Oil and gas production involves the extraction of hydrocarbon from the subsurface with an established quantity of recoverable reserve which is often of commercial quantity. The exploration and production of these deposits involves separating the oil, gas, and residuals for onward use. Crude oil production in Nigeria is domiciled in the upstream petroleum segment of the value chain. The federation gets a share of the crude produced from all the production arrangements it is a party to. This share is termed the ‘’ equity crude’’,  this portion is lifted and exported by the NNPC on behalf of the Nigerian state. The federation gas is also sold by NNPC to buyers1.

Exploration

In 2016 a total of 294.5 sq. km of 3-D seismic data consisting of 138.5 sq. km of data on land, 775.497 sq. km offshore, was acquired by the country. More data on rig and well activities can be found in the 2016 oil and gas annual report of the Department of Petroleum Resources (DPR). No exploration activities were carried out in the joint development zone of Nigeria and Sao Tome and Principe2.


Seismic data acquisition is ongoing in all inland basins in the country including the Sokoto basin3. Data acquisition and drilling activities are also expected to continue in the Chad basin as soon as the security situation is brought under control4. In addition to these activities, the NNPC’s collaboration with Halliburton Corporation to in the search for commercial hydrocarbons in the inland sedimentary basin5 of Nigeria is still in the works.


1 Buyers include sales to NGC, feedstock sales to NLNG and other off takers.

2 Populated data templates from NSPJDA

3 http://www.nnpcgroup.com/PublicRelations/NNPCinthenews/tabid/92/articleType/ArticleView/articleId/852/Tambuwal-Wants-NNPC-to-Explore-Oil-in-Sokoto-Basin.aspx

4 http://nnpcgroup.com/PublicRelations/NNPCinthenews/tabid/92/articleType/ArticleView/articleId/814/NNPC-Secures-2Billion-Discounts-on-Renegotiated-Upstream-Contracts.aspx

5 http://nnpcgroup.com/PublicRelations/NNPCinthenews/tabid/92/articleType/ArticleView/articleId/818/NNPC-RD-Collaborates-with-Halliburton-for-Oil-Search-in-Inland-Basins.aspx


Production

In 2016 Nigeria has produced 659,136.76 barrels of oil (and field condensate) was produced at an estimated average daily production of 1.96 million barrels of oil per day. There was a 15.13% decline over the average production rate for 2016.This volume was produced by seventy-one (71) OMLs in production ( with 30 producing above 5 million barrels).

Production activities concentration

Crude oil and gas is currently being produced from three sedimentary basins: the onshore Anambra, the offshore Benin (deep-water and ultra-deep-water) and the Niger Delta (shallow and deep-water basins). There are varied types and levels of operation in ten of Nigeria’s thirty-six states (Abia, Akwa Ibom, Bayelsa, Cross Rivers, Delta, Edo, Imo, Lagos, Ondo, and Rivers). There is also off-shore activity in the Bight of Bonny, Bight of Benin, and the Gulf of Guinea.

 

Figure 1: Map of Nigeria showing sedimentary basins
fig1

Source: NEITI 2013 oil and gas report6

In 2016, total crude oil production was 659,136.76 million barrels with an estimated value of $171.152 billion. The production data was supplied by COMD which includes production from the Joint Venture, Production Sharing Contracts, Service Contracts, Sole Risk and Marginal Fields. The crude oil monthly Average Selling Price ($) per barrel was computed using the monthly total sales supplied by COMD. The total estimated production value was arrived at, by multiplying the monthly volumes with the average monthly price for 2016.

The total gas produced in 2016 was 2,711.803 mmscf. Government’s take from the gas produced in the sector amounted to 591 thousand MT (gas) and 655.530 mbtu (feedstock) valued at $186.817 million and $789.645 million respectively was established.

Varying prices for the sales of gas in Nigeria exist depending on the purchaser from NGC. The price per mscf for power generation is $1, for commercial - $3.06, while as feedstock (industrial), i.e. Notore price is $0.689 and ALSCON - $0.25.

Therefore, to estimate the total value of gas produced in Nigeria, the rate for commercial buyers was used to compute value for utilized gas, re-injected gas, gas flared and unaccounted gas. The commercial rate was used because gas sold for commercial use accounts for 99% of the total gas sold in 2016.

Gas produced is utilized for sales, used as fuel gas, re-injected, liquefied  and flared into the atmosphere.  Federation equity gas sale was made by NNPC and was categorized as export gas.

There was no production from the joint development zone between Nigeria and Sao-tome and Principe in the year. For further details on gas production, lifting  and sales during the year see Chapter 2.5 of the main report.

Export

Total lifting of crude oil was 668.148 million barrels. All federation lifting  was 244.615 million barrels while company lifting was 423.533 million barrels. Actual lifting as per sales invoice was 238.447 million barrels with a sales value of US$10.43 billion. Domestic allocation for the year was 126.164 million barrels with a sales value of US$5.54 billion (approx. N1.44 Trillion) . Federation share of equity crude is allocated for export and for domestic use. The portion allocated for domestic use is further allocated for the offshore processing , refinery deliveries and direct sale direct purchase and export. Gas was sold by NNPC for domestic use to NGC. All other gas sales are categorized as export gas. Gas sales in the year was 591 thousand MT and 655.530 mmbtu valued at US$976,462 million. For more details see Chapter 3 of the main report.

Federation lifting includes federation export crude, domestic allocation, tax oil on account of FIRS, royalty oil on the account of DPR, lifting on behalf of MCA, RDP/QIT, lifting on behalf of NPDC and PanOcean.

Note that federation lifting is valued in US$ while domestic export is valued in N


7 http://www.nlng.com/Media-Center/Publications/2018%20FACTS%20AND%20FIGURES%20ON%20NLNG.pdf

8 Federation lifting includes federation export crude, domestic allocation, tax oil on account of FIRS, royalty oil on the account of DPR, lifting on behalf of MCA, RDP/QIT, lifting on behalf of NPDC and PanOcean.

9 Note that federation lifting is valued in US$ while domestic export is valued in N