The number of active oil rigs in Nigeria rose in October by one to 28, compared to 38 in January 2015, data from Baker Hughes Incorporated and the Organisation of Petroleum Exporting Countries showed.
It rose to 26 in February this year from a record low of 23 in December last year.
The reduction in the rig count was mostly triggered by the slump in global crude oil prices since mid-June 2014 as oil companies were forced to slash their capital budgets and suspend some projects.
Rig count is largely a reflection of the level of exploration, development and production activities occurring in the oil and gas sector.
Nigeria saw the fourth-largest drop in rig count among its peers in OPEC last year. The number of rigs in the country averaged 25 in 2016, down from 30 in 2015, and 34 in 2014.
“Regulatory uncertainty has resulted in fewer investments in new oil and natural gas projects, and no licensing round has occurred since 2007. The amount of money that Nigeria loses every year from not passing the PIB is estimated to be as high as $15bn,” the United States Energy Information Administration said in its ‘Nigeria Brief’.
Nigeria has the second-largest amount of proven crude oil reserves in Africa, but exploration activity has slowed.
“Rising security problems, coupled with regulatory uncertainty, have contributed to decreased exploration,” the EIA said.
According to the agency, the PIB, which was initially proposed in 2008, is expected to change the organisational structure and fiscal terms governing the oil and natural gas industry if it becomes law.
It said, “International oil companies are concerned that proposed changes to fiscal terms may make some projects commercially unviable, particularly deepwater projects that involve greater capital spending.”
Global oil prices have increased in recent months, raising expectations that oil companies may soon consider working on projects that have been suspended.
The Secretary-General, Organisation of Petroleum Exporting Countries, Dr. Mohammad Barkindo, said at the 25th Lustrum Symposium in the Netherlands on Tuesday that the effects of the current downward price cycle on the industry had been severe.
He noted that industry budgets were depleted and exploration and production spending was reduced by 27 per cent in both 2015 and 2016.
“In total, nearly $1tn investments were frozen or discontinued, and many thousands of industry workers were cut from payrolls,” he said.
Barkindo said, “It is clearly imperative that industry investment be urgently restored to levels that will secure the energy requirements of future generations. To achieve this, an estimated $10.5tn in industry investment is expected to be required from now until 2040.