(EnergyAsia, July 24 2014, Thursday) — Nigeria’s state oil and gas firm Nigerian National Petroleum Corp (NNPC) has affirmed its targets to boost the nation’s crude oil reserves to 40 billion barrels and production to rise to four million b/d.

But group managing director Andrew Yakubu did not mention a deadline to achieve those goals in a recent meeting with the local media. According to BP, Nigeria had 37 billion barrels of oil reserves and produced 2.32 million b/d last year, down from 2.42 million b/d in 2012 amid the country’s worsening ethnic conflicts and widespread corruption.

With foreign investors scared off by Nigeria’s difficult operating conditions, the Department of Petroleum Resources (DPR) has estimated that the country’s oil reserves have fallen from 40 billion to 35 billion barrels.

Acknowledging investors’ growing worries, Mr Yakubu revealed that the country’s conflicts and lawlessness now threaten more than 500,000 b/d of oil production as well as supplies through its four main crude export pipelines. The Trans Forcados Pipeline in western Nigeria, the Ogbanbiri/Temidaba/Brass pipelines in the centre, and the Trans Niger and Nembe creek trunk lines in the east handle the bulk of Nigeria’s oil flows.

Nevertheless, he said NNPC will push ahead with an “aggressive exploration campaign” to attract oil and gas companies to explore in Nigeria’s offshore and onshore areas including the inland basins of Chad, Anambra, Benue, Bida and Sokoto Dahomey. Despite the conflict involving terror group Boko Haram, NNPC said has acquired over 1,000 sq km of seismic data in the Chad Basin near the northeastern state of Borno.

Nigeria’s economic and oil data    Annual percentage change, unless otherwise specified

Nigeria’s economic and oil data

Annual percentage change, unless otherwise specified

Year

2010

2011

2012

2013

2014

Real GDP (at 1990 factor cost)    8.0                 7.4             6.6             6.4            7.3
Oil and Gas GDP                             5.2                -0.6            -0.2          -1.8            6.8
Non-oil GDP                                    8.5                 8.9             7.8             7.7            7.4
Crude oil output (million b/d)    2.46              2.37            2.34          2.30        2.39
Source: IMF

Earlier this year, the International Monetary Fund (IMF) presented Africa’s most populous country with a glimmer of good news by projecting its economy to grow by 6.4% this year, thanks largely to the “continued strong performance” of its non-oil sector.

“Economic growth is expected to improve further in 2014, driven by agriculture, trade and services. Inflation should continue to decline, with lower food prices from higher rice and wheat production and supported by a tight monetary policy and a budget execution that maintains medium-term consolidation objectives,” said the IMF executive board.

The fund expects Nigeria’s inflation rate to decline to 7.9% by year end on account of lower food prices, fiscal consolidation and the government’s tight monetary policy stance.

The external current account surplus fell to 3.1% of GDP from 7.8% at end-2012, but reserves remained at a comfortable 5.6 months of next year’s imports, despite uncertainties about the timing of the tapering of unconventional monetary policies.

The IMF urged the government of President Goodluck Jonathan to focus on rebuilding external and fiscal buffers, avoid spending pressures from the political cycle, strengthen the transparency and governance of the oil sector, and enhance financial stability, while promoting the availability of and access to finance.

“Over the medium term, it will be vital to ensure the steady implementation of the wide-range of structural reforms necessary to improve competitiveness and productivity, boost growth and job creation, strengthen governance, and build social cohesion,” it said.

While Nigeria’s economic outlook remains favourable, the IMF said the government must focus on risks posed by continued lower oil revenues from oil production losses and lower oil prices, the impact from the unwinding of unconventional monetary policy in advanced economies, and domestic political and security uncertainties.

It called on the government to take “strong action to address oil theft and production losses” as well as strengthen the regulatory framework by passing a sound Petroleum Industry Bill with enhanced oversight and transparency provisions.