By Adedapo Adesanya
The Department of Petroleum Resources (DPR) has disclosed that Nigeria’s crude oil deposit could be exhausted in five decades from now.
This was contained in its latest Nigerian Oil and Gas Industry Annual Report, which noted that at current reserve depletion rate standing at 2.04 percent per annum, will cease in 2067.
The DPR then warned that this may be brought forward if oil is exploited at a greater rate as Nigeria may resort to a bigger oil production if its volatile economy faces a large scale crisis that upsets its current balance.
“The nation’s depletion rate and life index are 2.04 percent and 49.03 years respectively. These parameters lie within the long-term range.
“However, to achieve the aspiration of the Federal government of 4MMBOPD daily production and reserves of 40MMMB, there is the need for corresponding increase in reserves as production is increases, otherwise, the life index will fall from a sustainable long-term threshold to a less futuristic and sustainable medium to short term range,“ the document said.
The report further disclosed that the nation’s oil and condensate reserves was shared across various contract types namely Joint Venture, Production Sharing Contract, Sole Risk and Marginal Field.
Of this four, the Joint Venture, which is constituted by international oil exploration companies such as Mobil, Chevron and Total, is the highest production rate of nearly 41.64 percent. Interestingly, it has a low depletion rate in the neighbourhood of 1.8 percent and a high life index of 56.34 years.
The Production Sharing Contract, making up 36.08 percent of Nigeria’s total oil output, has the lowest life index of 32.15 years and the highest depletion rate currently 3.10 percent. This means that it poses the biggest threat to Nigeria’s oil future at its current production rate.
The Sole Risk, presently responsible for 20.14 percent of the national production, maintains the lowest depletion rate of 1.5 percent at the same time the highest life index of 65.49 years.
On its part, the Marginal Field contributes 2.14 percent to the nation’s production basket at a 2.7 percent depletion rate while maintaining a life index of 36.83 per cent.
Beyond the challenge that the depletion has on Nigeria’s revenue, it was revealed that oil will continue to face less demand as developed and emerging economies warm up for a large-scale migration from gasoline-powered cars to electric cars, shrinking need to buy the nation’s crude oil from some of Nigeria’s oil partners like the US, India, Brazil, Spain, France, and the Netherlands.
Currently, as the world move to alternative energy, patronage for electric cars is rising spurred in part by the massive campaign for the invention in the Western world and this means no large demand for oil.
Apart from the peerless benefit of offering renewable energy, electric cars easily promote the global massive campaign for environmental friendly initiatives and do not emit carbon which affects the environment.
Oil prices are also affected due to its volatility which faced a free-fall lately with Brent Crude (the international benchmark for Nigeria’s Bonny Light) tumbling from $70 per barrel to $57 a barrel since the year began following the spread of the coronavirus in China, one of Nigeria’s crude destinations.
Modupe Gbadeyanka