$34bn lost in oil output decline from delayed Seplat-ExxonMobil deal – Lokpobiri

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Nigeria lost $34 billion in 30 months due to the fall in production from the assets being divested by ExxonMobil to Seplat Energy.

The minister of state for petroleum resources (oil), Mr Heineken Lokpobiri, revealed this in a speech at the Second Quarter Dinner of the Petroleum Club held under the theme ‘Funding our way out of the crisis: Looking up to the oil and gas sector.’

He said output from the assets declined from 600,000 barrels per day (bpd) to current 120,000bpd, leaving a shortfall of 480,000bpd, which he said amounted to $34 billion loss at a conservative $80 per barrels, in the last two and a half years.

However, the minister expressed optimism that the country could ramp up oil production to five million barrels per day within the next 12 to 18 months.

He said lack of required investment in the Nigerian oil and gas industry over the past 10 years contributed to the decline in production, and stressed that it was one of the major challenges he faced on assumption of office.

Lokpobiri said Nigeria was producing about 600,000bpd from the ExxonMobil assets that were now under divestment.

Of late, he said the production from the asset dropped to about 120,000bpd.

He stated that if the problem hindering the divestment process was resolved and minimal investment made on the asset, the country would be able to restore the production to 600,000bpd with the addition of 480,000bpd.

With that, in addition to condensate, which is outside the Organisation of Petroleum Exporting Countries (OPEC) computation, the minister maintained that the country was already delivering two million barrels.

“My own opinion is that, look, we are in short of 480,000 barrels a day from that ExxonMobil-Seplat transaction.

“For the past two and a half years, oil has been moving around $80 a barrel. Four hundred and eighty thousand barrels a day, multiply it by two and a half years, it will give you about $34 billion.

“I was doing rough mathematics. If one asset was doing about 600,000 barrels, because of certain problems, which we’re trying to resolve, production declined to 120,000 barrels, which means we’ve lost about 480,000 barrels a day.

“Multiply it by $80 a barrel. Every day, you’ll get about $34 million. Multiply it by two and a half years; you’re talking about over $30 billion. If $30 billion is injected into our economy today, I guess you guys will have to sell more of your dollars because dollar will naturally drop. This exchange rate is sometimes a question of demand and supply,” the minister said.

Lokpobiri said he would ensure that all problems hampering investment in the sector were resolved, beginning with the Seplat-ExxonMobil divestment issue.

“If from only that Seplat-ExxonMobil transaction, we have lost about $35 billion, imagine if that money was in Nigeria, imagine if NNPC has about 70 per cent of that money. If they have that money to expand their investment, I believe that Nigeria will be in a better place,” he added.

The minister further disclosed that the task of ramping up oil production could not be feasible without sustainable investment and without solving the problems in the industry.

He said one of the first problems that confronted him was the ExxonMobil-Seplat transaction.

He revealed that some agreements had been reached in the attempt to resolve the divestment bottleneck, assuring that in no distant time, the problem would be finally solved.

“When I came, what I did was to bring Seplat and NNPC to the table to say, ‘look, we must lock up ourselves in this room. We must find a solution to this problem.’

“What is the problem? They can attest to the fact that we are able to get some agreements. And I believe that in no distant time, we’ll be able to resolve that problem.”