Nigeria has, more than ever before, been exposed as a country that is unable to meet its OPEC’s quota of 1.772 million.

It is unable not take advantage of the looming Russian oil ban to ramp up its revenue.

Following the war between Russia and Ukraine, the European Commission recently proposed an oil embargo on Russian crude oil and refined products as part of the sixth sanction package being discussed by the European Union.

The crude oil embargo would come into effect after six months and the refined product embargo would come into effect at the end of this year.

While the European Union alone imports some 3.5 million barrels of crude oil and refined products from Russia, the country’s supply quota in OPEC’s cut deal is 7 million barrels per day.

Since a supply gap would be created when Russia’s ban takes effect, Europe is currently putting pressure on OPEC to increase output to compensate for the loss.

However, OPEC has refused to increase output due to its alliance with Russia in the ongoing Declaration of Corporation, DoC, which has been in place since 2014. It is rather warning that “no capacity in the world can replace Russia’s oil”.

Nigeria, also being one of OPEC’s strongest members, is torn between working to increase exploration by all means in order to take advantage of Russia’s oil ban to earn more revenue, and remaining loyal to OPEC’s quota.

Yet, Nigeria’s eagerness to latch on the opportunity about to be created by the ban may be a mere wish, especially since the country currently battles vandalism, oil theft, low investments, technical issues and other forms of menace, which have kept it from producing more than 1.2 million barrels per day despite an opportunity that allows it to churn out more.

Although OPEC has increased output quota twice this year, Nigeria is unable to meet its target, as the country’s output hovers around 1.2 million barrels per day for the past two years.

Europe and Asia are Nigeria’s largest buyers of crude oil. Between October and December 2021, Nigeria exported over N4 trillion worth of crude oil. In the fourth quarter of 2021, crude oil exported to Europe amounted to about N2 trillion, while exports to Asia followed with around N1.4 trillion.

If Russia’s ban comes into effect, Nigeria could be one of those countries that Europe would turn to Nigeria for succour.

However, experts say the country is unprepared.

An oil and gas expert, Dr. Dauda Garuba, said Nigeria did not prepare for the coming opportunity posed by the Russian ban, and therefore, would not, in any way, take advantage of it.

“Nigeria is not, in any way, positioned to take advantage of what’s happening now because it is already under-producing,” he said.

According to him, the issue at hand was a global one, “and even OPEC has already expressed its inability to bridge the gap that will be created by the ban. Nigeria didn’t prepare for this because, since 2017, the country’s reserves have remained static at 37 billion barrels. Although the government expressed interest to increase it to 40 billion barrels, this is all word of mouth. Practically, the government is not doing anything about it. What we can do is just to sit and watch the turn of events. It’s an unfortunate situation but it’s the reality,” he said.

International oil companies have begun to divest assets in a bid to focus on renewable sources of energies.

Most recent to join the list was TotalEnergies, which hinted of its intention to exit its onshore oil fields.

This move by TotalEnergies also aligns with that of Shell and ExxonMobil, which are now focusing on deep-water fields away from the difficulties of operating in close proximity to local communities.

According to Bloomberg, the French energy giant will look to offload its 10 per cent interest in a firm that holds 20 onshore and shallow water permits in Nigeria.

Using data from Nigeria National Petroleum Corporation (NNPC), it was revealed that in one year, 3.6 million (3,636,400) barrels of oil were lost by oil companies and NNPC over issues with host communities, ranging from salaries, environment and appointments.

In July 2021, Shell divested its Nigerian asset with the planned sale of the company’s shallow-water and onshore asset interests in the SPDC joint venture, which supplies around 10 per cent of Nigeria’s gas demand.

A top executive of Shell had said that the company could not solve numerous community problems in Niger Delta, which included oil theft and pipeline sabotage, as well as lawsuits brought up by local communities over oil spills.

Also, on February 25, Seplat Energy Plc announced an agreement to acquire the entire share capital of Mobil Producing Nigeria Unlimited from Exxon Mobil Corporation, Delaware for $1.28 billion.

The transaction is reminiscent of the $1.5 billion ConocoPhillips Nigerian operation acquisition by Oando Plc in 2014 and entails the acquisition of ExxonMobil Nigeria’s entire offshore shallow water business.

Former president, National Association of Petroleum Explorationists, FNAPE, Oyebamiji Ajibola, said the government should find solution to insecurity.

“The low production is caused by a pyramid of problems; vandalism, theft, onshore asset divestments, Petroleum Industry Act, and PIA implementation.

“Most IOCs are selling off their onshore assets, thereby hampering production.

“The solution, among others, is to deal with insecurity of assets (physical, human and material). There is a need to organise workshops with stakeholders on the implementation of the PIA, encourage IOCs to review or re-activate all well shut-in due to insecurity,” he said.

Educationist and researcher, Dr. Austine Nweze, said more indigenous players should be encouraged to compete.

“Since the IOCs are divesting, Nigerians should be encouraged to buy up those assets and begin to compete in the sector. I am of the opinion that Nigeria’s assets should be owned and operated by Nigerians and not foreigners. We need more Dangotes and Seplats. Government should eradicate monopoly, and let more Nigerians come into the business and compete. Then the country will be able to increase output and take advantage of the situation,” he said.

Managing Director/Chief Executive Officer, 11plc, Tunji Oyebanji, said Nigeria, first of all, must stop the oil theft.

According to him, the country needed to ensure that crude oil produced was accounted for and properly sold.

“The Federal Government needs to engage with the oil community to make sure they stop oil theft and vandalism. Government should work together with them to maximise the current output,” he said.

He added that full implementation of the Petroleum Industry Act, PIA, was also needed to encourage new investments, which would in turn lead to new exploration.

“We also need to resolve the security challenges,” he added.

Emadeb Energy’s Managing Director and Chief Executive Officer, Adebowale Olujimi, said  a recurring problem at Africa’s largest economy’s upstream sector was in the area of investment.

According to him, investment in the Nigerian upstream sector had continued to dwindle on the bias that the world increasingly moved to renewables, coupled with the growing security risks around Nigeria’s oil infrastructure with sporadic theft and vandalism of pipelines staying in play.

On what Nigeria must do to ramp up production, he said there was a need to attract investments to the upstream sector through more amiable fiscal policies for oil producing companies, adding that government must pursue the possibility of stemming the exit of the IOCs.

“They have the much-needed resources to fund investment in the Nigerian upstream sector,” he said.

He also explained the government needed to work out ways of having meaningful engagements with the Niger Delta community to stem the alarming vandalism and crude theft presently rife in the region.

“Government needs to come up with a clear and robust policy on gas to attract more investments in the gas sector, and government through the CBN could provide guarantees for indigenous companies to enable them access funds for investment in the Upstream sector,” he said.