assured that the NUPRC is actively working with operators to bridge this gap, reactivating shut-in wells and identifying quick-win opportunities to boost production.
Komolafe highlighted the Commission’s ambitious targets, including reaching 40 billion barrels in proven oil reserves and 220 trillion cubic feet of gas. He also revealed that the recent 2022/2024 bid licensing round had awarded 27 Petroleum Prospecting Licenses (PPLs), with preparations already underway for the 2025 bid round to sustain exploration momentum.
As the government pushes for increased investment and efficiency in the upstream sector, the big question remains: Will Nigeria’s oil industry finally unlock its full potential, or will inefficiencies continue to drag it down?
