United States Shale oil, Renaissance Capital, has disclosed that it could take over a large percentage of global oil exportation, which will affect the market in oil expecting countries like Nigeria.
The reaserch and finance firm, in a report entitled: Crude Times: Thoughts for Nigeria, said Shale oil is re-defining the oil landscape globally and posing threat to the conventional oil producers.
“The biggest challenge comes from the biggest energy consumer-the US where the Shale revolution is transforming the global energy value chain.
“International Environmental Agency expects the US to add another 2.8million barrel per day of production by 2018 at a break even price of less than $70 per barrel, which is more than the whole of Nigerian oil output in 2012 (estimated at 2.1million per barrel per day.”
It said such developments put traditional producers at risk and create the urgency to bring new technologies and capital to revive stagnating production.
The report said Nigeria faces bigger challenge because it is competing with other emerging countries, some of which have are placed in terms of favourable regulatory environments.
The report added that the US has over the years cut its imports from Nigeria by half, arguing that the issue has forced Nigeria to find new destinations for its crude.
“With Nigerian Gross Domestic Product (GDP) having grown steadily at about seven per cent per annum over the past ten years and with the population of 160million, the country energy thirst is increasing (from the extremely low 300kbd level).
“At the same time, if production remains at current level due to under-investment, the net amount available for export will shrink quickly putting further pressure on the budget and future economic growth,” the report added.
It advised the government to develop new methods such as deep offshores, and increase recovery rates at old oil fields in the Delta region. It said such efforts would help in increasing investment in the energy sector, as well as transforming it.
Rencap said the emergence of gas is a major boost to the country’s energy market, adding that the country will in a matter of time have enough gas for export.
“We are encouraged by recent plans announced by Aliko Dangote to build a new local refinery, with a 400kbd capacity, which should improve long-term pricing for both local producers as well as consumers not to mention new jobs and the multiplier effects on the economy,” it said.