Nigeria at risk of not meeting OPEC quota, 2010 reserves target

Paris (Platts)--8Sep2005

Nigeria's dwindling hydrocarban reserves may pose a threat to its 2010
reserves target and OPEC quota, industry officials have warned.

     Nigeria produced 8-bil bbl crude oil in the last 10 years but has only
added 6-bil bbl in reserves from the deepwater, Nigerian Association of
Explorationists (NAPE) senior officials said.

     "The balance of new discoveries/production in the last 10 years does not
strongly suggest a reserve accretion sufficient to meet our national
aspirations," said NAPE president Gilbert Odior, quoted in ThisDay newspaper.

     "Everybody is producing because [the] oil price is pretty high," but he
added that the shortage of rigs was prohibiting companies from much-needed
exploration activity. He also said government funding and community problems
in the Niger Delta with its history of kidnappings, pipeline sabotage and
crude oil theft, posed a major challenge to oil and gas production.

     "For the funding problem, if you wanted to shoot seismic of 20 square
kilometers in the deepwater a year or two ago, you would probably spend like
$1 million or $1.5 million, but today it cost $5 million," he added.
     Oil accounts for more than 90% of Nigeria's foreign exchange earnings and
about 80% of Gross National Product.
     
     PUMPING AT SURGE CAPACITY 

     Nigeria, which has been pumping to surge capacity of up to 2.4-mil b/d
against its current OPEC quota of 2.36-mil b/d, has already has been forced to
cut back output to prevent long-term damage to its aging fields.

     "Suddenly it started occurring to us that three years ago, we thought
OPEC constraint production was our problem, that we had so much to produce. In
less than two years we found out that really, we might be called upon for
production that we can't really afford. We are constraint at 2.4-mil b/d,"
said NAPE's president-Elect Austin Avuru.

     Avuru also said oil companies are slowly shifting away from Nigeria's
onshore areas because of ethnic unrest to offshore production.
     "We have found out that the reason there is so much a race by the
operators to the deepwater is not so much because there are no more
discoveries to be made in the traditional terrain of onshore and the Shelf, it
is largely due to community crises," he said.

     Nigeria's finance minister, Ngozi Okonjo-Iweala recently said the
government will not be able to implement its 2005 budget due to shortfall of
some 300,000 b/d in the country's projected supply to the world market. "Our
initial projection was for the production of 2.7-mil b/d.

     "According to what the Nigeria National Petroleum Corporation told us,
due to the closure of some oil wells which is also due to community unrest, it
has come down to 2.4-mil b/d. I want people to know that," the minister said
last month.

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