The Nigerian Petroleum Development Company(NPDC) has indicated it will double its production rates by 2019. The company currently produces 180,000 barrels of crude oil per day, and hopes to increase its production capacity to 300,000 bpd by 2018 and by 2019 and 2020 its production is expected to hit 400,000 bpd and 500,000 bpd, respectively. Managing Director of the company Yusuf Matashi disclosed this recently.
Why this is good news
Nigeria’s oil industry has been largely dominated by foreign majors. These companies end up repatriating a large proportion of their profits to their parent countries, thus denying the government of much needed revenue. Host communities have also complained of being neglected by oil companies in terms of Corporate Social Responsibility (CSR) projects.
Several of the oil majors, have however sold their holding to indigenous firms due to declining returns and community unrest. Oando Plc in July 2014 announced the completion of its acquisition of the Nigerian Upstream Oil and Gas Business of Conoco Phillips (NYSE: COP) for a total cash consideration of US$1.5 billion after customary adjustments plus a deferred consideration of US$33 million.
In addition to greater revenue for the government, the expansion in NPDC’s operations means more Nigerians will have jobs either through direct employment by the company or contracts that would be awarded to indigenous engineering firms.
Nigeria is highly dependent on oil revenues for both foreign exchange earnings and government revenue. A crash in crude oil prices and production volumes last year led to the economy going into recession
The NPDC was established in 1988 as a wholly owned subsidiary of the Nigerian National Petroleum Corporation (NNPC). The company is currently the largest supplier of gas, to the domestic market with an average of 700 million standard cubic feet per day.